Floor Statements

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 President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I understand we are now on the Byrd amendment to the appropriations measure before us; is that correct?

I thank the Presiding Officer.

First, I thank Senator Byrd for offering this important amendment which provides much-needed funding for our homeland security.

Secondly, I thank Senator Byrd for including funding in his amendment to help States implement the President's plan for inoculating our first responders against the smallpox virus. A month ago, on December 13, President Bush announced his policy for vaccinating U.S. citizens against smallpox. He had a tough decision to make, and I support that decision.

That same day, the Government began inoculating 500,000 armed services personnel and other Government officials working overseas, people who are most likely to encounter the smallpox virus.

The second phase involves inoculating on a voluntary basis first responders and health care workers across the United States against smallpox. It is estimated that up to about 10 million Americans may fall into this category. Senator Specter and I have worked with the administration and Senators Byrd and Stevens since the events of September 11 to provide sufficient funds to produce the smallpox vaccine necessary to inoculate every American against smallpox if that becomes necessary. That money has been appropriated, and I understand the production of vaccine is well underway and that sufficient vaccine will be available by the end of the year. That was a good first step.

It is one thing to produce the vaccine, but the administration of the vaccine also costs money. That financial burden will fall on our State and local public health departments. Local public health departments will absorb the costs of the needles and personnel to administer the vaccine. But then again, personnel and equipment and needles only represent a part of the cost to local health departments. That is because the smallpox vaccination is a far more resource-intensive activity than any other type of vaccination activity.

For example, costs include specialized training for the vaccinators. You cannot just have someone off the street doing the vaccinating; they have to be specially trained. And since we have not administered the smallpox vaccine for a number of years, people would have to be trained. There would also have to be prevaccination screening for individuals to make sure you don't have something else that might interfere with the vaccination. It will also include postvaccination monitoring because it is estimated that 1,000 out of every 1 million vaccinated will experience a serious adverse effect. Then you add to those costs the cost of extra security for the vaccine.

I have received estimates from those involved in public health that the cost of administering the vaccine to State and local health departments under the President's plan may be $85 a person, or $850 million to inoculate 10 million first responders and health care personnel.

The amendment before us--the Byrd amendment--includes that $850 million appropriated to HHS for distribution to the States for this first 10 million first responders' vaccination.

When I first saw this figure of $85 a person, I thought that was pretty expensive. I remember when I was a kid and got my smallpox vaccination in school. They lined you up, and the public health nurse gave you your vaccination. I cannot believe it costs, in equivalent dollars, $85 to get that vaccination. So I think we here on the Appropriations Committee and on the Oversight Committee and those at Health and Human Services under Secretary Thompson really need to look at this and to make sure these estimates are valid estimates.

Again, I know that, as I said, there are other things we have to do, such as prescreening and training of inoculators; there has to be postvaccination monitoring and safety. There are other considerations that perhaps we didn't have maybe 50 years ago when I got my smallpox vaccination.

I do think we are going to have to be careful stewards of the public's money to make sure we are getting our money's worth and to make sure every dime is accounted.

Some may say we have already provided significant new funding to State and local health departments since the events of September 11, and that is true. Senator Specter and I and the Appropriations Committees have worked hard to provide those funds, and those funds were sorely needed because we had let our public health departments stagnate over the years.

The money we provided over the last couple of years was just to begin to repair the benign neglect of our public health system, to upgrade public health monitoring, to increase the lab capacity in our State labs to identify possible bioterrorism agents, to improve communications between CDC, the Centers for Disease Control and Prevention, health departments, and other health providers. That was just a few of the needed improvements that, again, had been consigned to benign neglect over the years.

I guess what I am saying is, we should not put a stop to those improvements by forcing our local public health departments to use those funds to administer the smallpox vaccine. We are making strides in this country to bring our public health resources back up to where they should be. We should not be robbing those resources to administer the smallpox vaccine.

Local health departments are concerned that the financial burden of administering the smallpox vaccine will force them to make cuts in other areas. For example, Dr. Floyd Novak, president of the New York State Association of County Health Officials and the commissioner of health of the county that includes Syracuse, said, according to an article in the New York Times:

We have to transfer staff from other functions to do this.

It just cannot be absorbed as business as usual. We need more

resources.

Dr. Novak said his department would conduct 221 fewer screening tests for breast and cervical cancer and 835 fewer pediatric dental examinations, among other lost services, in the 2 months when vaccinations are to be performed. That is why the amendment we have before us is so crucial.

The Byrd amendment we are considering includes funds not only for smallpox vaccinations but also for other important homeland security needs, and it means that Dr. Novak in New York and other county health officials throughout the United States will not have to stop the important functions of breast and cervical cancer screening, pediatric dental examinations, and other functions we sorely need, in order to conduct the smallpox vaccinations.

I urge my colleagues to support this much-needed amendment. Of the $5 billion amendment that Senator Byrd has proposed, $850 million will go to make sure we have the needed resources to inoculate the 10 million estimated first responders--police, fire, emergency personnel, guardsmen, and others who will be our first responders in this country. These resources would, indeed, ensure we can do that without

robbing or stopping the other needed services of our public health departments.

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

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

Mr. President, I ask unanimous consent to speak as in morning business for up to 30 minutes.

I thank the Chair.

Mr. President, last Thursday I spoke at some length about the Nation's economy and pointed out what I thought at that time were some of the deficiencies in the President's plan for economic recovery.

In my remarks on Thursday, in reading them over in the Record, I thought maybe I might have been a little harsh; maybe my remarks were a little too pointed in that they referred to the President's economic plan as one that would unduly benefit the wealthiest in our country and that would not do much to really help working Americans.

After reading the newspapers over the weekend, I have come to the conclusion that what I said on Thursday was not nearly as harsh a judgment on the President's economic policy as that of some of our foremost economic thinkers and writers in America today.

So after reading these newspapers this weekend, I thought I would call the attention of my colleagues and others to several articles that appeared on this topic over the weekend, which I think are graphic in their detail and analysis of how awful the President's economic program is, and will be for this country if we enact his latest version.

The first thing I saw was, on Saturday morning, a front-page article that said the economy lost 100,000 jobs in December. The unemployment rate remains at an 8-year high. This was on the front page of the Washington Post on January 11:

U.S. companies shed more than 100,000 jobs last month,

reducing payrolls to their lowest level since the recession

began in early 2001, while the unemployment rate remained at

6 percent, its eight-year high, the Labor Department reported

yesterday.

Again, unemployment is high and continues to get worse. So clearly we have to do something in this country to stem the rising tide of people who are not working.

Looking back a couple of years ago to when the first economic downturn started, when the President put his recovery program into place, in 2001, it is clear it is not working. We are 18 months later and it is not working. It is going in the wrong direction. So do we keep going down that road or do we start to make some changes? That is what we have to do. We have to recognize we are going down the wrong road and we have to make some changes.

The President has now proclaimed his new economic program to build on the misguided one of 2001. This is a David Broder column from Sunday's Washington Post entitled: ``It Reeks of Politics.'' I wondered what he was talking about. I thought maybe he was talking about judicial appointments or something like that--``It Reeks of Politics.'' No. What Mr. Broder was talking about was the economic program. I will quote some parts of it.

Before the O'Neill talk--

He is talking about a phone call from Paul O'Neill--

I asked one of my favorite Republican economics guides what

he thought of the new Bush tax plan. He did not mince words.

This man--a veteran of the Nixon and Ford administrations and

a friend and adviser to many officials in the Reagan and two

Bush administrations--said, ``It may be the least defensible

policy ever.'' I would amend that slightly. It is probably

the most ill-considered since Treasury Secretary John

Connally persuaded President Nixon to freeze wages and prices

in 1971. Like that move--designed to help Nixon's reelection

in 1972, whatever the damaging long-term consequences, this

latest pack of proposals reeks of politics. The proposal to

eliminate taxes on dividends--the centerpiece of the plan and

the source of more than half of its staggering costs--looks

like ``the wrong reform at the wrong time,'' my mentor said.

I ask unanimous consent to have Mr. Broder's column printed in the Record at this point.

Mr. Rove and the political advisers to the President may think it is good politics, but it is terribly damaging to our economy. Again, I refer to some Republicans in this Congress and in this administration who support this plan, and I said they should properly be called ``red ink Republicans'' because they seem to have absolutely no concern about pushing plans that will skyrocket the deficit and the national debt.

Mr. Broder goes on in the last couple of paragraphs to point out:

Over time, eliminating this tax--

The dividend tax--

would likely deepen the growing budget deficits. The first

round of Bush tax cuts will cost more than $1.3 trillion in

revenue over 10 years. This package--

This new package--

pushes the costs to the $2 trillion level--even as the

demands of homeland defense, the war on terrorism and a

possible attack on Iraq add to spending pressures. But none

of this is likely to deter Bush. His arguments are flexible,

but the policy is constant: Keep cutting taxes from the top

down.

Now we are talking about more than $2 trillion in deficits. I guess the times have changed. Former Senator Everett Dirksen of Illinois once said: A billion here and a billion there, and pretty soon you are talking about real money. We have to revise that. Now it is a trillion here and a trillion there and pretty soon you are talking about real money. And, that is before we add huge additional sums in interest to be paid on the debt.

We have considerable needs that we have to meet domestically: Homeland defense, a possible war with Iraq--I hope not--a huge unfunded mandate on local schools called Leave No Child Behind, which is underfunded; special education, totally underfunded. These last two items, the cost of special education, the cost of all the testing and everything to leave no child behind, they mean higher property taxes at the local level, which is harder on the middle class than the tax on corporate dividends.

If we do not meet our obligations at the Federal level on special education and meet other education needs like the unfunded mandate of Leave No Child Behind, that means the States and local communities will have to do it. They will raise property taxes. That hits the middle class a lot harder than the tax on dividends.

Of course, towards the end of the decade we will have the retirement of the baby boomers coming. Then where will the money be to fix Social Security and Medicare? We will be so far in the hole at that time maybe then that dream will come true of those who want to privatize Social Security. Maybe that is what it is all about at the end of this decade.

So the reading this weekend was not too good, not promotive of the President's policies. There were a lot of warning shots heard. There was another article in the Sunday Washington Post, ``A Tax Plan That Will Pay Few Dividends.'' The article was written by Reuven S. Avi- Yonah, the Irwin I. Cohn Professor of Law at the University of Michigan, and David S. Miller who is a tax lawyer in Manhattan. I don't know either one of these individuals. Reading their article is a clear warning to those in Congress that if the President will not cease and desist from this ill-considered tax scheme of his to cut taxes on dividends, then we in the Senate must hold up the stop sign and say no. This article, ``A Tax Plan That Will Pay Few Dividends,'' is alarming in how it paints the future of what happens if we go down that path:

So the portrayal of the double tax on dividends as evil is

more fiction than fact. Dividend exclusion is unlikely to

have the desired effect of lifting the stock market, and the

administration's proposal won't really cure the woes of our

corporate tax system.

Instead, it raises serious issues. First, if the measure

does encourage individuals to

shift investments from taxable bonds into more risky tax-free

dividend-paying stocks, the investing public will be less

diversified and less cushioned for the next stock market

downturn. And if the proposal succeeds in increasing dividend

rates, corporations might borrow more to pay higher yields,

making balance sheets all the more shaky.

And fourth, the exclusion will benefit the wealthy. The

Urban-Brookings Tax Policy Center estimates that the

wealthiest 1 percent of all taxpayers could capture as much

as 42 percent of the benefits of a dividend exclusion. This

``tax cut'' won't put any more money in the hands of working

Americans.

But we are certain of one thing: Excluding dividends from

taxation will create opportunities for new tax shelters.

There will be tax shelters that permit corporations to

artificially manufacture dividends for shareholders and

shelters that permit shareholders to receive tax-exempt

dividends without economically ``owning'' any of the

underlying stock. Each of these shelters is easy to develop

under current law.

If history is any guide, Congress will respond by enacting

new rules to stop taxpayers from abusing the exclusion. Given

the IRS's recent track record, these anti-abuse rules will

run to hundreds of pages, few cheats will ever be caught,

those cases will take years to litigate and ultimately the

anti-abuse rules will prove ineffective.

Then this morning, I listened to NPR and I obtained a transcription. This was ``Morning Edition'' on National Public Radio. Bob Edwards was host in the first of a series of commentaries about the Bush economic plan. Commentator Kevin Phillips says:

The White House proposal to eliminate taxes on dividends

will increase debate over class warfare in the U.S. economic

policy.

Then Kevin Phillips came on, and he said:

Over the last two decades, the Republicans in Washington

have been quick to charge class warfare when the Democrats

complain that this or that tax or economic proposal gives too

much to the American rich. By this the Democrats usually mean

the top 1 percent income group. It's been a good GOP

strategy, and sometimes it has worked when Democratic

debaters have backed off. But this time, with the

administration's proposal to allocate more than half of a

$674 billion economic stimulus program to tax relief for

stock dividends, the whole class warfare issue was riding a

giant boomerang.

The Democrats say, and they're quite right, that what the

administration is doing is in itself class warfare; high-

income policy makeovers are short-changing the other income

groups. The top 1 percent of Americans alone hold some 40

percent of the individually owned stock in the United States,

and they also get about that same 40 percent ratio of

dividends paid out. Given all the concern in the White House

and elsewhere about pumping support into a weak economy, this

proposal is really mind-blowing, not just for its contents,

but for its lack of stimulus. Republican Senator John McCain

had called for payroll tax relief.

Well, so have I. Last Thursday I said what we ought to be calling for is a payroll tax holiday with the trust funds fully reimbursed through the general fund for perhaps four months and put the money where it really needs to go.

But not George Bush. The congressional leadership in the

White House are so wedded to an economic policy keyed to

helping those at the top that they lined up behind what is

really a program to make stock dividends into a 10-year, $300

billion individual income tax shelter. This isn't just

trickle-down economics. The benefits to the rest of the

economy, even to the stock market, are so conjectural that

trickle-down looks to become misting down.

That is Kevin Phillips; with long Republican credentials.

I say to my friend from Nevada, after the trickle-down economics of the 1980s, one of my constituents came up to me in Iowa and said: I heard all about the trickle-down, I have not even had any drops on me. I would just settle for a heavy dew. That is what Kevin Philips said we might get out of this: Maybe a heavy dew.

I yield to the Senator from Nevada.

I was so depressed after reading the newspapers this weekend, I didn't pick up the Wall Street Journal this morning. I guess I could get depressed further reading that.

I was not. I was aware of the fact we lost 100,000 jobs in December. It was Christmas. Imagine, at Christmas, to have 100,000 jobs lost. I also know we are at the highest unemployment level in over 8 years.

That is right.

Then we wonder why kids in the cities are hanging around the streets and get into drug, joining gangs and things like that. They need jobs. They need to be put to work.

Schools.

That is true.

That is right.

A huge benefit.

I say to my friend from Nevada, the assistant minority leader: You are thinking too rationally. You are just thinking too rationally. Evidently what is happening down there at the White House is they want to think irrationally. But we have to stand up and we have to think along the lines

the Senator is talking about here right now.

The Senator put his finger on it. I have been somewhat successful in the last few years, getting some money in my State for rebuilding and modernizing schools all over the State of Iowa. I visited--not all of them, I visited a number of them: new classrooms, getting new technology in.

I visited one school that just started up this fall, and one of the workers there, one of the brick masons, saw me outside. He said: I understand you helped get some Federal money to get this going, get this school improved.

I said yes.

He said: I want to thank you. It put food on my family's table for months, working on that school.

To answer this sort of statement the Senator made earlier about: Well, these are government jobs; wouldn't the private sector be better?--all the jobs done on that school were done in the private sector: private contractors, private electricians. They buy all the stuff from the private sector. So the ripple effect in the economy was tremendous.

That is why the Senator has put his finger on it. There are so many unmet needs in this country. I focus on schools a lot. I think the recent estimate is somewhere in the neighborhood of $189 billion, I believe--I could be off some--just to bring all our public schools up to modern-day standards; in other words, to give them the heating and the air-conditioning, the lighting, fire standards, the Internet hookups--just making them modern. What an unmet need out there.

What if we were to do that? Think of the jobs we would create. One thing I might also say to my friend from Nevada: Just think, not only do you get the jobs' ripple effect in the economy, but when it is over with, you have something that lasts a long time. You have new schools.

That is right.

I say to my friend from Nevada, I got depressed reading the weekend newspapers. Here is one in the Business section of the Sunday Washington Post, apropos of what you are just talking about here, about whom this is benefitting. The headline:

Some CEOs Would See a Windfall.

They have a nice little 1040 Tax Code wrapped up as a nice package here.

It says here:

. . . some of the biggest potential winners under the Bush

plan would be top executives at dividend-paying companies who

own big blocks of their firm's shares.

Walt Disney Co.'s Michael D. Eisner, for instance, owns

about 14 million company shares, a spokesman said. Disney

announced an annual dividend of 21 cents this month, which

adds up to about $2.9 million for Eisner. Under the current

tax code, assuming Eisner is in the highest personal income

tax bracket, the Disney chairman and CEO would pay about $1.3

million in state and federal taxes on that amount, according

to a tax expert at a major accounting firm. Under the Bush

plan, he might pay nothing on that portion of his income.

It went on. There were some other ones here that they mentioned. Sanford Weil, who owns 22.8 million shares, would save as much as $6.9 million in taxes.

This is for 1 year. I am sorry. I thank the Senator for pointing that out. It is not a lifetime sum. It might be repeated year after year.

Douglas Daft owns 2.5 million shares in Coca-Cola. He is chief executive. Coke paid 80 cents a share in dividends. Under the Bush plan, he would save about $875,000 in taxes.

These are all, I am sure, fine individuals. They have done a lot. They have invested in America, helped build big corporations. They are CEOs. I have nothing against them, as the Senator said. I have nothing against them. They are likely to be fine people. But does that mean what we are going to do now is take the Tax Code and give them even more wealth, as the Senator said, when we have 100,000 people in December out of work and we have so many unmet needs in this country? This is a cockamamie scheme.

My friend from South Carolina, who sits across the aisle from me, Senator Hollings, once said this came about after Charles Schwab went down to the Texas ranch--I guess in December or sometime like that--and had a little bite to eat and a little refreshment with the President. And Schwab evidently said: This is a good idea. And the President said: It sounds good to me. Let's do it.

I would be happy to yield.

I agree with my friend. I have had not a single call either. I have often said there is nothing wrong with being rich in America. There is

nothing wrong with having a nicer home and a nicer car, or a nicer lifestyle, as long as you have done it honestly and forthrightly. And most wealthy people have done it that way. There is nothing wrong with that. But I think the obligation that we have in government is to make sure we leave the ladder down for others to climb.

What the Bush administration seems to be saying is: You have a lot of money, you have made all this money, and you can pull the ladder up behind you. And guess what. We are going to help you pull the ladder up behind you.

That is not my idea of what America is about. America is about fairness and equity and giving the kids from Searchlight, NV, or Cumming, IA, that same opportunity to get a great education, to be healthy, to have a piece of that American dream, and to have that opportunity. But the more we concentrate wealth in the hands of a few people and then use the Government to ensure that they not only keep it to get wealthy, the more we are taking that American dream from those kids in Searchlight, NV, and Cumming, IA.

I would add my commendations also to my good friend, the Senator from Rhode Island, for his forthrightness in coming out as he did. I appreciate that.

Mr. President, I ask unanimous consent for 15 additional minutes.

It is a good exchange. I appreciate it.

There was a surplus.

Here is the chart that illustrates it. Here we are, starting in, in 1981, with the first Reagan tax program. Look at what happened to the deficit. It went down and down until finally we had the 1993 plan when we started to reinvest in America and get our economy back on track. Look at what happened. Look at this. It is a steady climb up for 8 straight years to one of the largest surpluses we have ever had in America.

Then, in 2001, the administration couldn't stand that we were getting out of debt. There were actually too much surplus for them. We were paying down national debt for future generations. This is the 2001 tax bill. Look at what happened--right back down where we started. Now we are back down in the hole again in the deficit. If that isn't enough, they want to add even more--taking more money out with this new cockamamie scheme of theirs to take it away with a tax dividend.

This is the largest surplus on record. Exactly.

I thank my friend for his keen insight into the economics of this country and this tax bill and how bad it really is.

I close by saying again that we have to kind of look at the past and take some instruction from what happened. If you look at unemployment rates, when the 1981 tax bill was passed, the unemployment rate was 7.4 percent. Eighteen months later, it went from 7.4 to 10.3 percent. When the 2001 tax bill was passed, unemployment was 4.5 percent. Now it is 6 percent. Now we have this coming in. Now in 1993, the blue line shows what we did. The unemployment rate went down. When it passed in 1993, the unemployment rate was 6.8 percent, 18 months later it was down to 5.4 percent and eventually it dropped to 4 percent. All of the red ink Republicans said how it would be so terrible for the economy. But, after the 1993 tax bill where the wealthy did see some real tax increases, the economy boomed. The deficits turned into surpluses. And we created a huge number of jobs. Again, we ought to be instructed by that and know the fact that the President's tax cut will not only plunge us further into deficit spending but it will not help increase employment. It will provide for one of the unfairest distributions of income in our country.

For example, the 100-percent reduction in dividend rates provides, for those making more than $1 million a year, an $88,000 tax cut--an $88,000 tax cut. And the average Iowan, making between $20,000 and $30,000, would get $204 in 2003.

But that is just the beginning. When you look at the outyears, it gets worse. By 2010, for the average Iowan, making $20,000 to $30,000, they might get maybe $25. For those making $40,000 to $50,000, they would get about $84. But if you made over $1 million a year, you would get $27,000 in tax benefits in the year 2010.

I believe it was former OMB Director David Stockman back in 1981, who called the Reagan tax cut--the trickle-down tax cut--he called it a ``riverboat gamble.'' And that is exactly what it was: a riverboat gamble. And we lost in terms of deficits and unemployment. We got it back on track in the 1990s, but here we are back again.

Well, Mr. President, a ``riverboat gamble,'' ``trickle-down economics''--whatever you call it--I call it ``go-go economics'': Don't think about the future. Live for today. And, by all means, whatever may help you politically, whatever will help ensure your reelection, do that, and forget about what comes after.

That is what this program is. Because it is designed, basically, to help those who will give the most out of their pockets to reelect this Republican President: the richest people in this country. And, of course, we just had campaign finance reform, so to speak. And what did it do? It doubled the amount of money that a person can give to a Federal candidate--doubled it.

So I believe President Bush, when he was a candidate, if I am not mistaken, raised over $100 million--with those $1,000 contributions. Well, now that doubles and with a primary and general combined, it adds up to $4,000. So it just goes back to the same people. Plus they give more money in other ways. So I guess what this is: rewarding your friends. I understand that politically he rewards your friends. But in this case it is hurting our whole economy by him rewarding his few rich friends at the top.

As my friend from Nevada said--and I share this with him--I have not spoken with one wealthy person in Iowa or anywhere who called me saying this is the best thing to do. Not one. In fact, I think most of them are even embarrassed by President Bush's proposal.

So the best thing, I think, is for the President to recognize this was a bad

piece of advice he got. I think one of the marks of leadership is to recognize when you are wrong and to rectify it. If you want to give the economy a shot in the arm right now, and give our bond markets a shot in the arm, I think the best thing the President can do is say he is scrapping this whole deal.

Then what we need is a payroll tax holiday, paid through the general fund to put money in the hands of working people, many of whom do not even pay income taxes. But they are working, and they are raising families, and they are paying every last penny of payroll taxes. Many of these people did not get anything out of the 2001 tax plan. These are people who need some help. I will be talking more next week and in the days to come about my concept of a payroll tax holiday that would extend for a few months, and which could be adjusted after that depending upon what the economy is doing at that time.

It would be a lot cheaper than what the President is proposing, No. 1. No. 2, it would give an immediate stimulus to the economy. Third, it is fair because it puts the money down at the bottom where it is needed. As we know in Iowa, and as I am sure they know in Minnesota, you don't fertilize a tree from the top down. You have to put it in at the roots and let it grow. That is what a payroll tax holiday would do. That would give us our short-term stimulus.

Then--exactly what Senator Reid was talking about--let's invest in rebuilding and modernizing schools. Drive the interstates someday and have your car beaten to death. That interstate highway system is now almost 50 years--a half a century--old. It needs to be rebuilt. These are things that need to be done in investment in the future of this country that puts people to work. That is the kind of job growth we need in this country. And all those jobs are not done by the Government. They will all be done by the private contractors.

So I hope the President will recognize the bad advice he got, will say he is scrapping this plan, and then come down and work with all of us. There are bipartisan things we can do here--I am convinced of it-- bipartisan things we can do that will be both a short-term stimulus, that will not inure huge deficits in the outyears, and there are long- term things we can do to put people back to work that will benefit this country.

I call upon all my friends on the other side of the aisle who are not ``red ink'' Republicans to join in this effort and to recognize the future of this country is not more red ink and more red ink and more red ink, but it is getting this country out of the hole, paying off the deficits, and getting back to a surplus once again.

Mr. President, I look forward to working in a bipartisan fashion towards this end. But the lead has to come from the President. As long as he pushes that dividend tax scheme of his, well, then we are going to be kind of blocked from doing anything here. So I hope the President will scrap it, call us together, and let's work out a bipartisan plan to get this country moving again.

I thank the Presiding Officer for his indulgence. I yield the floor.

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

Mr. President, I understand that the Senate is now in morning business. I ask unanimous consent that I be allowed to proceed in morning business for up to 30 minutes.

Mr. President, I want to spend some time today here on the floor of the Senate discussing the state of the American economy, the choices we face, how we got here and hopefully a vision for a better future for our middle-class working families.

What is the state of the Nation's economy? You don't need to look at the economic indicators, and the latest unemployment statistics, although they could tell you a story. You can just walk on the streets of Burlington or Waterloo or any city, or most towns large and small anywhere in America. For ordinary people paying taxes, it is tough for families right now. People are hurting.

In the longer view, we face a growing fiscal and economic crisis due to a lack of reasonable economic leadership of this President. We have returned to deficit spending and are mortgaging the dreams of the middle class with millions to finance a tax cut aimed at the very few. That tax cut is squeezing out sensible, middle-class tax relief. It is squeezing out funding for health care and education. In the last year, the President, even in his budget reduced funding for the Leave No Child Behind Act, which just yesterday at the White House he was touting as being a great success. It is squeezing out money needed for that.

Worst of all, the President's fiscal mismanagement threatens Social Security and Medicare, and threatens having a real prescription drug benefit that is so needed. It threatens the need that we have to raise the floor on Medicare payments to States. My State of Iowa is right now rock bottom in the Nation in terms of beneficiary funding for Medicare.

Again, we are facing the retirement of the baby boomers who are coming along pretty soon; and, of course, the need to fight terrorism.

All of these are being squeezed by the misguided and misplaced economic policies of this administration. To date, the economic leadership of President Bush has been a miserable failure.

Let us start at the beginning.

On the day that George W. Bush was sworn as the 23rd President of the United States, the 10-year budget surplus was estimated at $5.6 trillion $3.1 trillion on budget--the largest in American history. That year's budget surplus was $236 billion--again, the largest 1-year budget surplus in our Nation's history. The economy had created 22 million new jobs in the previous 8 years. Unemployment stood at 4.2 percent, a record.

The Nation's fiscal health in January of 2001 was such that facing a slowing economy, we could have passed a substantial stimulus package to boost the short-term economy without harming the Nation's long-term fiscal health. In kind of simple terms, it is if you or I get sick, and if we eat right and exercise, and we are in good health, we can even ride out the occasion of a bad flu, for example. But if you haven't taken care of yourself, if you haven't eaten right, and you are not in good health overall, a simple flu can put you in the hospital or on life support. That is the kind of smart economic plan we followed in the 1990s. Those fiscally responsible and pro-growth policies made it possible for us to deal with the short-term economic slowdown without harming our Nation's long-term fiscal health.

Unfortunately, President Bush chose a different but now an all-to- familiar economic course--a massive, fiscally irresponsible tax cut that does little to create jobs but does benefit largely the wealthiest among us. It has little or nothing to do with helping the middle class or with creating jobs.

In this day and age it seems that a Republican candidate running for

President can never go wrong by proposing a massive, deficit-bloating tax plan that largely benefits the wealthy. That is what candidate George Bush did in 1999. It was not about the state of the American economy, it was about simple Republican politics.

The Bush tax plan forgot that Americans don't live their lives on the right or the left of political parties. They live and work and struggle as part of the great American middle class. And they are here every day--not just on election day. They deserve economic policies that respond to their needs--not the short-term political goals of this President, or any other politician or party or political theory. Not only is the Bush tax plan rooted in what I call 2000 Republican politics, but it is deeply rooted in a failed economic theory called ``supply-side economics.'' Supply-side economics is nothing more than a dressed up fancy name for what we called back in the 1920s and the 1930s trickle-down economics. In fact, former President Bush called it, I think, what it really is. He once termed it voodoo economics.

You can call it anything you want, but, in the end, it spells disaster for America's long-term fiscal health. At its core, trickle- down economics says that if we just slash marginal tax rates, particularly for the wealthiest Americans, they will get so much money that it will trickle down, and the economy will grow so rapidly that this tax cut will, to a significant extent, pay for itself.

Well, it is a nice theory for those who are not weighted down by the burden of reality. It does not work in widely held economic theory and it did not work in practice when former President Reagan tried it in 1981. That is a fact.

Many will claim that the 1981 tax cut was good for the economy. In fact, the economy dropped like a rock. When it passed in August 1981, unemployment was 7.4 percent. By the end of the year, it had climbed to 8.5 percent. A year after passage, it was continuing to rise, reaching a peak of 10.8 percent.

In Iowa, we faced the worst farm and small-town prices since the Great Depression. I have a chart in the Chamber that depicts what happened after the 1981 tax bill was passed. It shows the unemployment rate going up and up and up and up and up all the time. That was the result of that 1981 tax bill.

While the economy did get back on track, it did thanks to a sharp cut in interest rates by the Federal Reserve in 1982. But the adverse effects of this misguided tax policy remained. The Federal deficit climbed from 2.7 percent of the gross domestic product to over 5 percent--double. More importantly, over time, the Government's publicly held debt multiplied fivefold as well.

This failed philosophy is now being put into practice for the second time with the first Bush tax cut and now with this proposed second tax cut. That is why I call those who support this failed economic program ``red ink'' Republicans. Maybe, as we move ahead if this is the course Republicans choose, I say to the Presiding Officer, we should replace the symbol of the Republican Party with something more fitting. Rather than an elephant that is supposed to have a great memory, perhaps the symbol of the Republican Party ought to be a big bottle of red ink, because every chance that these ``red ink'' Republicans get, they leave us swimming in red ink in this country. They did it in 1981. They are doing it again now--deficits, deficits, deficits as far as the eye can see.

This chart shows what happened during the 1980s. The deficits climbed. Then, in 1993, we enacted the Clinton economic program. Look what happened to the deficits. Down they came. Down they came, until we had the largest surplus on record.

Then we hit 2001, and another trickle-down economic tax plan, with deficits soaring again. And again, we are swimming in red ink in this country. The trickle-down, red-ink tax cut in 1981 did not get folks to work then, and it isn't now.

Just look at how many of my Republican friends reacted to the recent appointment of Stephen Friedman to the chairmanship of the President's National Economic Council. Many vocally opposed Mr. Friedman's appointment because, of all things, he was a member of the Concord Coalition, a bipartisan organization focused on doing away with the deficits. They certainly did not want anyone like that as the Chairman of the President's National Economic Council.

I think the case of Mr. Friedman signals the modern day Republican Party's total abandonment of fiscal discipline. It began in 1981. It continued through the 1990s as Republicans, to a person here in the Congress, opposed President Clinton's economic plan, a plan that balanced the budget, brought us a surplus, created 22 million new jobs, and gave us the longest economic expansion in America's history.

Now these ``red ink'' Republicans are still at it today. We heard all kinds of arguments in 1993--I was here--from my friends on the other side of the aisle about how terrible this 1993 recovery plan was going to be. Why, it was just going to be awful. It was going to destroy this country. And yet, as I said, it created one of the longest economic expansions in our Nation's history. Not one Republican voted for it.

One trickle-down Republican after another united in one prediction: that the 1993 bill was going to ruin the economy.

Well, let's take a look at what happened, after that 1993 bill was passed, in terms of unemployment. Unemployment was high. We passed the bill and unemployment came down. It came down, in fact, to the lowest point in our Nation's recent history; down to about 4 percent in the late 1990s.

Now we come to the end of 2000. We have our country on course. We have a record surplus. We have predicted surpluses for this decade of over $5 trillion; a healthy basis on which we could now begin to address the needs of the baby boomers as they start to retire, reduce the public debt, get our economy on a sound keel, and then, when the baby boomers retire, we will have the wherewithal to meet those needs of Social Security and Medicare. That is where we were at the beginning of the Bush Presidency in 2001.

That was until President Bush sent down his tax proposal of 2001. The Congress passed it and sent it to the President. The price tag was supposed to be $1.35 trillion, but the actual cost was much higher. It was only by using some accounting gimmicks and tricks that would even make Ken Lay of Enron blush. The actual cost goes much higher.

The 2001 tax bill was structured in another interesting way. In 2001, those in the top 1 percent of income--with incomes averaging over $1 million got under 10 percent of the benefits. For 2002 and 2003, they get under 20 percent of the benefits. By 2006, they are scheduled the get over a third of the benefits. And in 2010, they get over 50 percent of the benefits.

This truly is trickle-down economics. The top 1 percent's share of the Bush tax cuts--see, it is a kind of little trick. It starts out low, but look what happens when we go through the decade. And we wind up in a decade where over 50 percent of the Bush tax cut goes to the top 1 percent, the wealthiest people in this country.

What did President Bush tell us at the time in trying to pass this bill?

I quote here from a speech he gave at Western Michigan State:

Tax relief is central to my plan to encourage economic

growth, and we can proceed with tax relief without fear of

budget deficits, even if the economy softens. Projections for

the surpluses in my budget are cautious and conservative.

They already assume an economic slowdown in the year 2001.

President Bush gave that speech on March 27, 2001:

. . . we can proceed with tax relief without fear of budget

deficits. . . .

We went from a surplus, the largest on budget surplus in our Nation's history of $83 billion, to over a $300 billion deficit just two years later; a shift of over $400 billion in just two years. $\1/2\ trillion in surpluses wiped out in 2 years of this Presidency. And he said there would be no fear of budget deficits. Well, maybe the President doesn't fear budget deficits; maybe like President Reagan.

Maybe they don't care, but the middle class in America, the baby boomers about ready to retire better fear it because it is eating right into Social Security. That is exactly what it is doing.

Then he says, ``projections for the surpluses in my budget.'' Can you believe that his budget actually projected surpluses when in the very first year it plunges us into the biggest deficits we have ever had?

I can only say that if I were President and my economic advisers had given me this plan and written this speech for me, which I assume they probably did for him, and it turned out the way it turned out, I would fire the whole lot of them. Obviously, they didn't know what they were talking about. Either that or they knew what they were doing, they knew what they were talking about, and they were pulling the wool over the eyes of the American people. I tend to think that is really what it was about. It was a scheme to reward those who had done the most to help this President get elected, a massive tax cut for the wealthiest in our country.

Two years after this quote, here is the Bush economic record: The estimated 10-year budget surplus of $5.6 trillion is wiped out; this year's on-budget deficit, $319 billion as estimated by the CBO. The economy has shed 2 million jobs, the worst record of negative job creation of any President in more than 50 years.

I must hand it to this President. All this was done in 2 years. It is amazing. The latest unemployment is about 6 percent. This is where we came from: 4.5 percent in April, 2001 when the bill became law. After 18 months, it is still going up. Hang on.

That is why we need a short-term stimulus to stop the rise in unemployment. Quite frankly, the President's program of slashing taxes on dividends will not do that. I will explain that.

The Center on Budget and Policy Priorities noted that:

The tax cut would cost the Treasury approximately $4

trillion in the decade after 2011, the same period when the

baby boomers will begin to retire in large numbers and the

cost of Social Security and Medicare and Medicaid and long-

term care will rise substantially as a result. Yet it is

during that same decade, after 2010, that the cost of a

permanent tax cut would explode as all of its revenue losing

provisions would then be fully in effect.

As I pointed out, after it goes fully into effect, well over half of it goes to the top 1 percent of our country. And yet those who rely on Social Security and Medicare and long-term care are the ones put at risk.

Continuing:

[If] the tax cut takes full effect as scheduled and

continues after 2010, the long-term cost will substantially

exceed the 75-year deficit projected within Social Security.

In fact, if the tax cut were just scaled back so that three-

fifths of it took effect while the funds of the other two-

fifths were used to strengthen Social Security, the entire

75-year projected deficit of Social Security could be

eliminated.

There you have it. You have your priorities. Do you want to shore up and secure Social Security for the next 75 years, or do you want to give the top 1 percent of our country more tax breaks?

That is the course we face. That is the course we have to change: Going from an $86 billion budget surplus to a $318 billion deficit, a shift of over $400 billion.

The economic record of this President is one of fiscal mismanagement, economic stagnation, rising unemployment, and jeopardizing the jobs and the futures of our middle-class families and jeopardizing the long-term health of Social Security and Medicare. That is why we have to change course now.

I said, we need to begin with a stimulus package to stop the rise in unemployment. In the coming debate, the President has already accused some of us on our side of playing ``class warfare.'' But it is the President's own tax cut of 2 years ago that already declared class warfare, class warfare on the middle class. Take from the middle class, give to the wealthiest 1 percent. If that is not class warfare, I don't know what is.

Middle-class families are not getting their fair share of tax relief. They are not seeing their incomes rise. Many are losing their jobs. And every day hundreds of thousands of working families go without any health insurance. Millions of Americans are already without any health insurance coverage whatsoever; every day hundreds of thousands more are added to the rolls.

For some reason the President cannot see the pain that his economic policies are causing. The President's refusal to see his own mistakes reminds me of that scene from the Caine Mutiny. The ship was sailing through a typhoon. It was in danger of floundering, but stubbornly and rigidly, Captain Queeg tells the helmsman to hold course, because Queeg refused to listen. He refused to see the danger ahead. He could not save the ship.

Just like the crew of the Caine, our first loyalty is in saving the ship, not protecting the captain, not blindly following what the captain says when we plainly know what lies ahead. That is why it is time for us to change America's economic course. We need to provide an immediate stimulus to put people to work.

The President made his proposal. It is more of the same--more tax cuts for the wealthiest, little for working and middle-class families. The centerpiece of the President's new proposal is the elimination of dividend taxes at an estimated cost of $364 billion over 10 years.

According to the tax policy center, about 45 percent of these benefits will go to the wealthiest 5 percent of taxpayers. Sound familiar? It should. We did the same thing 2 years ago.

Here are the facts: A 100-percent reduction in dividend taxes, plus the other components of the Bush economic plan, would provide for those who make more than a million dollars a year over $88,000 in tax cuts this year, 2003. For my fellow average Iowan making between $20,000 and $30,000 a year, they will get $204 in 2003. So I guess the President is right. Everybody gets a little something--yes, average working families get the crumbs from the table and the wealthy get the smorgasbord. But, looking ahead, most of the benefits that went to average taxpayers dissolve. But, the linchpin of the plan that mostly goes to the top 5 percent, that continues on for the long haul

That is class warfare. It is a direct frontal assault on the middle class in America. But not only is the Bush plan class warfare, it mortgages our future by raiding the Social Security and Medicare trust funds. And now it will shortchange key investments in education, health care, and homeland security. I predict--and I will come to the floor next week and apologize if I am wrong--that the appropriations bills that will be brought up by the Republican side to be added to the continuing resolution for this year will have cuts in education compared to what the Appropriations Committee approved last summer. I predict that there will be cuts in education.

Quite frankly, in the budget for this year that the President sent up for fiscal year 2003, he actually proposed cutting funding for Leave No Child Behind. Secretary Paige was on television today saying that was wrong. Next time I see Secretary Paige, next time he comes before our committee for a hearing, I am going to get the White House's own budget book and lay out the programs for Leave No Child Behind and show him what the President's budget was. There was a cut of $90 million in the Bush budget this year for the Leave No Child Behind programs. Why? So we can pay for all these tax cuts for the wealthiest in our society.

Trickle-down economics. We need to get a prescription drug benefit through for the elderly, but there will not be any money for it. Why? Because we are going to have a tax benefit, doing away with taxes on dividends, which benefit the wealthiest 5 percent. We will not have any money left for prescription drug coverage. So we have to change course. We cannot blindly follow the captain in his misguided economic policies for America. We must stimulate job growth now and it must not come at the expense of Social Security.

I think the following elements should be addressed and should be passed to get our economy going. First, extend the unemployment insurance benefits. We need to do that now. We have considerable reserves and now those facing long-term unemployment need help. Of course, if they get that money, they spend it quickly and it helps the economy. Now, we did pass an extension this week that is short, but we need to do more.

Secondly, we need to provide fiscal relief for the State. States all across the country, including my own, are facing huge deficits that they have to eliminate under their State constitutions. That means there are going to be big cuts in crucial services--often health care for the poor or the working poor, education for our children, housing, help for the homeless, things that States have to spend a lot of money on.

Well, they will not have it. So we are going to need to step in to provide these crucial services.

Third, we need to quickly put people back to work on things we need. I have been trying for years to get the Congress to address the need of rebuilding and modernizing schools all over America. We did succeed in getting a billion dollars into that program in the last Clinton budget for 2001. The results of that are now coming in from States all over America. That money was used to rebuild and modernize schools all over America.

Our experience in Iowa--I can only speak about that because that is all I have the data for right now--was that for every dollar that we put into rebuilding and modernizing schools in Iowa, it translated into well over $20 of economic activity. It put people to work, it got money into the economy, and guess what we got out of it. We got new schools, new classrooms, better equipped classrooms for our teachers to teach in.

There are many projects in this country that are truly needed. We can have people working on these within months. I was told when they were using this money to build a new school in Iowa with this money that not only did it put people to work immediately, but the whole chain-- everything from the electricians ordering electrical parts, lights and wiring, to those who put in the wallboard, ordering that, and the lumber and the tile and everything that goes into that. As one small restaurant owner told me, for the year and a half they were building the school, he even had people come in there buying lunches, so it even helped that local economy. This is what we need to do to get people back to work right away.

Fourth, we need to pass a short-term middle-class tax cut that will improve our short-term economy without further harming our long-term fiscal health. I say that we should consider a short-term payroll tax holiday, paid through the general fund, that will put money in the hands of people more likely to spend it right now. If we had a payroll- tax holiday, people could get their money directly through the regular payroll checks, that will speed up its delivery and the likelihood that it will be spent now.

We need to stimulate the economy right now and this would help working people left out of the tax rebates in 2001.

Fifth, we must cut wasteful spending and close tax loopholes. I have outlined a series of cuts in Government spending that would do that. I say to my friends on the other side that we can have a significant stimulus package and we can take care of the unemployed, provide tax relief for middle-class families for this year, and reduce the size of Government at the same time.

One of the first things we have to do is have competitive bidding in Medicare. Now, we have cut down the waste, fraud, and abuse in Medicare over the past 10 years. It has gone from $20-some billion a year to around $11 billion or $12 billion. We have a ways to go. But the one thing that would save money right now and cut wasteful spending would be good old-fashioned competitive bidding in Medicare. We ought to do it and we ought to do it soon.

I believe that the stimulus package should entirely be in the people's hands this year. The cost should not exceed $100 billion. And, that it could be more than fully paid for over the course of ten years through the implementation of reductions in spending by things like requiring competitive bidding on durable medical equipment and by eliminating the tax rate cut that only goes to the one percent of those with the highest incomes, averaging over a million dollars a year. We also need to eliminate allowing Benedict Arnold companies and individuals that make their home overseas in order to escape paying their fair share of taxes.

Well, this, I believe, is the course of action we ought to take and not continue on the disastrous course we were set upon 2 years ago. And now we are asked to make it even worse with the new President Bush proposing tax relief for the wealthy. We need a strategy that adheres to these good principles: benefit working and middle-class families, focus on job creation, restore fiscal discipline. In short, America's new economic strategy must take into account the economic realities, not failed trickle-down theories or cynical political strategies purely for election purposes.

When it comes to the economy, I will paraphrase President Bush in his acceptance speech at the Republican National Convention almost 3 years ago: You have had your chance. You have not led. We will. That is what we need to do.

President Bush's response was to make permanent the 2001 tax windfalls which will blow a hole in the budget to endanger Social Security. Add to that another windfall tax benefit to the wealthiest in our country. By every measure, it is the wrong course for America. It will just ensure the rich get richer, the poor get poorer, and the middle class gets stuck with paying both of the bills. It is time for a new direction. I am hopeful that in the Senate we can have a real debate over the best economic policies for the future of our country.

When it comes to the economy, the President reminds me of the guy who is lost driving but he refuses to pull over and get directions. He just keeps going down the same roads over and over. Mr. President, it is either time to pull over and get directions or let someone else drive because it is obvious, Mr. President, you and your economic team are lost. It is time to return to policies we know work: Balanced budgets, tax cuts for working families, investment in education and health care, not failed trickle-down economics.

Let's start the debate. Let's have the debate, but more than the debate, let's have the votes in the Senate. We can no longer afford to delay. We have to step up to the plate and change our course. We are now in the midst of a serious economic and fiscal predicament. We have to make some adjustments, some course corrections. We cannot cling dogmatically and rigidly to the same old policies that did not work before, are failing us now, and will jeopardize the future of Social Security and Medicare.

Again, let's have the debate but, more importantly, let's have the votes to change the economic course in our country so that our middle- class families are the ones who benefit. Let's end the class warfare declared on the middle class by this President and his failed economic policies. Let's recognize that we are all in this together, and the best way to keep that ladder of opportunity there so people, yes, on the bottom can become middle class and, yes, those in the middle class can become rich is to change the failed economic policies of this administration.

I yield the floor.