Small Business Tax Relief Act of 2009

Mr. President, I ask unanimous consent the order for the quorum call be rescinded.

I yield myself such time as I might consume. Maybe I better ask, are we under a time agreement?

Mr. President, today, the Senate starts debate on expiring tax and health provisions, for people outside Washington. Around here, those tax provisions are generally referred to with the word ``extenders.'' But before I discuss the bill before us, I would like to make a couple points on the process, before I get into the substance of the substitute before the Senate. What I find surprising is, we are taking up a package that, similar to last week's exercise, absolutely belongs to the Senate Democratic leadership; that is to say, we are not taking up a bipartisan package that I put together with my friend, Finance Committee Chairman Baucus.

To be sure, some of the structure reflects the agreement I have with Senator Baucus, but this package is almost three times the size of the package we agreed upon. Virtually all the additional cost is due to proposals I would not have agreed to in representing the people of Iowa or the Republican conference.

I was under the impression the Senate Democratic leadership was genuine in its desire to work on a bipartisan basis, but clearly I was mistaken. Although the Senate Democratic leadership was highly involved in the development of that original bipartisan bill, they arbitrarily decided to replace it with a bill that skews toward their liberal wing. So my first comment to my colleagues, also to the media and to the entire Nation, is: Don't let this package be mislabeled as the Baucus- Grassley package. It is not the package my friend, Chairman Baucus, and I negotiated. Again, the package before the Senate dramatically differs in cost, balance, and dramatically is different in intent from the Baucus-Grassley compromise announced on February 12.

My second preliminary comment goes to the way in which these expiring tax provisions have been described by many on the other side, including those in the Democratic leadership. If you roll the videotape back a week or so, you would hear a lot of disparaging comments about these routine, bipartisan extenders. From my perspective, those comments were made in an effort to sully the bipartisan agreement reached by Chairman Baucus and this Senator. If you take a look at newspaper accounts of a week or so ago, you come away with the impression that the tax extenders are partisan work of Republicans and only for Republican interests. A representative sample comes from one report which describes the bipartisan bill as:

. . . an extension of soon-to-expire tax breaks that are

highly beneficial to major corporations, known as tax

extenders, as well as other corporate giveaways that had been

designed to win GOP support.

The Washington Post included this attribution to the Senate Democratic leadership in an article last week:

"We're pretty close,'' [the majority leader] said Friday

during a television appearance in Nevada, adding that he

thought, `fat cats' would have benefited too much from the

larger Baucus-Grassley bill.''

That quote happens to be from the majority leader.

The portrait that was painted by certain members of the majority and was echoed without critical examination--and in some press reports was outright inaccurate. For one thing, the tax extenders included provisions such as deductions for qualified tuition and related expenses and also the deduction for certain expenses for elementary and secondary schoolteachers. If you are going to college or if you are a grade school teacher, the Senate Democratic leadership apparently views you as a fat cat. If your house was destroyed in a recent natural disaster and you still need any of the temporary disaster relief provisions contained in the extenders package, too bad because helping you would amount to a corporate giveaway in the eyes of some. Such distortion of the extenders--some of them have been on the books for a long period of time; some of them passing this body by consensus-- belittles helping some people who have needs.

Again, I wish to say the tax extenders have been routinely passed repeatedly because they are bipartisan and, frankly, very popular. Democrats have consistently voted in favor of extending these tax provisions. Let me tell you what House Speaker Nancy Pelosi released recently, a very strong statement when the House passed these very same tax extenders at the end of last year saying this was ``good for business, good for homeowners, and good for our community.''

That was December of 2009, not very long ago.

In 2006, the then Democratic leader released a blistering statement ``after Bush Republicans in the Senate blocked passage of critical tax extenders American families and businesses are paying the price because this Do Nothing Republican Congress refuses to extend important tax breaks.''

Recent bipartisan votes in the Senate extending bipartisan tax provisions had come in the Emergency Economic Stabilization Act of 2008 and the Tax Relief and Health Care Act of 2006. By the way, that passed the Senate by unanimous consent. Then we had the Working Family Tax Relief Act of 2004, which originally passed the Senate by voice vote, although the conference report only received 92 votes in favor and a whopping 3 against it.

Let me give what the nonpartisan Congressional Research Service has to say about the history of these extenders which are now before us, which should have been passed in December. They have been consistently widely supported because they mention the Tax Relief Extension Act of 1999, which passed the Senate by unanimous consent and one vote against it on the conference report. One Member on the other side said:

Our side isn't sure that the Republicans are real

interested in developing good policy and to move forward

together. Instead, they are more inclined to play rope-a-dope

again. My own view is, let's test them.

So we are testing each other when we are talking about merely reimposing some policy that has been on the books for a long period of time and just happens to sunset, to force some review by Congress.

We had another Member of this large 59-vote majority exclaim:

It looks more like a tax bill than a jobs bill to me. What

the Democratic caucus is going to put on the floor is

something that's more focused on job creation than tax

breaks.

Reading these comments, I found myself obviously scratching my head. The only explanation for this behavior is, certain Senators decided last week it serves a deeply partisan goal to slander what had been for several years bipartisan and popular tax provisions benefiting many different people.

The Washington Post article I quoted from earlier includes a statement from a Democratic Senate leadership aide saying that ``no decisions have been made, but anyone expecting us immediately to go back to a bill that includes tax extenders will be sorely disappointed.''

You can imagine that, today, a little over a week after these comments, I scratch my head, once again. We have before us the expiring tax and health provisions that were disparaged just a short time ago. Have they morphed from corporate tax pork? Have they suddenly reacquired their bipartisan character? Are these time-sensitive items, now expired for more than 2 months, suddenly jobs related?

We are beginning another debate, a jobs bill debate. So I wanted to focus on the economy, small business, and jobs after giving you that partisanship that should not have existed a week ago, to explain that it existed and not much has changed since then, but all of a sudden there is some idea of being bipartisan.

So we are going to talk about the substance of this bill. We all agree our Nation is currently facing challenging economic times. While there have been some signs of improvement such as the recent growth in our gross domestic product, job losses continue to mount and many hard- working Americans are struggling to make ends meet.

According to the Bureau of Labor Statistics, over 8 million jobs have been lost since our economy officially slipped into recession in December 2007. The unemployment rate is currently 9.7 percent, which is simply an unacceptable level. The lack of job creation continues despite aggressive action taken at the Federal level in order to stabilize the economy.

This includes the enactment of TARP and the $800 billion stimulus bill. However, these bills were all missing a critical ingredient for spurring job creation, and that was substantial tax relief targeted to small business.

Everybody knows small business is where the jobs are created in America; 70 percent of the net new jobs. In October 2008, Congress enacted the Troubled Asset Relief Program that we all call TARP around here, T-A-R-P. That was a $700 billion financial bailout bill that we were told had to be enacted immediately in order to deal with the so- called toxic assets to keep credit from drying up, which would have choked off the lifeblood of the American economy.

What we actually got--because we sure did not take out these toxic assets. So what we actually got was direct infusion of cash into the largest Wall Street banks, which was 180 degrees different than what we were told by Treasury before that bill was voted on, and the purpose of that bill as well. Later came the bailout of General Motors and Chrysler using TARP money after the Senate had just voted not to bail out GM and Chrysler.

This inconsistent policy by Treasury created uncertainty in the financial markets and the business community. Moreover, exorbitant bonuses were paid to executives and the management of firms that would have been out of a job if not for Congress and Treasury and the Federal Reserve intervening.

How effective was the bailout in improving the credit markets? In October 2009, the Government Accountability Office released a report reviewing TARP's first-year performance. The GAO report found credit had improved based on certain market indicators. However, they were not able to determine how much, if any, was attributed to TARP as compared to general market forces or other Federal action.

While it is unclear the extent credit has been freed up as a result of TARP, it is clear who has reaped the benefits of those programs. This past year, many financial firms, including Goldman Sachs, JPMorgan Chase, and others who received TARP funds, posted record or near-record profits.

While Wall Street executives have clearly benefitted form TARP, small businesses and their employers have not been that fortunate. Small businesses continue to struggle to obtain credit in order to expand their operations, purchase inventories, and even make payroll. The so- called stimulus bill, enacted almost solely by an overwhelming Democratic majority in Congress last February, has not spurred job creation either.

This massive $800 billion spending bill was hastily rushed to the floor of the Senate with little time to deliberate its merit. Lawrence Summers, the Director of President Obama's National Economic Council, said:

The test for the stimulus is whether it is timely,

targeted, and temporary.

This stimulus bill hit the trifecta. It has failed in all three. Through a report issued in January 2009 by the current Chair of President Obama's Council of Economic Advisors, Christine Roemer, the administration predicted that the stimulus would save or create 3 million jobs. We were told by the Obama administration that if the bill was not passed quickly we would experience unemployment of 9 percent.

At this point we have a chart. The middle line, where it says 9 percent, the White House projected unemployment at 9 percent with no stimulus. However, we were also told by the Obama administration that if the stimulus bill passed, unemployment would not go over 8 percent, and that would be the bottom line.

Well, the bill was passed. But what did we get for $800 billion of debt before interest that was laid at the feet of our children and our grandchildren? The unemployment rate jumped from 7.7 percent in January right before the stimulus was enacted, to a high of 10.1 percent in October.

While unemployment recently dipped slightly to 9.7 percent--you can see that is the red line at the top--this was not due to job creation but because millions of individuals have literally given up looking for work and obviously do not show up in the unemployment statistics.

The Obama administration also stated that ``more than 90 percent of the jobs created are likely to be in the private sector.''

In all, 3.3 million jobs have been lost since the stimulus bill was enacted. That is 3.3 million compared to the 3.7 million the President said. Of course, 3.2 million of those jobs were in the private sector.

In summary, the Obama administration was terribly inaccurate regarding its stimulus jobs projection. At the time the stimulus bill was passed, I raised concerns that the bill was not targeted enough at small businesses and job creation. However, my point of view lost out and less than one-half of 1 percent of the bill included tax relief for small business.

The money in the stimulus bill gave tax credits to people who buy electric plug-in golf carts or to pay for rattle-snake husbandry in Oregon, among other ill-advised provisions, which would have been better allocated to small business tax relief, the place where employment starts. Since the stimulus, small businesses have been bearing the brunt of job losses in our economy. However, the words of those on the other side regarding the importance of small business job creation do not match their action when looking at the paltry amount of small business tax relief being provided.

Again, in the jobs bill, or stimulus bill, or whatever you want to call it that passed the Senate last week, there was only one provision directed solely to small business tax relief. That was a provision I supported which increased expensing of equipment purchased by small businesses. But it is a very small provision. It only gave small businesses what they have already been getting for the last couple of years, just extending it; in other words, just extending that figure. That provision was only $35 million out of $62 billion, the $15 billion that everyone talks about, plus the $47 billion for the highway trust fund that is typically not mentioned.

Last year, I introduced S. 1381, the Small Business Tax Relief Act. My bill would double the amount of equipment that small businesses could expense and would make those higher levels permanent instead of just for 1 year, as the Reid bill did.

In my negotiations on the jobs bill, I sought to include provisions for my small business tax relief bill. But there was no agreement to put small business tax relief provisions for my bill in the bipartisan compromise that we reached. Instead, we were asked to defer those provisions to a future tax bill.

According to ADP, national employment data from January 2009 through January 2010, small businesses with fewer than 500 employees saw employment decline by 2.67 million jobs, while large businesses with 500 or more employees saw employment decline by 694,000.

While I am sure many of us disagree about the effectiveness of the financial bailout and stimulus spending in getting our economy back on track, I know for sure that we all agree there has been a lack of job creation and too many people continue to be unemployed. Because the stimulus bill has so clearly failed in what it was supposed to do, which was to create jobs, and the administration and the congressional Democratic leadership are running away from the word ``stimulus'' faster than the Triple Crown winning horse Secretariat. Everything proposed now is called a ``jobs bill'' even if it includes proposals that were always labeled ``stimulus'' in the past.

Only 6 percent of Americans believe the stimulus bill created jobs. That is less than the 7 percent of Americans who believe that Elvis is still alive. Last week, the Senate passed a bill that included provisions designed to increase hiring. This includes a payroll tax holiday for businesses that hire unemployed workers and a tax credit for the retention of newly hired individuals throughout all of 2010.

The payroll tax holiday part of this proposal is likely to spark some modest hiring at businesses at the margins among those who have seen some improvement in their business but are on the fence about whether to hire somebody now or wait a while. However, many businesses continue to struggle and will not hire new employees just because it is the stated policy goal of Congress.

Before a business can hire a new employee, they need to know that new employee will generate additional revenue that exceeds the cost of the employee. The latest survey of the Small Business Economic Trends--and that is produced by the National Federation of Independent Businesses, or NFIB, as we know it--shows that many small businesses may not be in a place that they can afford to hire new employees even with the provisions of that bill passing the Senate last week called the Payroll Tax Holiday.

I have a chart from the National Federation of Independent Businesses to which I now want to refer. That chart has selected components from the Small Business Optimism Index. While many components of this index improved slightly from December, it is clear that small businesses continue to struggle. You will see from the chart a net negative 1 percent of owners who plan to create new jobs in the next 3 months. You will see on the chart a net positive of only 1 percent of business owners expect the economy to improve. Only 4 percent of business owners said it was a good time to expand, and a net negative 42 percent of owners reported higher earnings.

This last component is especially important for businesses when it comes to hiring new employees. If earnings are declining, there is little a payroll holiday will do to spark hiring since businesses need to know that the revenue generated by the additional employees will exceed the cost, not just today but in the future.

Before I go on to this NFIB survey, at the grassroots of my State, I had the opportunity the previous weekend to spend part of a Friday and part of a Sunday afternoon in what is called the Des Moines Home and Garden Show which has probably been around for 30 years or so, that one weekend a year. On the Saturday in between, I had an opportunity to attend a like show called the Home Improvement Show in Waterloo. You walk around and talk to vendors, small business people. You kind of look at what do they expect Congress to do about creating jobs. I never got anything positive about something we might do, but I got a lot of ideas that they want us to do that said: You have to give us some certainty.

Do you know what they quoted. They quoted the big tax increase coming up at the end of this year as some of that uncertainty. They quoted the cap-and-trade tax that possibly could pass the Senate. Then they quoted the potential cost to small business because of the health care reform bill. They said: Take all of those potential things out of the picture, and we will start hiring. But it is the uncertainty that is out there of what Congress is going to do to us that is keeping us from hiring people.

I want to go back to the NFIB survey. When businesses are asked what the single most important problem facing their business is, the answer is lack of sales. That is in addition to the uncertainty I related. But this is closely

followed by what I did say, taxes, and then government regulation, and redtape. I am glad my colleagues on the other side have recognized that true job creation comes through the private sector and have thus sought hiring incentives through payroll tax relief.

However, this minor tax relief is a drop in the bucket considering the challenges small businesses face due to the economy and proposed increased taxes and redtape included in the President's budget. Whether we are speaking about cap and trade that will drastically increase energy costs, health care reform that would mandate small businesses offer health benefits that will increase the cost of labor, or the call for tax increases on so-called wealthy taxpayers earning over $200,000 that will largely fall on the backs of small businesses, if our intention is to increase long-term employment, the last thing we should be doing at this time of economic uncertainty is to increase taxes and place additional burdens on those who are responsible for creating 70 percent of the jobs in our economy; namely, small business.

Providing small businesses a payroll tax holiday while intending to impose increased taxes, regulations, and mandates amounts to throwing them a few peanuts while taking away their supper. In recent months, I have spoken at length about the impact of tax increases set to kick in 10 months from today. I have examined the impact of these tax increases on small businesses. I think Members ought to take a closer look at it before we actually enact big tax hikes.

The President and my colleagues on the other side of the aisle have proposed increasing the two marginal tax rates from 33 and 35 percent to 36 and 39.6 percent, respectively; increasing the tax rates on capital gains and dividends to 20 percent, fully reinstating the personal exemption phaseout for those making over $200,000, and fully reinstating the limitation on itemized deductions for those making more than $200,000.

With these two provisions fully reinstated, the individuals in the top two rates could see their marginal tax rates increase over 15 percent or more. My colleagues on the other side of the aisle respond that these proposals will only hit ``wealthy individuals'' and only a small percentage of small businesses fall into this category. I have been trying to tell them for 3 or 4 years that what they want to talk about, the small percentage of small businesses falling into that category--I will not convince them, because I don't know what they are reading--is wrong. Because small business is going to be hit very definitely by these increases. What my colleagues fail to understand is that the small businesses that fit into this group are not static but consist of different businesses over time that go in and out of the top two tax brackets depending on the market.

Data from the Joint Committee on Taxation, which is a nonpartisan official congressional scorekeeper on tax issues, shows that 44 percent of the flowthrough business income will be hit with the increase in the top two tax rates proposed by the President. This hits small businesses particularly hard since most small businesses are organized as flowthrough entities. It will increase taxes on single small business owners who make more than $200,000 per year, even if they plow all of their income back into their small business to keep paying their workers and hire additional workers. Increasing taxes on this group punishes their success and limits their ability to reinvest in their company. It prevents them from putting away funds for tough economic times to keep their business afloat.

Government is currently creating a climate of uncertainty where the private sector does not know what we will do next, what taxes will be raised, and what regulatory barriers will be put in their way. We can start to put some certainty back into the business world by declaring we will not increase taxes on businesses 1 dime, by making the 2001 and 2003 bipartisan tax measures permanent.

Let me be clear: Businesses do not want to be certain that the government is going to raise their taxes and make them go up through more redtape. They want to be certain that it is not going to happen. Until then, many will simply sit on the sidelines and not hire more workers, as I reported from my weekend before last at a couple affairs in the State of Iowa.

Moreover, we can directly provide targeted relief to small businesses. Last June, I proposed legislation to do that. I introduced the Small Business Tax Relief Act to lower taxes on job-creating small businesses. Since the Democratic leadership barred any amendments last week, I am hopeful we will debate and vote on an amendment offered by Senator Thune. Many provisions in my bill are contained in the Thune bill. My bill contains a number of provisions that will leave more money in the hands of small businesses so they can hire more, continue to pay the salaries of their current employees, and make additional investments. This includes allowing flowthrough small businesses, partnerships, S corporations, LLCs, and sole partnerships to deduct 20 percent of their income, effectively reducing their taxes by 20 percent. My bill also includes tax relief for small business owners from the unfair alternative minimum tax. It takes general business credits, such as the employer-provided childcare credit, out of the alternative minimum tax. This would allow a mom-and-pop retail store that provides childcare for its employees to get the same tax relief a Fortune 500 company gets when it provides childcare for its employees.

My bill would also allow more than nearly 2 million small C corporations to benefit from the lower tax rates for the smallest C corporations. There are so many small C corporations because they were formed as C corporations before other entities such as LLCs became more widely used.

Among other provisions, my bill would also lower the potential tax burden on small C corporations that convert to S corporations.

The NFIB has written a letter supporting my small business tax relief bill, stating:

To get the small business economy moving again, small

businesses need the tools and incentives to expand and grow

their businesses. S. 1381 provides the kind of tools and

incentives that small business needs.

I want to talk about an opportunity for true bipartisanship that was killed by the Democratic leadership. The same day Chairman Baucus and I released a bipartisan bill that contained significant compromises, behind closed doors the Democratic leadership cherry-picked four provisions out of the larger bill Chairman Baucus and I agreed to. Those provisions had been agreed to in a meeting of senior Members of the other side only while Chairman Baucus and I were negotiating. I was extremely disappointed to see the Democratic leadership blow up the bipartisan deal Chairman Baucus and I reached. To pour a little salt into the wound, the Democratic leadership then prohibited any Senator on either side of the aisle from even offering an amendment to improve a bill that he hijacked. One of the four provisions the Democratic leaders cherry-picked is Build America Bonds. If it had been just me drafting the bill, I wouldn't have included this provision. However, for the sake of bipartisanship and compromise in the context of a much larger bill, I reluctantly agreed that putting this provision in the bill would not cause the overall bill to lose my support. Build America Bonds is a very rich spending program disguised as tax cuts. Bloomberg reported that large Wall Street investment banks have been charging 37 percent higher underwriting fees on Build America Bonds deals than on other deals. Therefore, American taxpayers appear to be funding huge underwriting fees for large Wall Street investment banks as part of the Build America Bonds program.

Democratic leadership has said the Build America Bonds program is about creating jobs. I wanted to know whether it is about lining the pockets of Wall Street executives. So last week I asked the Goldman Sachs CEO a number of questions about these much larger underwriting fees subsidized by American taxpayers. I expect to have that discussion shortly.

Turning back to the bill being debated this week, the Thune amendment, which incorporates many of the provisions from my small business tax relief bill, provides substantial small business tax relief and should be adopted.

In this bill, I hope we can all work toward improving our economy, not through more government but by letting the engine of job creation, meaning small business, keep more of its

own money in the form of substantial small business tax relief.

I yield the floor.

Mr. President, I have at the desk amendment No. 3337. I ask for its immediate consideration.

Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

Mr. President, this is the Sessions-McCaskill amendment, offered with Senator McCaskill, my colleague from Missouri. It is a bipartisan amendment, and it is one that I think is very important. I hope my colleagues will give it serious consideration. We have close to enough votes to make it law. I am absolutely convinced it is one thing that will work to reduce the surging deficits in our country.

The week before last, I traveled my State of Alabama--25 stops, 6 days of travel. People continually expressed to me their concern about the financial future of our country. They want us to do something about it.

I heard some of my colleagues express things like: This is just populist anger. It will pass off. We need to keep a cool head here. We don't really have to change how we do business. Things are going to work out somehow, someway, although nothing in the numbers show that.

Mr. Bernanke, the Chairman of the Federal Reserve, said last week in his testimony before Congress that our path is unsustainable. That is not the first time he said that. Virtually every economist who has opined in the last 6 months or more on our economy has said our spending levels are unsustainable and threaten the viability of our country's economic system. It is very troubling. We all know that, and we do not need to go into a whole lot of discussion about it.

The gross debt of our country has grown to approximately $12 trillion--the highest in our Nation's history. Some of this is internal debt. We owe Social Security and Medicare and other trust funds that may be in surplus. But we also owe trillions on the public debt--the amount of debt this country owes outside the government. Within 5 years our public debt will double, and in 10 years the public debt will triple. I will show a chart on that point before I go into the details of it. One of the consequences of the public debt is that we pay interest and we have to get nations or individuals to loan us their money by buying our Treasury bills, bonds and notes. When they give us their money, this is not free. We have to pay them interest on all of the debt we run up. This bill that is on the floor today will add to the debt again because it is not paid for.

This chart is what we get in stunning numbers. It shows that in 2009, interest on the public debt--the debt we owe to people outside our government--was $187 billion. The Congressional Budget Office scores it based on the 10-year budget President Obama submitted to us. If his budget is in effect for 10 years, the deficit would go up every single year. The debt will continue to go up every single year, and in the outyears the annual deficits will approach $1 trillion each year. The interest on the debt in 1 year would be $799 billion. That is well above the current defense budget. Aid to education is $50 billion or $60 billion. State and Federal aid to highways last year and the year before last was $40 billion. Mr. President, $800 billion in interest in 1 year? It is a stunning number, a breathtaking number. It is going to crowd out all kinds of plans some of my spending colleagues would like to effectuate in future years because we are not going to have the money or else we are going to inflate the currency and damage this economy in a most systemic way.

This disturbing trend of higher and higher deficits and deficit spending shows no sign of stopping. As of September 30, the end of our fiscal year, we finished with a record $1.4 trillion deficit. That is more than three times the highest deficit we have ever had. It is projected that as of September 30 of this year we will have a $1.4 trillion or $1.5 trillion deficit this year, which would be the highest ever again in consecutive years. It is stunning. We cannot continue to spend the way we are spending.

Between 1990 and 2002, however, Congress took some steps that actually worked to help get us out of a spiral of spending deficits. It was successful. What we did was we passed statutory caps on discretionary spending only, not Social Security, Medicare and those kinds of programs. We kept it to 1 to 2 percent growth each year. As this chart shows, these caps led to a surplus. The chart is upside down really. These are the surplus years. These are the deficit years. During these years, we begin to show a decline in deficits, all the way to the surpluses. When it expired, it jumped up again. This looks like a high deficit, and it was a very high deficit in 2004. That was about the highest, at that point $400 billion.

I just made the point that this past fiscal year, it was $1,400 billion and next year it is going to be $1,500 billion. We lost some discipline when we allowed those statutory caps or spending levels to be breached and go away.

This amendment Senator McCaskill and I have offered both restores and strengthens the procedures that were proven to work in the 1990s. It would create 4-year discretionary spending caps or limits, and it would set those limits at the level of the fiscal year 2010 budget resolution Congress passed last year.

Last year, we passed a budget resolution, not 10 years as proposed by President Obama but 5 years. It is currently in effect. One of the things you learn around here is the only part of the budget that has any teeth is the year you are in. The discretionary spending on the omnibus bill that covered half the appropriations bills contained an increase of 12 percent. We are not doing a very good job at that. The budget has no teeth in these outer years. The amendment proposes, though, a fairly responsible spending increase of 2 percent or so a year over these 4 years.

One could say: Senator Sessions, your State is cutting its budget. My State is having to reduce its budget. My city is reducing its budget. My county is reducing its budget. My family is reducing our budget. Why can't you guys reduce the budget? And the answer is, we can, of course.

Some have suggested and the President has suggested that we should have a freeze on the budget, which I would support. But I am just saying to my colleagues, last year our discretionary spending accounts had double digit increases; if we pass this amendment so that we have a statutory limit of 1 to 2 percent increases for the next 4 years and it is subject to a two-thirds vote point of order in the Congress if there is a proposal to go above that on the basis of some emergency need, I think we will have a much better chance of making the kinds of tough decisions to contain this ever-growing spending level than we have been doing in the last several years.

The Omnibus appropriations bill that passed last year increased Federal spending 12 percent in 1 year. That is a lot. At 7 percent, your money will double in 10 years. At 12 percent, the spending in those accounts would double in 6 or 7 years, no doubt about it, unless something is done about those trends.

I think this legislation Senator McCaskill and I have offered will get us there. I was pleased to see that 17 Democratic Senators voted for the bill because I think there is a growing bipartisan consensus that we can do better.

A 2-percent containment in the growth of spending will not cause the United States to sink into the ocean. We are still going to exist. The American people are still going to have a government in Washington. There are still going to be bureaucrats here to take care of us if we just have a 2-percent growth in the discretionary account instead of 12 or whatever that number was last year.

I note that the President suggested freezing some of the accounts. Though

there are some very significant gimmicks in it that make it much less tight than it would appear from his State of the Union Address, it still indicates that the President himself knows we have to reduce our spending, and in some of these accounts we could easily freeze them with no damage to our Nation. I salute him for that.

This bill would create spending limits, not based on what Jeff Sessions says the limit should be, but these are the limits in the President's budget, that first 5 years of it that he proposed and that Congress passed last year. We would be simply saying this would be a hard limit on how much we can spend. Now if we need to spend more than that on an emergency, we would have to have strong support in the Congress to create an emergency designation to spend above that. We have been able to do that many times in the past when a true emergency arrived.

Some say: Jeff, you are focusing too much on the discretionary spending. Entitlements are bigger--Social Security, Medicare, those kind of things--and they are a bigger problem than discretionary spending. Well, there are three reasons we have to act on discretionary spending. One is that while entitlements, such as Social Security and Medicare, are large, they actually have a net surplus right now. In fact, Congress raided $137 billion from Social Security in fiscal year 2009 to pay for other things, such as the $800 billion stimulus package that we passed--that Congress passed--last year.

Of course, a $137 billion Social Security surplus won't pay for the Congress's $800 billion stimulus package, so where did the rest of the money come from? We borrowed it on the world market, on which we are paying interest. And what about the Social Security surplus; is that free money? No, it is not, because Social Security is heading to default. When we take the Social Security surplus into the U.S. Treasury and spend it on increasing discretionary spending by 12 percent, we give them back a debt instrument, an IOU--a Treasury bond.

I am told they are in some location in West Virginia. I am sure the chairman of the committee knows that but I want to go out and see them. They have notes out there, Treasury bills, evidencing the debt of the U.S. Treasury to the Social Security Administration. As soon as Social Security goes into deficit, it is going to call those notes. So it does not make much difference whether you borrowed it from Social Security or you borrowed it from the public. The interest rates are very similar, too. The government pays interest to Social Security and Medicare, when Medicare has a surplus.

It is projected that Congress will raid another $90 billion in 2010-- this year we are in--to pay for things such as this omnibus bill that is on the floor: for increased transportation and HUD funding, which went up 23 percent; create more funding for the State and foreign operations accounts, which went up 33 percent this year, for a record $1.4 trillion deficit last year, and a projected $1.4-plus trillion for fiscal year 2010. All of that was driven not by deficits in Medicare and Social Security but from a discretionary spending account.

Our appropriators are always saying the problem is all Social Security and Medicare. But the truth is, almost without exception, we have had surpluses in those accounts and we are spending that to supplement our general fund spending. We give evidence of debt back to our seniors from Medicare and Social Security, which the actuaries tell us, without any doubt, will soon be in deficit. We are going to call those notes, and the Treasury will have to come up with it.

So there is no free lunch. Nothing comes from nothing. If you spend money you don't have, you borrow it from somewhere. You can print money, I suppose, and devalue the currency. But everybody has the value, and the money in their pocket is devalued. It is the same as a tax. There is no way to do this in a free way. We have been irresponsible, and I think the American people are correct.

When I go to townhall meetings, what can I tell them? Oh, we didn't do anything wrong. The Senate and the House, we have been handling your money fine, my fellow Alabamian. We have done great. Don't complain. Don't get mad. You will get over it.

We have an $800 billion interest payment coming up in 2019 and our children and grandchildren are going to pay that. Yet when Senator Bunning asks that unemployment insurance be paid for out of this unspent $800 billion stimulus and not add it to the debt, which our grandchildren will pay, he was able to say with some personal conviction--with 42 grandchildren--that he wasn't going to vote for it, and he didn't. He didn't support it and he didn't agree to let it pass without an objection. He said we should have paid for it, and we could have paid for it out of the stimulus.

Another reason I think we need to focus on discretionary spending is because, unlike the entitlements, such as Social Security and Medicare, discretionary spending has overhead. There is some, but really very little overhead in Social Security and Medicare. And we can do better. I know Chairman Baucus has worked on Medicare overhead. I don't know how much can be squeezed out of Social Security overhead; not a lot, because most of it is that check that goes out to seniors, who count on it every month. But there is overhead in discretionary spending--all the things we spend our money on. Trust me, I have been in the Federal Government; I have worked there. I know it can be made more efficient.

This past year, we increased spending on the Department of the Interior and EPA by 17 percent total. I think the EPA account went up 33 percent. In 1 year they got a 33-percent increase in their budget. And by the by, this does not include any of the $800 billion stimulus funds that were allocated--about half of which has gone out. It doesn't include that. EPA got money out of that, Interior got money out of that, highways got money out of that--large amounts. We are seeing unprecedented increases in spending in these accounts.

Consider the Department of Agriculture. I remember people criticized President Bush for spending too much money on Agriculture. If you look at his Agriculture budget over the 8 years he was President, it averaged less than a 2-percent increase. Last year, our Agriculture budget--not counting the stimulus package, which sent a large amount to Agriculture--increased 15 percent. I always try to support the Agriculture budget, but I could not support that. That would double the entire agriculture spending in, what, 5 years, at compounded increases. It is not responsible. We have to do better.

The American people, I think, are upset. This recent CNN poll asked a tough question of the voters in America: Which of the following comes closer to your view of the budget deficit--the government should run a deficit if necessary when the country is in a recession and at war, or the government should balance the budget even when the country is in a recession and is at war? Sixty-seven percent said balance the budget, you guys. Because they have heard these excuses before. They have heard all of it before. What they are seeing is red ink as far as the eye can see, with record deficits above anything we have ever seen. That is what I am hearing when I go out and talk to my constituents. And frankly, I am glad I don't have to defend having voted for this stimulus package. I am glad I don't have to defend the $700 billion Wall Street bailout, and $182 billion going to AIG. They sold off one of their most profitable companies, or are talking about it, I saw in the paper today, and they are going to bring in $35 billion. They are going to use a chunk of that to pay down some of that $182 billion debt. But if they keep selling off what they have, how will they have any money to pay the rest of it? I think they are not going to pay the rest of it.

Finally, I will add that spending billions, adding billions to the baseline budget, makes a big difference. I made this chart for the DOD appropriations bill. It is an interesting little chart. I hope my colleague can pay a little attention to this weird, fine print chart. It shows what happens when there was gimmicked up on the bill an $18 billion add-on, all unpaid for. There was $18 billion added to the Defense bill. If this gets in as baseline spending, which is what it tends to do, then next year when you advertise how much you increase the Defense bill, you have this $18 billion in and it adds up, so that next year it is not just $18 billion, it is

the $18 billion additional money that is in the baseline from the previous year and then you add another $18 billion. Let's say, hypothetically, you jack it up each year by $18 billion, and the net deficit is $36 billion; and then next it is $36 billion plus $18 billion; and the next year it is $54 billion plus $18 billion; and the next year it is $72 billion plus $18 billion. You carry that out to the tenth year, and it is $162 billion plus $18 billion, or $180 billion extra for the Defense budget in 1 year, which is about $990 billion over 10 years.

So an $18 billion addition, or failure to contain the growth in a discretionary account, has tremendous ramifications over the years. It is this kind of psychology that has led us into this mess. Some of our appropriators and others in this Congress, I think, have felt a thrill if they can beat the limit on their account. If they have been given an account, and they get $80 billion or $100 billion to spend they can figure a way to gimmick it up $18 billion or $5 billion or $7 billion, and they can maneuver it through and then tell you when the bill hits the floor: Well, if you don't vote for it, Sessions, you are against agriculture and people back home are going to attack you because you voted against agriculture. And I say: Well, Mr. Senator, you put too much money in there. I can't vote for it; there is too big an increase. Therefore, you are either for agriculture or you are against agriculture.

What they said to Senator Bunning down here the other night, when he said unemployment insurance should be paid for, was: You are against unemployment insurance. You do not want people to have any unemployment insurance. That was absolutely false. They repeated it over and over and over again. But he stood like a solid rock and he didn't give in. He said: I am not agreeing to it because you could pay for it, and it is increasing the debt on my 42 grandchildren. He didn't agree to it.

Well, every now and then somebody stands up in this Senate and says: I have had enough. I am not going to say yes this time. I respect him for the courage he showed.

The Committee for a Responsible Federal Budget, which is a bipartisan group in DC, issued a report not long ago that said that freezing all nonwar-related discretionary spending next year could save us $60 billion in 1 year, and it will set up a new baseline that would save us--as this chart which creates a new baseline mentality shows--$600 billion over 10 years. That is a lot. Even in Washington, $600 billion is real money. On the other hand, the committee stated that if we allow discretionary spending to grow at the projected rate of GDP growth instead of inflation, it would cost us $1.7 trillion more over the next 10 years.

This is a nonbiased group. I don't think anybody would fundamentally disagree with that. So it does make a difference how much money we spend on every single account, on every single funding in an appropriations bill that comes through this Senate.

Can we get bipartisan support for having a tougher line and containing spending? I think the answer is absolutely we can. Why is there a conflict? The simple fact is the 5-year binding caps that were passed in 1990 had broad bipartisan support. In fact, a number of currently serving Republicans voted for them and 10 of our currently serving Democratic Senators did also, including Senator Reid, our Democratic leader, and Senator Inouye, the chairman of the Appropriations Committee. He voted for them in the 1990s.

If we think this through, we have every reason to believe we can get there. The 5-year spending cap that passed in the 1990 budget deal had even stronger bipartisan support. It passed again in 1997. I know Senator Baucus was here then, and it passed 85 to 15, with 44 currently serving Senators supporting it, and 26 of them were Democrats. Senators Reid, Durbin, Conrad, and Inouye all voted for them. If we could do it in 1990, and again in 1997, there is no reason we cannot do it now. In fact, I and my staff have met with numerous groups across the political spectrum, including the Brookings Institute, the Committee for Responsible Federal Government, the Urban Institute, the Progressive Policy Institute, the Concord Coalition, and the U.S. Chamber of Commerce--everybody we met with has said getting a handle on discretionary spending is essential.

Although AARP, the Association of Retired Persons, initially expressed opposition to the amendment, I believe we have addressed their concerns. Their chief concern was that we would not separate defense and nondefense spending, which would let the defense spending raid nondefense accounts. However, we have separated them, so that is not a danger.

Of course, one criticism some might give to the bill is that it raises the threshold for waiving--breaking the spending limits from 60 Senate votes to 67 Senate votes, and they say that is just too restrictive. But we have to raise this threshold because we have a 60- vote situation now and we have been able to muster 60 votes to pass every kind of possible emergency bill, and some of those clearly were not emergencies. It takes 67 votes in this Chamber to make a change to the Senate Journal, but we can max out the Senate's credit card with 60 votes. Something doesn't seem right about that. I think, with the seriousness of our situation, this would be a good step.

Furthermore, the fiscal year 2010 budget resolution already accounted for about $10 billion per year in emergency spending, which we have allowed to remain in this amendment. Any emergencies for which that is inadequate should be able to receive the support of 67 Senators--if we have an emergency. In fact, all the disaster relief emergencies, those kinds of emergencies since the emergency designation was created in 1990 to try to contain spending, have received support of more than 67 Senators. Isn't that interesting? All of our emergency designations for hurricanes and earthquakes and fires and storms and the like have received more than 67 votes. So I think it is just not a good argument to say we can't respond to a legitimate emergency.

The prospect of massive Federal spending is hurting jobs and growth. In a recent editorial in the Wall Street Journal, Stanford University economics professor Michael Boskin stated:

The explosion of spending, deficits and debt foreshadows

even higher prospective taxes on work, saving, investment and

employment. That not only will damage our economic future but

is harming jobs and growth now.

China and other countries may not be able to keep financing our debt in the future even if they would like to--which I really think they won't. Professor Allan Meltzer, a well-known scholar on the Federal Reserve and monetary policy, noted in a column in the Wall Street Journal that our current and projected deficits are too large relative to current and prospective world savings to rely on other countries being able to finance them for the next 10 years. In other words, there may not be enough surplus money in the world to buy these debt instruments we are going to have to issue. In fact, a recent Washington Times editorial entitled ``Spending to a Depression'' notes that, since China and other countries are trying to reduce their holdings of dollars, we will have to rely more and more on U.S. banks to buy our bonds, which will decrease capital available for lending to businesses.

On an airplane today, coming back from Alabama, I read an article that made reference to the fact that when the Federal Government puts out this much money and interest rates become higher than they have been. They are currently extraordinarily low, and banks are now buying Treasury securities at 3.6 or 3.7 percent interest for 10-year Treasury notes. Instead of loaning to local businesses, banks can get the money from the Fed at less than 1 percent and they can buy a Federal Government debt instrument for 3.5 or 4 percent and not have to loan it to some businessperson who might be a higher risk. We are crowding out resources necessary for economic growth. This is a reality.

In a Budget Committee hearing on budget reform on November 10, former Comptroller of the Currency and GAO head David Walker testified that by 2040, 30 years from now, we will have to double taxes just to keep up with current commitments. Can you imagine that? The way we are spending, we are going to have to double taxes in 30 years. He stated that in 12 years, interest will be the single biggest line item in the entire budget, even assuming interest rates do not change from today's

low rates. But they are going to go up. Everybody knows that. Some are predicting the kinds of interest rates we had in the late 1970s. I truly hope that does not occur, but many people believe we do not have any idea how high interest rates could surge when the whole world, including Europe and other places, is spending money it does not have and attempting to borrow in the marketplace to have that happen. Mr. Walker also said that deficits are the public's largest concern by 20 points, in opinion polls.

In a Financial Times editorial in May of last year, Mr. Walker warned that the United States is in danger of losing its triple-A credit rating. Moody's made that clear. Moody's stated that the United States is in danger of losing its triple-A credit rating. Pierre Cailleteau, the chief economist at Moody's, stated that, unlike several years ago, ``Now the question of a potential downgrade of the U.S. is not inconceivable.'' Under the most pessimistic scenario put forth by Moody's, the United States could lose its top rating in 2013--3 years from now.

I was very pleased we had strong bipartisan support for the amendment previously. By allowing us not to apply these budget limits we passed last year to the current year, it gives some relief to our Members of the Senate who complain that next year we will start cutting spending but we should not this year. We will give a little bit there, although it will mean we will not save as much money for sure. But I really believe we need to pass this legislation. I truly hope we can. We only need three or four more votes to make it a reality. I count now, with the ones who voted for it before and a new Senator in the body, we will have 57 votes. We need 60. The situation has not gotten any better, and I am hoping my colleagues will look at it afresh and that we might be able to reach that number. It will make a difference. It made a difference in the 1990s and led to an actual surplus. I believe it could help us again this time. We have much more serious problems this time. We have more challenges this time. But it could make a very significant difference in our spending level. It would really be a statement to the entire financial world that we are beginning to take some steps and that next year we are not going to have 12 percent increases in spending for discretionary accounts but we are going to hold it to the 1- or 2-percent increase level. I think that might have some psychological improvement in our entire financial condition.

I apologize to the fine chairman of the Finance Committee for taking this long, but I really believe it is an important issue. I am so hopeful we are getting close to getting the votes to take this positive step.

I yield the floor.

Mr. President, did the Senator make a budget point of order?

I thank the Senator.

Mr. President, I ask unanimous consent that the following staff be allowed the privilege of the floor during consideration of the pending bill: Randy Aussenberg, Aislinn Baker, Brittany Durell, Dustin Stevens, Greg Sullivan, Max Updike, and Ashley Zuelke.

Mr. President, I now call up my amendment by number and urge its consideration.

Mr. President, Martin Luther King, Jr., once said:

Life's most urgent question is: What are you doing for

others?

Pretty much all of us came here to the Senate to work on that urgent question. Pretty much all of us came here to help other Americans.

On a number of levels, the legislation before us today is urgent legislation. The legislation before us today is urgent because it would prevent millions of Americans from falling through the safety net.

The legislation before us is urgent because it would extend vital safety net programs that expired yesterday.

The legislation before us is urgent because it would put cash in the hands of Americans who could spend it quickly, boosting economic demand.

The legislation before us today is urgent because it would extend critical programs and tax incentives that create jobs.

The legislation before us today is urgent because it is important that we here can do this for other Americans.

Since the recession began, more than 7 million Americans have lost their jobs. The unemployment rate remains nearly 10 percent. For Americans without a job, this great recession is a great depression. If you do not have a job, it is a depression.

Last week, with a solid bipartisan vote, we passed legislation to help create jobs. We can and should do more, and by extending this package of vital provisions we can do just that.

The provisions in this bill are important to American families. They are important to communities that have suffered a natural disaster. They are important to businesses competing in the global economy. They are important to furthering America's commitment to energy independence.

The need is urgent. Yesterday many of these important provisions expired. Millions of Americans are being put at risk. The expiration of these provisions has left gaping holes in the safety net.

Among the provisions that expired yesterday are these: expanded unemployment insurance benefits; COBRA subsidies to help people keep their health insurance; a provision that keeps folks right at the poverty line from losing their benefits; the small business loan program; the temporary measure to prevent a 21-percent cut to doctors under Medicare; the Flood Insurance Program; the Satellite Home Viewer Act.

Unless we reinstate the programs in this bill, there will be real world consequences for the people who depend on these programs today.

Take unemployment insurance. This bill would extend the program for expanded unemployment benefits. These benefits expired on Sunday. The bill would extend what is called Federal emergency unemployment compensation. This bill would extend 100 percent Federal extended benefits. That is a program where State governments normally have to pay 50 percent. We would also extend the additional $25 a week for each beneficiary receiving unemployment benefits.

According to the National Employment Law Project, 5.6 million people are currently benefiting from one of the Federal unemployment benefits. Mr. President, 5.6 million people today benefit. Between March and November of last year, we distributed nearly $8.3 billion in additional benefits through the additional $25-a-week supplement.

For example, my office received word about one unemployed Montana worker who had been living in a homeless shelter for more than a month. This Montanan used emergency unemployment compensation benefits to move closer to an out-of-State relative. The relative helped the Montanan through this difficult time. With the help of emergency unemployment compensation benefits and the help of family, this Montanan was able to find work again.

Unemployment benefits also make good economic sense. The nonpartisan Congressional Budget Office estimates that every dollar spent on unemployment benefits generates up to $1.90 in additional gross domestic product. That is $1 to $1.90. This makes unemployment benefits one of the most cost-effective policies for stimulating the economy.

By helping our unemployment workers through this long recession, we help to keep the neighborhood gas station operating. We help to keep a house from foreclosure. And we help to keep our economy from further damage.

We must act immediately to help the more than 1 million people who lost their benefits yesterday. My heart goes out to them and to their families and hope that they can hold on while we work to clear up this mess, in order to clear this bill and bring them the help they deserve and on which they have been depending.

A second vital program in this bill that expired yesterday is a program that provides a tax benefit for COBRA health benefits. What is that? That is the program that helps workers who lose their jobs to keep their health insurance. When workers lose their jobs, they lose more than just their paychecks. Unfortunately, they often lose their ability to afford health care coverage as well.

Today, roughly 60 percent of the nonelderly population receives health insurance through their jobs. In most cases, unemployed workers have the right to keep their work coverage for up to 18 months through the COBRA program. But to receive COBRA health benefits, workers must typically pay all of the premium costs, plus an additional 2 percent for administrative costs; that is, they pay 102 percent. That is not right.

For a family of four, the average monthly COBRA premium is $1,100. For most people out of work, that is simply unaffordable. How can a family who is out of work pay health benefits at a rate of $1,100 a month? They cannot do it.

The Recovery Act helped unemployed workers and their families to cover the costs. This assistance helped millions of unemployed workers and their families to maintain health insurance while they look for a new job.

Unfortunately, COBRA assistance expired yesterday, and that is the provision that gave a 65-percent subsidy. It expired yesterday. This means workers who lose their jobs today or afterwards will not be eligible for COBRA assistance. They can still buy health insurance through the COBRA program if they can find the dollars to pay full freight. That is 102 percent of their current premium. For many folks, that is simply unaffordable. Unless we act, the ranks of those living in fear without health insurance will grow even more.

Third, without this legislation, physicians who treat our seniors and military families will face an immediate 21-percent pay cut. That is right, an immediate 21-percent cut in pay. That is more than families lost in net worth during the worst of the recession in 2008, and that is nearly twice as much as home prices fell last year.

This cut would force doctors to stop seeing patients. This cut would mean less access to care for our parents and our grandparents. This cut would mean our doctors would be forced to cut their own costs, potentially forcing them to lay off staff.

Thankfully, the administration announced on Friday it will use its existing authority to delay the effect of this cut for the immediate future. But that is not going to last very long. We cannot delay action any longer. Seniors, military families, and physicians deserve better.

In Montana, 2,000 doctors serve 140,000 seniors who depend on Medicare for lifesaving health care. Montana has 32,000 military families who should not be turned away from their doctor's door either. They deserve access to the best health care we can give them. They deserve a Congress willing to put politics aside and put them first.

This bill before us today will avert the 21-percent cut because of the so-called sustainable growth rate. We adopt here another short-term stopgap. Next time, we hope and expect that we will come back to a long-term solution. We must find one.

By exempting part of the SGR from the new statutory pay-go rules, the Senate recently recognized that a long-term solution will require a short-term investment. The House followed suit. I hope this push will aid us in finding a permanent solution for the sake of our seniors' continued access to medical care.

A fourth provision in this bill affects the 2009 poverty guidelines. Why is this important? Let me tell you. Dozens of programs are available to help lower income Americans. We all know the important role these programs play in keeping those less fortunate fed, keeping them healthy and safe. I am talking about programs such as Medicaid, the Supplemental Nutrition Assistance Program--formerly known as food stamps--the School Lunch Program, and the Low Income Home Emergency Assistance Program, otherwise known as LIHEAP.

Eligibility for these and many other programs is based on the Federal poverty guidelines. These guidelines are updated every year for inflation. But the update for this year, 2010, will cause people who are currently eligible for and benefiting from these programs to lose their eligibility. You may wonder why at a time of economic crisis poverty-based program eligibility would decrease. You might think that sounds counterintuitive.

One of the effects of the current economic crisis is that inflation went down. That means the average cost of everyday things, such as clothes, transportation, and rent, is less than it was the year before. However, because the Federal poverty guidelines are based on the average cost of everyday goods, the poverty level for 2010 would be less than it was for 2009. This is the first time in the history of the guidelines that such a decrease would occur. That, clearly, is not the right outcome. We should not make fewer people eligible for poverty- based programs at precisely the time when those safety-net programs are serving the very purpose for which they were created. Safety-net programs are there to help people when times are tough. That is their purpose. But there is a simple solution: we can simply leave the guidelines developed for 2009 in place. That way, people who were eligible can remain eligible. Leaving the 2009 guidelines in place would mean people would not lose their health care by being kicked off of Medicaid. It would mean families would not go hungry because they lost their eligibility for a number of nutrition programs. It would mean low-income folks could still heat their homes this cold and snowy winter thanks to LIHEAP. Keeping the 2009 guidelines in place would not increase eligibility. It would mean we would avoid pulling the safety net out from under the people it is there to protect.

Fifth, for individuals and families, this bill provides much needed tax relief in a time of economic uncertainty. For example, many students don't have the books or supplies they need. Some

teachers have to buy classroom supplies using money from their own pockets, if you can believe it. This bill extends the expense deduction for teachers buying school supplies for their classrooms. It extends the qualified tuition deduction to help with college costs. The bill provides much needed relief to families who have suffered from natural disasters. It extends a package of disaster relief provisions developed to address all federally declared disaster areas with immediate, reliable, and robust tax relief.

It extends important business provisions to help create jobs and make our companies competitive in a global economy. America counts for one- third of the world's investment in scientific research and development. We rank first among all countries, but relative to the size of our economy, America is in sixth place. The trends show that maintaining American leadership in the future depends on an increased commitment to science and research. Yet our R&D tax credit expired at the end of last year. This will put American corporations at a competitive disadvantage. Corporations are unsure if they will be able to obtain the R&D credit next year, and they need to plan for the future.

American financial services companies successfully compete in world financial markets. We need to make sure the U.S. tax rules do not change that. This legislation extends the active financing exception to subpart F. In so doing, it preserves the international competitiveness of American-based financial services companies, while including safeguards to ensure that only truly active businesses benefit. This provision will put the American financial services industry on an equal footing with foreign-based competitors that are not taxed on active financial services income.

Several energy tax incentives also expired at the end of last year. This bill extends those incentives to encourage continued investment in technologies that promote energy independence. For example, the bill extends incentives for new hybrid battery technology and the construction of new energy-efficient homes.

Sixth, in addition to these important provisions that provide direct assistance and job creation, the bill includes other proposals that will provide relief for businesses and individuals. One such provision is pension funding relief. These days, American employers are faced with the need to make higher pension contributions. Several factors have combined to require these higher contributions: There is the funding changes of the Pension Protection Act of 2006, there is the slide in the stock market in 2008, and then there is the ensuing great recession. These requirements for higher contributions are coming upon employers just when they are facing lower asset values and lower cash flow. Meeting these requirements could divert resources employers could use to keep workers on the payroll.

We addressed this bind temporarily in the Worker, Retiree and Employer Recovery Act of 2008, but employers are still facing the prospect of closing plants and stores. Employers are still faced with the possibility of terminating workers in order to make up for lost asset values. The bill contains additional temporary, targeted, and appropriate relief for these employers. At the same time, the bill still maintains the pension and security system.

Seventh, this bill would also extend several important health provisions that expired at the end of 2009. Notable among these is the exceptions process for Medicare therapy caps. Extending this provision will help ensure Medicare beneficiaries will continue to receive access to the therapy services they need. Several rural policies are also extended.

Eighth, these tough economic times have hit the States hard as well. So included in this bill is a 6-month extension of the additional Federal financial assistance for State Medicaid Programs. This will allow States to plan for their next fiscal year with the certainty of continued help from the Federal Government. Additional Federal Medicaid match money--known as FMAP--helps the economy grow. According to economist Mark Zandi, this funding has return on investment of about $1.40 for every dollar invested. The Nation's Governors have repeatedly asked for an extension of this Federal assistance, and this bill answers their pleas.

With so many Americans out of work, our country needs Congress to enact this legislation. This bill continues valuable tax incentives to families and businesses that will help them in these difficult economic times. The bill sustains vital safety-net programs that will also help foster economic growth.

As I said at the outset, this is not just ordinary legislation; this is urgent legislation. It would prevent millions of Americans from falling through the safety net. It would extend vital programs that expired yesterday--expired yesterday. It would put cash in the hands of Americans who would spend it quickly, boosting economic demand. It would extend critical programs and tax incentives that create jobs. It is an important bill that we here can do for other Americans. So let's help America's businesses to create more jobs. Let's join to work across the aisle on this commonsense legislation, and let's enact these tax incentives and safety-net provisions into law.

Mr. President, I yield the floor, and I suggest the absence of a quorum.

Mr. President, the Senator from Arizona argues that unemployment insurance is a disincentive to jobs. Nothing could be further from the truth. I don't think anybody who is out of work and receiving unemployment insurance believes that payment is sufficient not to find a job. The payments are so much lower than a salary or wage would be, it is ridiculous. There are five unemployed Americans today for every job opening in the economy--five unemployed Americans who are looking for work but cannot find it. That is the case and has been the case for a long time. People are looking for work. They are not unemployed because they have a choice. It is because of the recession that struck and the economy. It is not because people don't want to work.

An additional point. Many of us asked the CBO to rank what measures would be most effective in helping the economy. The one they came up with was unemployment benefits because unemployment benefits generate about $1.90 in GDP growth for every $1 we paid out in terms of unemployment benefits.

I wished to make the point--and I don't know if the Senator meant this, but he strongly implied it, and I took him to mean that unemployment insurance is a disincentive for people to look for work. I don't think it is because the benefits are so low and so many are looking for work--it is the economy or recession that cost us jobs.

I appreciate that. I have a question. First of all, unemployment benefits in Montana are about $300 a month. That is all. It is $300 a month in Montana. I know doggone well that is not enough to keep anybody going very long. Lots of folks are looking for jobs, and they are not available. Failure to pass the extenders bill could be fairly stated as a job destroyer because there are so many people who have taken advantage of many provisions of the bill--for example, the R&D tax credit, which the Senator mentioned, and there are other provisions in the bill, such as the teachers expense, for example, and there is a deduction for tuition. Take unemployment. Say unemployment insurance was not continued. That would be a huge drag on the economy. If the provisions we are seeking merely to extend were not passed, it would be a job destroyer.

The President's office said, and many commentators have often said, our goal is to save or create so many jobs. It is hard to know what is saved or created sometimes. But we certainly want to save jobs too. We don't want the recession to be worse. Failure to pass this legislation is certainly going to cause tremendous hardship on a lot of Americans, and it would be a disincentive for the economy to turn around. It would be a disincentive for unemployment rates to come down to a lower level that we all find acceptable. Failure to pass this bill is a jobs destroyer.

I yield the floor.

Mr. President, I don't want to prolong this too long, but the

fact is, the President's Council of Economic Advisers has concluded this legislation; that is, the health care reform legislation which is not before us right now, actually would create jobs, new jobs. That is the conclusion of the economic advisers.

I appreciate the comments of the Senator from Alabama. He is concerned, as we all are, with our current fiscal situation, our debts and our deficits. I might add--this is not an excuse; it is clear we Americans have a problem that has to be addressed--other countries are in the same fix. It is not just America. But again, that is no excuse. Our deficits are high primarily because of the financial crisis, working our way through all that. The real test is whether we as a country, when times get better and incomes increase, live much more within our means. I certainly hope so. I know every Senator in this body hopes so.

More precisely, the Senator from Alabama seeks to place caps on the appropriated accounts. That is pretty much the same amendment the Senate rejected about a month ago; I think it was January 28.

I believe the pending Sessions amendment addresses matters within the jurisdiction of the Budget Committee. It therefore violates section 306 of the Congressional Budget Act. I will not raise that point of order at this time, but I believe the amendment does violate the Budget Act.

Furthermore, this subject is really more within the purview of the Appropriations Committee. I defer to the chairman of the Budget Committee to address this amendment in due course.

I also note that the Senator from Minnesota has been waiting very patiently to speak. We are all anxious to hear from the Senator from Minnesota, so I yield the floor.

No, I did not.

Madam President, is the Senator asking unanimous consent to set aside the pending amendment?

You wish to set aside the pending amendment?

Madam President, we are here to do the people's business. The folks in our home States elected us to do what is right. Most folks don't care too much about the process, as long as we get our job done and as long as it is reasonable, within the boundaries of reasonableness, and as long as they think we give the subject considerable thought. I think we agree that is true. I think it is largely true that most of the people would think: Well, gee, why don't you go ahead and pass that extenders thing you are talking about back there because it is the right thing to do.

People need to collect their unemployment checks. They need their health insurance. Some of these tax provisions need to be continued; otherwise, this is a job-killer action the other side is taking. It is a job destroyer. To not continue these provisions actually destroys jobs. That is not what we want to do.

On another matter: The Senator from South Dakota proposes an amendment to make a series of tax cuts for small business. I might say that some of these tax cuts, the ones he proposes, actually have merit. We in the Finance Committee hope to address small business tax cuts in a markup perhaps as early as this month. This is a jobs agenda. It is additional legislation to help create jobs, preserve jobs, and help the recovery come along a little more quickly.

The offset, however, that the Senator from South Dakota proposes is another matter. The Senator from South Dakota seeks to pay for his amendment by cutting funding from the Recovery Act, and that idea does not have much merit, at least not in this Senator's judgment. Pretty much the last thing we should do is to be seeking to cut the Recovery Act.

The nonpartisan Congressional Budget Office, the independent organization we rely upon around here--both sides of the aisle in both bodies--says the Recovery Act is working. The Congressional Budget Act says that in the third quarter of last year, for example, the Recovery Act caused between 600,000 and 1.6 million people to have jobs. That sounds as though it is working to me. The CBO also said these people had jobs who would not otherwise have had jobs. I, therefore, think we should not be cutting back on the Recovery Act; rather, we should let it work its will.

The investments the Senator from South Dakota seeks to cut in addition are largely within the jurisdiction of the Appropriations Committee and, thus, I will defer to the chairman of the Appropriations Committee who I think at the appropriate time will have quite a bit to say about this Thune amendment and will speak to it at greater length. I suggest that is an appropriate time to have a more lengthy discussion on this matter.

Madam President, I suggest the absence of a quorum.

Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, President Obama, in his press briefing this past Tuesday, June 23, 2009, made the following statement regarding his assessment of the first four months of the American Recovery and Reinvestment Act: ``I am not satisfied with the progress that we've made.'' I could not agree more with President Obama's assessment. Thus far, the $787 billion American Recovery and Reinvestment Act has fallen short on virtually every one of its advertised effects.

In the abbreviated debate leading up to the consideration of this bill, we constantly heard the mantra from my friends on the other side: JOBS, JOBS, JOBS! This stimulus bill was supposed to create jobs, jobs, jobs, but in the four months since the bill's passage, there are still no jobs in sight.

The architects of this bill made several bold claims in projecting the job effects of the $787 billion stimulus bill. First, they said that its passage would keep the unemployment rate from exceeding 8 percent. Second, they said it was going to create or save 3 to 4 million jobs. And third, they said that 90 percent of the new jobs created would be in the private sector.

So far, in all three of these areas, the actual effects of the stimulus bill have not lived up to the hype. Let us examine each of these areas one by one.

First, the stimulus bill was supposed to keep unemployment at or below 8 percent. In fact, the administration projected that in the absence of stimulus, the unemployment rate would peak at around 8.8 percent. However, four months into this program, the unemployment rate stands at 9.4 percent and rising--higher than the administration projected it would be in the absence of stimulus.

Just listen to President Obama's comments from his June 23rd press briefing to see which direction the unemployment rate is headed: ``I think it's pretty clear now that unemployment will end up going over 10 percent, if you just look at the pattern, because of the fact that even after employers and businesses start investing again and start hiring again, typically it takes a while for that employment number to catch up with economic recovery. And we're still not at actual recovery yet. So I anticipate that this is going to be a difficult, difficult year, a difficult period.''

When asked how high he thought the unemployment rate would go, President Obama responded, ``I am not suggesting that I have a crystal ball. Since you just threw back at us our last prognosis, let's not engage in another one.'' Once again, I have to agree with President Obama's assessment.

As the unemployment rate continues to go up, that means job numbers continue to go down, which brings me to my next point: The administration projected that the stimulus bill would create--or save-- between 3 and 4 million jobs by the end of 2010. While we've got a long way to go before the end of 2010, the prospects of the stimulus bill living up to this job creation estimate seem very unlikely. Before we look at the actual job numbers for the past few months from the Department of Labor, let me discuss the source of the administration's projections.

In January, Christina Romer, who is now Chair of the Council of Economic Advisers, and Jared Bernstein, who is now the Chief Economist for the Vice President, released a 14-page paper titled ``The Job Impact of the American Recovery and Reinvestment Act.''

In this document, Romer and Bernstein repeatedly asserted that a package of the size discussed by the President-Elect would be expected to create between three and four million jobs by the end of 2010, which would more than meet the President-Elect's goal of creating or saving 3 million jobs by the end of 2010. In a follow-up report in May, the Council of Economic Advisers attempted to explain how the administration planned on measuring the number of jobs created or saved by the stimulus. This document articulated that all recipients of stimulus funds for government investment will be required to provide ``recipient reports'' estimating the number of jobs retained or created directly by the funds.

Then, to arrive at the total estimate of jobs created or saved by the stimulus, the job numbers from the recipient reports will be added to the administration's estimate of jobs created or saved through tax cuts, State fiscal relief and transfer payments. These estimates will be derived from administration-produced multipliers and macro-economic modeling.

Sounds pretty simple, don't you think? Unfortunately, there are some problems.

The first problem is that the most accurate part of these job estimates will be from the recipient reports, and since the stimulus bill included approximately $271 billion in government investment spending, these reporting requirements cover just over a third of the $787 billion of stimulus funding.

While the job estimates from these recipient reports should be an accurate representation of actual jobs created by the stimulus, the administration even admits that ``there will likely be inconsistencies and measurement error across the individual reports.''

This leads us to the second problem: for the other \2/3\ of the bill, in the administration's own words, ``There is no mechanism available for collecting data on actual job creation from these parts of the Act.'' So, for \2/3\ of the bill, the job estimates are basically going to be guesswork from the administration based on mathematical formulas.

Since President Obama's ``First 100 Days'' address on April 29, 2009, we have heard plenty about the 150,000 jobs that have been created or saved so far by the stimulus.

As I have pointed out, it is impossible to verify these numbers with any degree of certainty, and the administration can not even give an estimate of how many of the 150,000 jobs were created and how many were saved.

What we can verify are the actual job numbers produced on a monthly basis by the Department of Labor. According to the Department of Labor, in the 3 full months March, April, and May, following the enactment of the stimulus bill, the U.S. economy has lost over 1.5 million jobs. In the first 5 months of 2009, the U.S. economy has lost 2.9 million jobs. These are the painful numbers that really matter.

As Jared Bernstein, Chief Economist for the Vice President, said on June 8, 2009, ``Most importantly from the perspective of American families, the nation's employers are still shedding jobs on net.''

So, the advertised effect of the stimulus on unemployment was clearly wrong, and the job claims resulting from the stimulus are unverifiable. Now, how about the claim suggesting that 90 percent of the jobs created by the stimulus will be in the private sector?

To be clear, this claim was first made in Romer and Bernstein's January report, and the President himself has repeated this assertion. Unfortunately, this projection--like the first two--is missing the mark by a long shot.

Let's look at the actual data from the Department of Labor once again. In the first three months since the stimulus bill has been the law of the land, the private sector has lost nearly 1.6 million jobs. In those same 3 months, government payrolls have actually expanded by 81,000 jobs. Similarly, in the first 5 months of 2009, while the private sector has lost over 3 million jobs, the government has gained 96,000 jobs.

While I am encouraged to see at least one sector of the economy experiencing job gains, I don't expect that the administration's projection of 90 percent of stimulus jobs being in the private sector will be realized. The administration has promised that 600,000 additional public sector jobs will be created or saved this summer. While an increase of 600,000 government jobs would certainly be a positive development if it comes to pass, it does raise concerns as to whether the government will be the only winner from the stimulus bill.

My point today, Mr. President, is not to berate the administration or those who voted for this bill.

My point is, first, to note the conspicuous absence of job gains in our economy following the stimulus, and second, to bring our focus back to the source of 70 percent of net new jobs over the past decade--the engine that drives the U.S. economy. Of course, I am talking about America's small businesses.

America's small businesses have been suffering during this recession. If you go back to your States frequently, like I do, you'll hear about it directly. A few months ago, Senators Landrieu and Snowe held a hearing on the credit crunch hitting small business. They found that big banks have been cracking down on lending to small businesses.

Another very good source of answers about the environment of small business is found in the monthly survey of small business. This survey is published by the National Federation of Independent Business ``NFIB''.

NFIB is the largest small business organization. NFIB has been conducting these surveys for 35 years.

NFIB's membership includes hundreds of thousands of small businesses all across America. You can find the survey on NFIB's website at http:/ /www.nfib.com/Portals/0/PDF/sbet/sbet200906.pdf. I would encourage every member to check out the June 2009 survey.

The survey shows some extremely disturbing trends. On credit availability, small businesses are getting squeezed very hard. The availability of loans has fallen off a cliff since late 2007 and is at its lowest point since the recession period of 1980 to 1982.

This credit crunch and other factors have contributed to NFIB's index of small business optimism falling well below average. According to the survey, small business owners have become extremely pessimistic in the last couple of years. What you see here is the attitude of the decision makers in small business America.

Those are the decision makers for businesses that President Obama and Congress agree are the businesses most likely to grow or contract jobs. This data should concern every policy maker in this town.

While those two sets of data are bad, it doesn't get any better when you look at small business hiring plans. Another question on the survey asks the small business owner whether he or she plans to expand or contract employment over the next three months. The survey results show small business activity contracting tremendously, and the overall small business employment numbers tell the same story.

I must say that the President's recent efforts to increase lending to the small business sector are commendable. The center piece of his small business plan will allow the federal government to spend up to $25 billion to purchase the small-business loans that are now hindering community banks and lenders. Unfortunately, that is a drop in a very empty bucket.

Remember, colleagues, that small business accounts for about half of the private sector.

Moreover, the positives that will come to small businesses from this relatively small package of loans--which will ultimately have to be paid back--will be heavily outweighed by the negative impact of the President's proposed tax increases. Helping small businesses get loans just to take that money back in the form of tax hikes is not wise.

I now want to turn to those aforementioned tax hikes on small businesses that President Obama and my colleagues on the other side of the aisle have proposed. I certainly understand that small business is vital to the health of our economy. The President and I agree that 70 percent of new private sector jobs are created by small businesses.

However, where we differ is that I believe small businesses' taxes should be lowered, not raised, to get our economy back on track. In 2001 and 2003, Congress enacted bipartisan tax relief designed to trigger economic growth and create jobs by reducing the tax burden on individuals and small businesses. This included an across-the-board income tax reduction, which reduced marginal tax rates for income earners of all levels, a reduction of the top dividends and capital gains tax rate to 15 percent, and a gradual phaseout of the estate tax.

Unfortunately, like many of the other provisions enacted in 2001 and 2003, these tax relief measures are scheduled to expire at the end of 2010.

Some have referred to this bipartisan tax relief as ``the Bush tax cuts for the wealthy'' and have suggested that the tax relief provided for higher-income earners should be allowed to expire. However, this tax relief was bipartisan and provides tax relief for all taxpayers. The President and my colleagues on the other side of the aisle have proposed increasing the top two marginal tax rates from 33 percent and 35 percent to 36 percent and 39.6 percent, respectively.

They have also proposed increasing the tax rates on capital gains and dividends to 20 percent, and providing for an estate tax rate as high as 45 percent and an exemption amount of $3.5 million.

Also, the President has called for fully reinstating the personal exemption phaseout, or PEP for short, and

the limitation on itemized deductions, which is known as Pease. Under the 2001 tax law, PEP and Pease are scheduled to be completely phased out in 2010. However, like other provisions in the law, PEP and Pease are scheduled to come back in full force in 2011 should Congress fail to take further action.

With PEP and Pease fully reinstated, individuals in the top two rates could see their marginal effective tax rate increased by 20 percent or more. For example, a family of four that is in the 33 percent tax bracket in 2010 could pay a marginal effective tax-rate of 41 percent after 2010--or even more if they had more children--because of PEP and Pease.

Some of my colleagues on the other side of the aisle have defended this proposal by claiming they will only raise taxes on ``wealthy'' taxpayers who make over $200,000 a year. For the vast majority of people who earn less than $200,000, raising taxes on higher earners might not sound so bad.

However, this means that many small businesses will be hit with a higher tax bill. These small businesses happen to at least 70 percent of all new private sector jobs in the U.S.

These small businesses that are taxed as sole proprietorships, S corporations, and partnerships--including LLCs--whose owners make over $200,000, or $250,000 if married, would get hit with the President's proposal to raise the top two marginal tax rates.

In addition, there are just under 2 million C corporations that are not publicly traded, and all C corporations are subject to double taxation. To the extent these C corporations' owners that make over $200,000, or $250,000 if married, pay themselves a salary, they would get hit with the tax increase on the top two marginal tax rates proposed by the President.

Also, any owners of C corporations that receive dividends or realize capital gains and make over $200,000, or $250,000 if married, would pay a 20 percent rate on these dividends and capital gains after 2010 under the President's tax hike proposals, instead of paying the current law rate of 15 percent.

According to NFIB survey data, 50 percent of owners of small businesses that employ 20-249 workers would fall in the top two brackets. According to the Small Business Administration, about \2/3\ of the Nation's small business workers are employed by small businesses with 20-500 employees.

Do we really want to raise taxes on these small businesses that create new jobs and employ \2/3\ of all small business workers?

With these small businesses already suffering from the credit crunch, do we really think it's wise to hit them with the double-whammy of a 20 percent increase in their marginal tax rates?

Newly developed data from the Joint Committee on Taxation demonstrates that 55 percent of the tax from the higher rates will be borne by small business owners with income over $250,000. This is a conservative number, because it doesn't include flow-through business owners making between $200,000 and $250,000 that will also be hit with the Budget's proposed tax hikes.

If the proponents of the marginal rate increase on small business owners agree that a 20 percent tax increase for half of the small businesses that employ two-thirds of all small business workers is not wise, then they should either oppose these tax increases, or present data that show a different result.

I will also fight for a lower estate tax rate and a higher estate tax exemption amount to protect successful small businesses and farmers. In a time when many businesses are struggling to stay afloat, it does not make sense to impose additional burdens on them by raising their taxes.

Odds are, they will cut spending. They will cancel orders for new equipment, cut health insurance for their employees, stop hiring, and lay people off. Instead of seeking to raise taxes on those who create jobs in our economy, policies need to focus on reducing excessive tax and regulatory barriers that stand in the way of small businesses and the private sector making investments, expanding production, and creating sustainable jobs.

As the current ranking member of the tax writing Finance Committee, you can be sure that I will continue to fight to prevent a dramatic tax increase on our nation's job engine--the small businesses of America. This includes working to protect small businesses from higher marginal tax rates, an increase in the capital gains and dividends tax rate, and an increase in the unfair estate tax rate that will penalize the success of small businesses and farmers who would like to pass on their gains to the next generation.

In fact, today I have introduced a bill to lower taxes on these job- creating small businesses.

My bill contains a number of provisions that will leave more money in the hands of these small businesses so that these businesses can hire more workers, continue to pay the salaries of their current employees, and make additional investments in these businesses.

For instance, my bill would increase the amount of capital expenditures that small businesses can expense from $250,000 to $500,000. Also, my bill would allow more small C corporations to benefit from the lower graduated tax rates for smaller C corporations.

Another provision takes the general business credits, which are listed in section 38, out of the Alternative Minimum Tax, AMT, for those sole proprietorships, flow-throughs and non-publicly traded C- corps with 50 million or less in annual gross receipts. This provision amends section 39 to extend the 1-year carryback for general business credits to a 5-year carryback. This applies to general business credits for those sole proprietorships, flow-through entities and non-publicly traded C-corps with 50 million or less in annual gross receipts.

Another provision in my bill amends section 199 of the Internal Revenue Code, which contains the deduction for manufacturing, to provide a 20 percent deduction for flow-through business income for all small businesses, which are defined as flow-through entities with 50 million or less in annual gross receipts. Another provision in my bill deals with the situation where a C corporation becomes an S corporation. Under current law, there is no tax on built-in gains of assets within a C corporation that converts to an S corporation if those assets with built-in gain are held for 10 years by the S corporation. The stimulus bill reduced this 10-year period down to 7 years for sales of assets with built-in gain that occur within 2009 and 2010.

My provision reduces this time period down to 5 years for all S corporations that have converted from a C corporation.

Another provision in my bill expands the net operating loss provision contained in the stimulus bill. Current law provides that net operating losses from any size business may be carried back 2 taxable years before the year that the loss arises and carried forward 20 years. The stimulus bill amended the carryback provision by expanding the carryback from 2 years to 5 years if a small business had gross receipts of $15 million or less.

This provision expands that $15 million gross receipt requirement to $50 million in gross receipts so that more small businesses can qualify for this benefit.

Another provision in my bill amends section 1202 of the Internal Revenue Code to eliminate the tax on capital gains for certain start-up C corporations. The stimulus bill reduced the capital gains tax to approximately 7 percent on stock qualifying under 1202. However, President Obama has called for eliminating, not simply reducing, the tax on capital gains for these start-up businesses, and that is exactly what my provision would do.

The final provision in my bill permits a deduction for payments made under the Self-Employment Contribution Act, or SECA, at one-hundred percent of health insurance premiums that are paid by those who are self-employed.

We all want to see the job numbers from the Department of Labor moving in a positive direction. We all want to see the unemployment rate plummet. I firmly believe that the best way for us to do that is to prime the job-creating engine of our economy, which is small businesses. Furthermore, increasing taxes on small businesses as President Obama has proposed will destroy even more jobs.

My small business bill, if enacted, will lead to many new jobs. As opposed

to the jobs President Obama argues that the stimulus bill has saved while our economy has been hemorrhaging jobs, my bill will create countable, verifiable, private sector jobs that will put people to work and get the economy moving in the right direction again.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, President Obama, in his press briefing this past Tuesday, June 23, 2009, made the following statement regarding his assessment of the first four months of the American Recovery and Reinvestment Act: ``I am not satisfied with the progress that we've made.'' I could not agree more with President Obama's assessment. Thus far, the $787 billion American Recovery and Reinvestment Act has fallen short on virtually every one of its advertised effects.

In the abbreviated debate leading up to the consideration of this bill, we constantly heard the mantra from my friends on the other side: JOBS, JOBS, JOBS! This stimulus bill was supposed to create jobs, jobs, jobs, but in the four months since the bill's passage, there are still no jobs in sight.

The architects of this bill made several bold claims in projecting the job effects of the $787 billion stimulus bill. First, they said that its passage would keep the unemployment rate from exceeding 8 percent. Second, they said it was going to create or save 3 to 4 million jobs. And third, they said that 90 percent of the new jobs created would be in the private sector.

So far, in all three of these areas, the actual effects of the stimulus bill have not lived up to the hype. Let us examine each of these areas one by one.

First, the stimulus bill was supposed to keep unemployment at or below 8 percent. In fact, the administration projected that in the absence of stimulus, the unemployment rate would peak at around 8.8 percent. However, four months into this program, the unemployment rate stands at 9.4 percent and rising--higher than the administration projected it would be in the absence of stimulus.

Just listen to President Obama's comments from his June 23rd press briefing to see which direction the unemployment rate is headed: ``I think it's pretty clear now that unemployment will end up going over 10 percent, if you just look at the pattern, because of the fact that even after employers and businesses start investing again and start hiring again, typically it takes a while for that employment number to catch up with economic recovery. And we're still not at actual recovery yet. So I anticipate that this is going to be a difficult, difficult year, a difficult period.''

When asked how high he thought the unemployment rate would go, President Obama responded, ``I am not suggesting that I have a crystal ball. Since you just threw back at us our last prognosis, let's not engage in another one.'' Once again, I have to agree with President Obama's assessment.

As the unemployment rate continues to go up, that means job numbers continue to go down, which brings me to my next point: The administration projected that the stimulus bill would create--or save-- between 3 and 4 million jobs by the end of 2010. While we've got a long way to go before the end of 2010, the prospects of the stimulus bill living up to this job creation estimate seem very unlikely. Before we look at the actual job numbers for the past few months from the Department of Labor, let me discuss the source of the administration's projections.

In January, Christina Romer, who is now Chair of the Council of Economic Advisers, and Jared Bernstein, who is now the Chief Economist for the Vice President, released a 14-page paper titled ``The Job Impact of the American Recovery and Reinvestment Act.''

In this document, Romer and Bernstein repeatedly asserted that a package of the size discussed by the President-Elect would be expected to create between three and four million jobs by the end of 2010, which would more than meet the President-Elect's goal of creating or saving 3 million jobs by the end of 2010. In a follow-up report in May, the Council of Economic Advisers attempted to explain how the administration planned on measuring the number of jobs created or saved by the stimulus. This document articulated that all recipients of stimulus funds for government investment will be required to provide ``recipient reports'' estimating the number of jobs retained or created directly by the funds.

Then, to arrive at the total estimate of jobs created or saved by the stimulus, the job numbers from the recipient reports will be added to the administration's estimate of jobs created or saved through tax cuts, State fiscal relief and transfer payments. These estimates will be derived from administration-produced multipliers and macro-economic modeling.

Sounds pretty simple, don't you think? Unfortunately, there are some problems.

The first problem is that the most accurate part of these job estimates will be from the recipient reports, and since the stimulus bill included approximately $271 billion in government investment spending, these reporting requirements cover just over a third of the $787 billion of stimulus funding.

While the job estimates from these recipient reports should be an accurate representation of actual jobs created by the stimulus, the administration even admits that ``there will likely be inconsistencies and measurement error across the individual reports.''

This leads us to the second problem: for the other \2/3\ of the bill, in the administration's own words, ``There is no mechanism available for collecting data on actual job creation from these parts of the Act.'' So, for \2/3\ of the bill, the job estimates are basically going to be guesswork from the administration based on mathematical formulas.

Since President Obama's ``First 100 Days'' address on April 29, 2009, we have heard plenty about the 150,000 jobs that have been created or saved so far by the stimulus.

As I have pointed out, it is impossible to verify these numbers with any degree of certainty, and the administration can not even give an estimate of how many of the 150,000 jobs were created and how many were saved.

What we can verify are the actual job numbers produced on a monthly basis by the Department of Labor. According to the Department of Labor, in the 3 full months March, April, and May, following the enactment of the stimulus bill, the U.S. economy has lost over 1.5 million jobs. In the first 5 months of 2009, the U.S. economy has lost 2.9 million jobs. These are the painful numbers that really matter.

As Jared Bernstein, Chief Economist for the Vice President, said on June 8, 2009, ``Most importantly from the perspective of American families, the nation's employers are still shedding jobs on net.''

So, the advertised effect of the stimulus on unemployment was clearly wrong, and the job claims resulting from the stimulus are unverifiable. Now, how about the claim suggesting that 90 percent of the jobs created by the stimulus will be in the private sector?

To be clear, this claim was first made in Romer and Bernstein's January report, and the President himself has repeated this assertion. Unfortunately, this projection--like the first two--is missing the mark by a long shot.

Let's look at the actual data from the Department of Labor once again. In the first three months since the stimulus bill has been the law of the land, the private sector has lost nearly 1.6 million jobs. In those same 3 months, government payrolls have actually expanded by 81,000 jobs. Similarly, in the first 5 months of 2009, while the private sector has lost over 3 million jobs, the government has gained 96,000 jobs.

While I am encouraged to see at least one sector of the economy experiencing job gains, I don't expect that the administration's projection of 90 percent of stimulus jobs being in the private sector will be realized. The administration has promised that 600,000 additional public sector jobs will be created or saved this summer. While an increase of 600,000 government jobs would certainly be a positive development if it comes to pass, it does raise concerns as to whether the government will be the only winner from the stimulus bill.

My point today, Mr. President, is not to berate the administration or those who voted for this bill.

My point is, first, to note the conspicuous absence of job gains in our economy following the stimulus, and second, to bring our focus back to the source of 70 percent of net new jobs over the past decade--the engine that drives the U.S. economy. Of course, I am talking about America's small businesses.

America's small businesses have been suffering during this recession. If you go back to your States frequently, like I do, you'll hear about it directly. A few months ago, Senators Landrieu and Snowe held a hearing on the credit crunch hitting small business. They found that big banks have been cracking down on lending to small businesses.

Another very good source of answers about the environment of small business is found in the monthly survey of small business. This survey is published by the National Federation of Independent Business ``NFIB''.

NFIB is the largest small business organization. NFIB has been conducting these surveys for 35 years.

NFIB's membership includes hundreds of thousands of small businesses all across America. You can find the survey on NFIB's website at http:/ /www.nfib.com/Portals/0/PDF/sbet/sbet200906.pdf. I would encourage every member to check out the June 2009 survey.

The survey shows some extremely disturbing trends. On credit availability, small businesses are getting squeezed very hard. The availability of loans has fallen off a cliff since late 2007 and is at its lowest point since the recession period of 1980 to 1982.

This credit crunch and other factors have contributed to NFIB's index of small business optimism falling well below average. According to the survey, small business owners have become extremely pessimistic in the last couple of years. What you see here is the attitude of the decision makers in small business America.

Those are the decision makers for businesses that President Obama and Congress agree are the businesses most likely to grow or contract jobs. This data should concern every policy maker in this town.

While those two sets of data are bad, it doesn't get any better when you look at small business hiring plans. Another question on the survey asks the small business owner whether he or she plans to expand or contract employment over the next three months. The survey results show small business activity contracting tremendously, and the overall small business employment numbers tell the same story.

I must say that the President's recent efforts to increase lending to the small business sector are commendable. The center piece of his small business plan will allow the federal government to spend up to $25 billion to purchase the small-business loans that are now hindering community banks and lenders. Unfortunately, that is a drop in a very empty bucket.

Remember, colleagues, that small business accounts for about half of the private sector.

Moreover, the positives that will come to small businesses from this relatively small package of loans--which will ultimately have to be paid back--will be heavily outweighed by the negative impact of the President's proposed tax increases. Helping small businesses get loans just to take that money back in the form of tax hikes is not wise.

I now want to turn to those aforementioned tax hikes on small businesses that President Obama and my colleagues on the other side of the aisle have proposed. I certainly understand that small business is vital to the health of our economy. The President and I agree that 70 percent of new private sector jobs are created by small businesses.

However, where we differ is that I believe small businesses' taxes should be lowered, not raised, to get our economy back on track. In 2001 and 2003, Congress enacted bipartisan tax relief designed to trigger economic growth and create jobs by reducing the tax burden on individuals and small businesses. This included an across-the-board income tax reduction, which reduced marginal tax rates for income earners of all levels, a reduction of the top dividends and capital gains tax rate to 15 percent, and a gradual phaseout of the estate tax.

Unfortunately, like many of the other provisions enacted in 2001 and 2003, these tax relief measures are scheduled to expire at the end of 2010.

Some have referred to this bipartisan tax relief as ``the Bush tax cuts for the wealthy'' and have suggested that the tax relief provided for higher-income earners should be allowed to expire. However, this tax relief was bipartisan and provides tax relief for all taxpayers. The President and my colleagues on the other side of the aisle have proposed increasing the top two marginal tax rates from 33 percent and 35 percent to 36 percent and 39.6 percent, respectively.

They have also proposed increasing the tax rates on capital gains and dividends to 20 percent, and providing for an estate tax rate as high as 45 percent and an exemption amount of $3.5 million.

Also, the President has called for fully reinstating the personal exemption phaseout, or PEP for short, and

the limitation on itemized deductions, which is known as Pease. Under the 2001 tax law, PEP and Pease are scheduled to be completely phased out in 2010. However, like other provisions in the law, PEP and Pease are scheduled to come back in full force in 2011 should Congress fail to take further action.

With PEP and Pease fully reinstated, individuals in the top two rates could see their marginal effective tax rate increased by 20 percent or more. For example, a family of four that is in the 33 percent tax bracket in 2010 could pay a marginal effective tax-rate of 41 percent after 2010--or even more if they had more children--because of PEP and Pease.

Some of my colleagues on the other side of the aisle have defended this proposal by claiming they will only raise taxes on ``wealthy'' taxpayers who make over $200,000 a year. For the vast majority of people who earn less than $200,000, raising taxes on higher earners might not sound so bad.

However, this means that many small businesses will be hit with a higher tax bill. These small businesses happen to at least 70 percent of all new private sector jobs in the U.S.

These small businesses that are taxed as sole proprietorships, S corporations, and partnerships--including LLCs--whose owners make over $200,000, or $250,000 if married, would get hit with the President's proposal to raise the top two marginal tax rates.

In addition, there are just under 2 million C corporations that are not publicly traded, and all C corporations are subject to double taxation. To the extent these C corporations' owners that make over $200,000, or $250,000 if married, pay themselves a salary, they would get hit with the tax increase on the top two marginal tax rates proposed by the President.

Also, any owners of C corporations that receive dividends or realize capital gains and make over $200,000, or $250,000 if married, would pay a 20 percent rate on these dividends and capital gains after 2010 under the President's tax hike proposals, instead of paying the current law rate of 15 percent.

According to NFIB survey data, 50 percent of owners of small businesses that employ 20-249 workers would fall in the top two brackets. According to the Small Business Administration, about \2/3\ of the Nation's small business workers are employed by small businesses with 20-500 employees.

Do we really want to raise taxes on these small businesses that create new jobs and employ \2/3\ of all small business workers?

With these small businesses already suffering from the credit crunch, do we really think it's wise to hit them with the double-whammy of a 20 percent increase in their marginal tax rates?

Newly developed data from the Joint Committee on Taxation demonstrates that 55 percent of the tax from the higher rates will be borne by small business owners with income over $250,000. This is a conservative number, because it doesn't include flow-through business owners making between $200,000 and $250,000 that will also be hit with the Budget's proposed tax hikes.

If the proponents of the marginal rate increase on small business owners agree that a 20 percent tax increase for half of the small businesses that employ two-thirds of all small business workers is not wise, then they should either oppose these tax increases, or present data that show a different result.

I will also fight for a lower estate tax rate and a higher estate tax exemption amount to protect successful small businesses and farmers. In a time when many businesses are struggling to stay afloat, it does not make sense to impose additional burdens on them by raising their taxes.

Odds are, they will cut spending. They will cancel orders for new equipment, cut health insurance for their employees, stop hiring, and lay people off. Instead of seeking to raise taxes on those who create jobs in our economy, policies need to focus on reducing excessive tax and regulatory barriers that stand in the way of small businesses and the private sector making investments, expanding production, and creating sustainable jobs.

As the current ranking member of the tax writing Finance Committee, you can be sure that I will continue to fight to prevent a dramatic tax increase on our nation's job engine--the small businesses of America. This includes working to protect small businesses from higher marginal tax rates, an increase in the capital gains and dividends tax rate, and an increase in the unfair estate tax rate that will penalize the success of small businesses and farmers who would like to pass on their gains to the next generation.

In fact, today I have introduced a bill to lower taxes on these job- creating small businesses.

My bill contains a number of provisions that will leave more money in the hands of these small businesses so that these businesses can hire more workers, continue to pay the salaries of their current employees, and make additional investments in these businesses.

For instance, my bill would increase the amount of capital expenditures that small businesses can expense from $250,000 to $500,000. Also, my bill would allow more small C corporations to benefit from the lower graduated tax rates for smaller C corporations.

Another provision takes the general business credits, which are listed in section 38, out of the Alternative Minimum Tax, AMT, for those sole proprietorships, flow-throughs and non-publicly traded C- corps with 50 million or less in annual gross receipts. This provision amends section 39 to extend the 1-year carryback for general business credits to a 5-year carryback. This applies to general business credits for those sole proprietorships, flow-through entities and non-publicly traded C-corps with 50 million or less in annual gross receipts.

Another provision in my bill amends section 199 of the Internal Revenue Code, which contains the deduction for manufacturing, to provide a 20 percent deduction for flow-through business income for all small businesses, which are defined as flow-through entities with 50 million or less in annual gross receipts. Another provision in my bill deals with the situation where a C corporation becomes an S corporation. Under current law, there is no tax on built-in gains of assets within a C corporation that converts to an S corporation if those assets with built-in gain are held for 10 years by the S corporation. The stimulus bill reduced this 10-year period down to 7 years for sales of assets with built-in gain that occur within 2009 and 2010.

My provision reduces this time period down to 5 years for all S corporations that have converted from a C corporation.

Another provision in my bill expands the net operating loss provision contained in the stimulus bill. Current law provides that net operating losses from any size business may be carried back 2 taxable years before the year that the loss arises and carried forward 20 years. The stimulus bill amended the carryback provision by expanding the carryback from 2 years to 5 years if a small business had gross receipts of $15 million or less.

This provision expands that $15 million gross receipt requirement to $50 million in gross receipts so that more small businesses can qualify for this benefit.

Another provision in my bill amends section 1202 of the Internal Revenue Code to eliminate the tax on capital gains for certain start-up C corporations. The stimulus bill reduced the capital gains tax to approximately 7 percent on stock qualifying under 1202. However, President Obama has called for eliminating, not simply reducing, the tax on capital gains for these start-up businesses, and that is exactly what my provision would do.

The final provision in my bill permits a deduction for payments made under the Self-Employment Contribution Act, or SECA, at one-hundred percent of health insurance premiums that are paid by those who are self-employed.

We all want to see the job numbers from the Department of Labor moving in a positive direction. We all want to see the unemployment rate plummet. I firmly believe that the best way for us to do that is to prime the job-creating engine of our economy, which is small businesses. Furthermore, increasing taxes on small businesses as President Obama has proposed will destroy even more jobs.

My small business bill, if enacted, will lead to many new jobs. As opposed

to the jobs President Obama argues that the stimulus bill has saved while our economy has been hemorrhaging jobs, my bill will create countable, verifiable, private sector jobs that will put people to work and get the economy moving in the right direction again.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.