Mr. President, I rise today, along with my friend and colleague Senator McCaskill, to introduce legislation we believe is essential to restoring growth and creating jobs in our economy. Our…
Mr. President, I rise today, along with my friend and colleague Senator McCaskill, to introduce legislation we believe is essential to restoring growth and creating jobs in our economy.
Our bipartisan bill is comprised of proposals in four general categories. First: taxes--we would protect American workers from payroll tax increases and preserve and provide new tax incentives for small business job creators to help spur job growth.
Second: infrastructure--we propose restoring and expanding funding to rebuild our nation's crumbling roads, bridges, and water treatment plants, adding jobs now and ensuring that the critical infrastructure needed for long-term economic growth is properly maintained.
Third: sensible regulatory reform--we focus on cutting the tangle of red-tape that is holding businesses back from expanding and adding jobs.
Fourth: job training--we propose fundamentally reforming the hodge- podge of Federal jobs training programs to focus on what really works. We also propose extending the charitable deduction for books and computers.
We would offset the cost of these proposals with a 10-year, 2 percent surtax on those with incomes of a million dollars or more, but with a ``carve out'' to protect small business owner-operators: our nation's job creators.
Let me discuss these proposals in further detail. With respect to taxes, Senator McCaskill and I believe that action must be taken quickly to extend the two percent payroll tax cut for employees that is scheduled to expire at the end of this month. Unless we do so, 159 million Americans will face a tax increase of up to $2,000 at a time when the economy is still weak. With so many American families struggling to make ends meet, the last thing we ought to do is to allow an automatic tax increase to take effect in less than a month.
But keeping taxes steady won't be enough to get the economy going again. If we want more jobs, we must do more. That is why Senator McCaskill and I are proposing that the two percent payroll tax cut be extended to employers, too, on the first $10 million of payroll. This targets small and medium-sized employers who have historically been the source of our nation's job growth.
We also extend bonus depreciation and Section 179 expensing at the current level, to encourage businesses to use this tax benefit to invest in the tools American workers need to remain the best in the world.
In the global competition for jobs, American workers go head-to-head with workers from China, India, and other countries, who are paid far less than Americans, and whose working conditions would rightly be viewed as unacceptable here in the United States.
The middle-class, the source of America's economic strength, was built by making sure American workers had the best tools in the world, so they would be the most productive workers in the world. Productivity and tools go hand-in-hand, and in the global competition for jobs, the worker with the best tools wins.
The provisions I have described will help businesses invest and keep the American worker ahead of the global competition.
There are several other tax benefits in our package. One is an innovative proposal that originated with Senators Mark Pryor and Scott Brown to generate investment in new high-tech companies. We all know how dynamic these young companies can be--a decade ago, Google was a fledgling search engine and Facebook didn't even exist. Today, Google executes billions of searches every week, and Facebook has 800 million members, and growing. Both are valued at more than $100 billion, but most important, both employ thousands of American workers.
But without the right investment at the right time, these two companies would not exist. Nor would many other companies in the high- tech field, or the millions of jobs they have created. The tax credit we propose will help the high tech firms of the future get the support they need to get off the ground, and become a part of the American story.
It is also important to help established companies stay on the cutting edge by extending the Research and Development tax credit.
Before I go on to describe the other provisions of this bipartisan jobs bill, I would like to explain further the small business ``carve out'' we built into our offset. Many on my side of the aisle have voiced the concern that a surtax would fall on small businesses. I share that concern. Most of our nation's small businesses are structured as ``flow-through'' entities, such as ``subchapter S'' corporations. These flow-through entities do not pay taxes directly, but instead distribute their income to their owners, who then pay tax on that income on their individual income tax returns.
To impose a surtax on this income as if it were the owners' personal income would be a mistake--we would be raising taxes on our nation's job creators at the exact same time we are trying to get our nation's job engine started again.
If we ignore this reality, we risk taxing small businesses as if they are ``the wealthy.'' They are not.
We cannot impose higher taxes on flow-through income without taking money out of small businesses--money that is needed to help those small businesses invest and add jobs. That is why Senator McCaskill and I are proposing to ``carve out'' owner-operator small business income so it is not subject to the surtax.
The way we would accomplish this is to separate ``active business income'' from ``passive business income,'' tracking the passive activity rules of Section 469 of the tax code. Basically, this
means that business owner-operators who ``materially participate'' in the running of their businesses will be protected from the surtax, while those who are passive investors will pay higher rates.
This is as it should be. Owner-operators are actively engaged in running their small businesses. They are on the front lines of our economy, and of the communities in which they live. The pass-through income that shows up on their tax returns is critical to their ability to finance investment, and grow their businesses. Left in their hands, this income will lead to more jobs and buy the tools that make American workers more productive.
Let me turn now to the other provisions of our bill.
With respect to infrastructure, our bill would provide $10 billion to capitalize the U.S. Department of Transportation's State Infrastructure Bank program. These banks are revolving loan funds established and administered by State DOT's to complement traditional funding by providing loans, loan guarantees, and other forms of non-grant assistance that leverage private dollars. This one-time infusion would allow states to voluntarily utilize this additional funding, while at the same time ensuring that there is sufficient oversight, reporting and public disclosure requirements.
Additionally, my bill would provide $25 billion in supplemental appropriations for existing highway and bridge formula programs. This funding is meant to supplement and not replace the approximately $40 billion appropriated annually under the current Surface Transportation authorization for similar transportation programs. According to the Federal Highway Administration's most recent estimates, every $1 billion spent on highway construction supported approximately 30,000 jobs.
It is essential that we rebuild our nation's deteriorating infrastructure. According to the American Society of Civil Engineers, it would cost more than $200 billion annually to substantially improve the conditions of our nation's roads and bridges--far more than current levels of national investment. Our legislation will not only create jobs but also bolster important road and bridge investments throughout the United States.
I am pleased to hear that the American Association of State Highway and Transportation Officials, AASHTO, a nonprofit, nonpartisan association, supports what we have proposed in our bill. These investments not only create jobs now when they are needed most, but they also address our nation's aging infrastructure, a daunting but essential task.
There is also no shortage of sewer and drinking water infrastructure needs in states and communities across the nation. The American Society of Civil Engineers' latest infrastructure report card gave the nation's water infrastructure a D-, and the Environmental Protection Agency estimates $187.9 billion in wastewater needs and $334.8 billion in drinking water needs over the next 20 years.
To help ensure the provision of safe water, we propose providing $800 million in additional funding to the Clean Water and Drinldng Water State Revolving Loan Funds, CWSRF and DWSRF, to help ensure these critical infrastructure programs are funded at the fiscal year 2010 levels of $2.1 billion for CWSRF and $1.387 billion for DWSRF. Water infrastructure investments provide significant environmental, economic, and public health benefits in our states and communities.
Investment in water infrastructure also creates jobs. The National Association of Utility Contractors, for example, estimates that one billion dollars invested in water infrastructure can create over 26,000 jobs.
As I meet with businesses, a chief complaint is that regulations and red tape are preventing them from growing and adding jobs. Our bill also contains important reforms to our regulatory system by incorporating provisions I offered earlier this year as the CURB Act, which stands for Clearing Unnecessary Regulatory Burdens. These provisions are designed to force Federal agencies to cut the red tape that impedes job growth.
All too often it seems Federal agencies do not take into account the impacts to small businesses and job growth before imposing new rules and regulations. The bill we are introducing today obligates them to do so in three ways: first, by requiring Federal agencies to analyze the indirect costs of regulations, such as the impact on job creation, the cost of energy, and consumer prices.
Currently, Federal agencies are not required by statute to analyze the indirect cost regulations can have on the public, such as higher energy costs, higher prices, and the impact on job creation. However, Executive Order 12866, issued by President Clinton in 1993, obligates agencies to provide the Office of Information and Regulatory Affairs with an assessment of the indirect costs of proposed regulations. Our bill would essentially codify this provision of President Clinton's Executive Order.
Second, our bill obligates Federal agencies to comply with public notice and comment requirements and prohibits them from circumventing these requirements by issuing unofficial rules as ``guidance documents.''
After President Clinton issued Executive Order 12866, Federal agencies found it easier to issue so- called ``guidance documents,'' rather than formal rules. Although these guidance documents are merely an agency's interpretation of how the public can comply with a particular rule, and are not enforceable in court, as a practical matter they operate as if they are legally binding. Thus, they have been used by agencies to circumvent OIRA regulatory review and public notice and comment requirements.
In 2007, OMB issued a Bulletin which contained a provision closing this loophole by imposing ``Good Guidance Practices'' on Federal agencies. This requires agencies to provide public notice and comment for significant guidance documents. Our bill would essentially codify this OMB Bulletin.
Third, our bill helps out the ``little guy'' trying to navigate our incredibly complex and burdensome regulatory environment. So many small businesses don't have a lot of capital on hand. When a small business inadvertently runs afoul of a Federal regulation for the first time, that first penalty could sink the business and the jobs it supports. Our bill directs agencies to search their files to determine whether a small business is facing a paperwork violation for the first time, and to offer to waive the penalty for that violation if no harm has come of it. It simply doesn't make sense to me to punish small businesses the first time they accidently fail to comply with paperwork requirements, so long as no harm comes from that failure.
One example of a planned onerous regulatory action by the Environmental Protection Agency is the Maximum Achievable Control Technology standards for boilers and incinerators, known as Boiler MACT. While currently being reworked by the agency, these rules could cost manufacturers billions of dollars, and potentially lead to the loss of thousands of jobs, especially in some of the hardest hit areas across the Nation. According to a recent study commissioned by the American Forest and Paper Association, implementing the rule as previously drafted could cause 36 pulp and paper mills around the country to close, putting over 20,000 Americans out of work--18% of the industry's workforce. For this reason, our legislation includes the EPA Regulatory Relief Act, which currently has 40 bipartisan cosponsors, to guarantee the 15 months the EPA itself requested, to provide the agency with the testing data needed for achievable rules and provide manufacturers with the time needed for the capital planning to comply with these very complex and expensive rules.
Maine has lost more than a third of its manufacturing jobs during the past decade, and I am wary of imposing costly new regulations that could lead to more mill closures and lost jobs. I remain committed to working with my Senate colleagues and the EPA to help ensure that the Boiler MACT rules are crafted to protect public health without harming the forest products industry, which is the lifeblood of many small, rural communities.
We must also act to reform our Federal jobs training programs. In our current fiscal climate, we need to ensure that our Federal dollars are being used
as efficiently and productively as possible. The Collins-McCaskill bill requires OMB to study the consolidation of duplicative job training programs and make legislative recommendations to Congress that contemplate consolidating job training programs under a single agency. Of the savings that result from this consolidation, half will be devoted to classroom, field, and hands-on training, and the other half will be be used to reduce the deficit.
In closing, Senator McCaskill and I believe this is the first comprehensive bipartisan jobs bill to be introduced in the Senate since the President's speech before the Joint Session of Congress in September. With the end of the year just three weeks away, we must take action now to protect the American public from a tax increase that will occur automatically on January 1. We must also work together to help grow the economy and add jobs. In achieving these goals, I would ask my colleagues to consider the approach Senator McCaskill and I have proposed in this bipartisan jobs legislation.
