Mr. Speaker, I come to the floor tonight with several of my colleagues to discuss our Republican friends' proposed tax cut package and the way it will affect the Federal budget and the American people. Mr. Speaker, President Bush has…
Mr. Speaker, I come to the floor tonight with several of my colleagues to discuss our Republican friends' proposed tax cut package and the way it will affect the Federal budget and the American people.
Mr. Speaker, President Bush has presided over the Nation's worst economic performance since the Great Depression and the worst fiscal reversal in all of American history. Since President Bush took office, we have lost more than 2.7 million private sector jobs, and real GDP has inched at only 1.5 percent annually, the worst record for any administration in over 50 years. The 10-year $5.6 trillion unified budget surplus projected when President Bush
came into office is gone, totally gone. In its place the administration has proposed a budget with over $2 trillion in deficits over that same time period. That is a fiscal reversal approaching $8 trillion.
These charts tell the story. Here we have the fiscal reversal illustrated going from a $5.6 trillion surplus 2 years ago projected until now looking at a $2 trillion deficit over the next 10 years. And this chart gives the picture on jobs. In the first 28 months of the Clinton administration, 6.8 million private sector jobs gained, 1993 through April of 1995. In the first 28 months of the Bush administration, 2.7 million private sector jobs lost as of April of this year.
Unfortunately, in the face of all this, in the face of the worst fiscal reversal in this Nation's history, the response of our Republican friends is to propose more and more of the same failed policies. Finding themselves in a hole, their message seems to be just keep digging. Mr. Speaker, Democrats believe that a stimulus plan should be based on three simple principles, principles that should be self-evident but that our Republican friends incredibly seem unable to grasp.
First, a stimulus plan should be fair. It should put money back in the pockets of average Americans, boosting consumer demand and the business investment needed to meet it.
Secondly, a stimulus plan should actually stimulate the economy. It should be fast-acting with its impact concentrated to provide an immediate jump-start to the economy. It should get the most bang for the buck by targeting consumers likely to spend and businesses likely to invest and hire new workers.
Finally, a stimulus plan should be fiscally sound. It should be paid for. It should not pile up national debt. It should not contain gimmicks which disguise its true cost.
Mr. Speaker, the Democratic plan that we will be debating tomorrow is organized around these three principles. The Republican plan fails to meet the standards by a country mile. It is not even close. Tomorrow the House is scheduled to debate the Republicans' $550 billion tax cut, every penny of it borrowed money, funded by increased government debt that will be passed on to our children and grandchildren.
Tax cuts that actually stimulate the economy during a downturn make good sense. However, the Republican plan only puts in place 9 percent of its tax cuts this year, precisely when they are needed the most. The House Republican plan centers on tax cuts, on stock dividends and capital gains, both of which economists have rated as very ineffective in stimulating the economy. These proposals would benefit mainly upper- income individuals who are much more likely to save such windfalls than would be low- and moderate-income families. Under the Republicans' proposal millionaires would receive approximately $139 billion in tax cuts through 2013. That is essentially the same amount of tax cuts that would be received by the entire bottom 89 percent of households combined.
Mr. Speaker, it is simply irresponsible to be considering large upper-bracket tax cuts that will worsen the long-term deficit to the tune of $1.2 trillion over the next 10 years, to be doing this at a time when we should be paying down the national debt to prepare for the retirement of the baby boom generation, which after all begins in only 5 years. Moreover the Republican plan is full of phony sunsets and other gimmicks that actually understate its true cost.
By contrast House Democrats have proposed a stimulus package that is fast, fair acting, fiscally responsible, and paid for. It uses a proven approach to creating jobs and growing the economy, puts money directly into the hands of average Americans, the very people most likely to spend it, and it provides tax relief to businesses most likely to invest. It focuses on jump-starting the economy now at a fraction of the cost of the Republican tax cut proposal. It provides permanent tax cuts for most American families, including an immediate increase in the child tax credit, marriage penalty relief, the expansion of the 10 percent tax bracket. The House Democratic plan also extends unemployment benefits for 26 weeks. It increases the level of benefits and provides temporary aid to States to broaden coverage to low-wage earners and part-time workers. These benefits would provide financial help to 5 million out-of-work Americans, and economists have rated that as one of the most effective stimuli that would we could apply.
In contrast the Republican plan would allow the Federal Unemployment Benefits program to expire on May 31, leading to millions of families being denied this unemployment insurance to help tide them over.
What about the States? As a result of a bad economy, States are facing the worst fiscal crisis since World War II. States across the country are cutting education and health programs and raising taxes, undermining jobs, undermining economic recovery. The Democratic jobs and growth plan in stark contrast to the Republican plan which has said to the States go elsewhere, the Democratic plan would provide $44 billion in aid to States to minimize tax increases and service cuts and to prevent the job losses that would otherwise occur.
The second chart compares the stimulative effect of the proposals I have been discussing. If we extend Federal unemployment benefits for every dollar we spend, the stimulative effect in the economy, the amount of economic activity generated, comes to $1.73, one of the most effective things we could do. If we support the States through Medicaid and education and homeland security funding, for every dollar we invest that way we get $1.24 in bang for the buck, also a good stimulative effect.
The centerpiece for our Republican friends' dividend tax reduction, 9 cents of impact for every dollar of revenue lost. If what we are talking about is stimulating the economy, then this chart says it all.
Finally, the Democratic plan would provide companies with a tax credit worth up to $2,400 for hiring somebody who has been out of work at least 6 months and includes $29 billion in tax incentives to generate investment and jobs now, such as allowing small businesses to expense up to $75,000 of the cost of new investments through 2004, triple the current limit. In other words, businesses would be encouraged to invest sooner rather than later, again fueling economic growth.
Mr. Speaker, the bottom line is that the Democratic plan would create almost twice as many jobs as the Republican plan in the first year. Let me be specific. The Democratic plan would create 1.1 million jobs compared to the Republicans' 600,000 jobs. And the Democratic plan would achieve this at a fraction of the cost.
Instead of saddling our children and grandchildren with a mounting national debt, I urge my colleagues to support the Democratic plan that will help revive the economy, promotes economic growth, offers tax relief to those who need it most, uses honest accounting, and is paid for.
A number of Members are going to be speaking over this hour about the choices that we have tomorrow and about what we can do now, what we can do effectively to turn this economy around and to do that in a fiscally responsible way, and I yield to the gentleman from Virginia (Mr. Moran), a valued colleague from Virginia, a member of the Committee on the Budget who over the years has stood for fiscal integrity, fiscal responsibility.
Why on Earth would our Republican friends want to do such a thing? It clearly is something that they do not intend to stick by. They do not really intend for these tax cuts to expire. Why would they write such a bill?
Before we yield to our colleague from Washington State, let me just commend the gentleman for a powerful statement and also for reminding us of a little bit of history, not too ancient history, but history that goes back to 1993 and a night on this House floor that many of us will never forget, where without a single Republican vote we passed a far-reaching plan to move the budget toward balance; and in fact from every year from then forward, until this President took office, every year for 8 years the deficit came down.
The strongest economy and the most sustained recovery. We even reached the point where we were running a surplus, not just a Social Security surplus, but a surplus in the general fund of this government. We retired $400 billion worth of the national debt. But our Republican friends might not be convinced by that historical lesson. It does not reflect very well on them.
So let me just ask the gentleman, look back to some previous Republican administrations. Is it not true that in 1982, when the Nation went into a recession and President Reagan had pushed through some tax cuts and the deficits were mounting, that with Senator Robert Dole's leadership some of those tax cuts were rescinded and some spending was cut? The Congress and the President found themselves in a hole, and they quit digging. They at least quit digging. They did not make the problem worse. To some extent they halted the deterioration of our fiscal situation.
Then think about the first President Bush. I am sure you remember that battle. President Bush said ``read my lips'' and had gotten himself locked into a situation. But when the economy declined, when the fiscal situation deteriorated, he had the courage and the statesmanship to work with Democrats across the aisle and to put a 5- year budget plan in place. So the first President Bush, when he found himself in a hole, he quit digging.
So if our Republican friends do not find the 1993 episode instructive, then maybe they will find those earlier episodes instructive. Then the question comes back, why is it that this White House seems to feel none of that restraint? Why is it that this Republican leadership seems to feel none of that concern, but is perfectly willing, finding themselves in a deep and dangerous fiscal hole, to propose that we should just keep digging?
I thank the gentleman.
I turn to our colleague, the gentleman from the State of Washington (Mr. McDermott), a member of the Committee on Ways and Means and a long time member of the Committee on the Budget.
Mr. Speaker, I thank the gentleman and I particularly appreciate his focus on the plight of the States. My colleagues may recall that the governors were in town a few weeks ago, Democratic and Republican governors who went to the White House, I understand, and talked about the ways that in a temporary way there could be some help for the States and, as we said earlier, help for the States is one of the best ways to stimulate the economy. It gives good bang for the buck. They suggested such obvious ideas as a little better cost-sharing on Medicare temporarily to tide them over. What kind of reception did they get down there, Republican and Democratic governors alike?
Stiff-armed, I understand.
What about our Republican colleagues in the House? They are supposedly in closer touch with these local communities. Does their bill contain one dime of help for the States?
And the Democratic plan, $44 billion, it is temporary, it stimulates the economy, it helps bail the States out. It will help avoid counterproductive things at the State level, cutting back services, raising taxes. What good is it going to do to cut taxes here if they have to be reimposed at the State level?
Mr. Speaker, there is nobody within our hearing tonight who could not think of better public and private uses for that than throwing it down the rat hole of $300 billion, $400 billion of interest on the debt each year. I thank the gentleman for his contribution.
Mr. Speaker, I am pleased now to recognize our colleague from Virginia, another colleague from Virginia (Mr. Scott), a member of the Committee on the Budget and a much respected Member of this body who has made himself an expert on budget affairs, and we appreciate him having his usual array of charts tonight to illustrate the situation we are facing.
Mr. Speaker, if I could just ask the gentleman to underscore what he just said. Are you saying that the amount that it would take to make Social Security whole for the next 75 years is less than the amount of this Republican tax cut?
Yes.
I wonder if the gentleman from Virginia (Mr. Scott) would put the chart back up giving the distribution of who benefits from these tax cuts, because on the talk shows these days you sometimes hear it said, well, of course, the tax cuts are mainly going to benefit the wealthy because they are the ones that pay the taxes. As a matter of fact, is it not true that this tax cut compounds the advantage of the wealthy? It does not just mirror their advantage.
For example, if you look just at millionaires, millionaires in this country pay 19 percent of the income taxes, but what percent of this tax cut do you think they get? Twenty-seven percent. They get 27 percent of the tax cut; they pay 19 percent of the taxes. So it just does not wash to say, well, they are paying more taxes, so naturally they get a better tax cut.
The fact is this is a grossly unfair tax cut, and it targets those in the upper brackets. That is not fair, but it also does not do what needs to be done in terms of turning this economy around.
I thank the gentleman for a very fine presentation.
I yield to the gentleman from Connecticut (Mr. Larson).
Mr. Speaker, the gentleman is absolutely right. As to the pressing nature of these needs, many of them carry out of the State level at the time that our States are flat on their back fiscally, and our Republican friends are offering no help in that regard whatsoever.
The gentleman talks about tax cuts. And we know people would rather pay less taxes than more. We are all pleased when we can offer tax cuts; but it does matter what kind of tax cuts.
Sure and that is what we need to face. If you are going to have tax cuts then, for goodness sake, have the honesty and the integrity to pay for those tax cuts so it is not coming out of the hide of the most vulnerable among us.
There are some tax cuts in the Democratic proposal, but they are aimed at the broad middle class in this country. They were designed to stimulate the economy and they are paid for. And in all three of those respects they contrast with these upper-bracket tax cuts which our Republican friends are trying to peddle as an economic stimulus when I do not know any economist who is going to tell you you get much bang for the buck from cutting the tax on dividends for goodness sake. The estimate I have heard is 9 cents on the dollar. That is not a very good return.
Mr. Speaker, I thank the gentleman.
Before we run out of time, I want to turn to one of our most passionate and effective advocates in the House, the gentlewoman from Ohio (Ms. Kaptur).
Mr. Speaker, I thank the gentlewoman, and I want to thank all of my colleagues who were part of this Special Order tonight.
Often we have very heated debates in this House and we have a good bit of rhetoric filling the air; sometimes there may even be an exaggeration or two. But I must say with respect to this bill tomorrow and with respect to our fiscal situation, we are not exaggerating. We are not exaggerating the danger we face. We are not exaggerating the unprecedented character of the risks that are being taken with our fiscal future by this administration and by the leadership of this House.
We are not exaggerating the differences between the parties.
There is a simple three-point test that any proposal ought to be able to pass: Is it effective? Does it stimulate the economy? Is it broad based and fair? Is it fiscally responsible? The two plans before us tomorrow could not be more opposed or more different in the way those basic questions are answered.
So I thank all of my colleagues for helping us line this out tonight and address our colleagues about this critical debate. It is not an exaggeration to say that our fiscal future is on the line, and I appreciate all those who have helped point that out so forcefully this evening.
Mr. Speaker, I yield back the balance of my time.