JOBS AND GROWTH TAX RELIEF RECONCILIATION ACT OF 2003CONTINUED
Mr. BIDEN. Mr. President, I rise to speak in opposition to the amendment of the Senator from Arizona. This amendment would retroactively breach the contracts entered into by States and their attorneys, and the settlement agreement reached in the tobacco-related Medicaid expenses litigation.
Let me remind my colleagues of the context in which this historic tobacco settlement came about. There were over 40 years of law suits brought against tobacco companies, occurring over three different time periods.
When these attorneys brought this litigation, cases against tobacco companies would go on for years and years, almost always with little or no favorable results. In order to catch the deception and subterfuge of these companies, these cases needed staying power. The attorneys bringing these cases needed the ability to withstand significant losses while they uncovered the facts needed to make the damning case that the tobacco companies had been hiding from the public.
The plaintiffs' attorneys undertook this riskiest of cases against daunting odds, with a high likelihood of never getting paid at all. In the first phase of tobacco litigation, no one was able to muster the resources needed to bring these cases. Then a group of attorneys in the public interest pooled over $100 million of their own money in order to withstand the onslaught put up by tobacco companies bent on hiding the truth from the public.
The tobacco companies spent approximately $700 million a year in legal fees to their lawyers during this period. Thanks to their tenacity, their legal skill, and the righteousness of their cause, in the end the attorneys who brought this action prevailed. They secured a settlement that returned $246 billion to the States. That is "billion" with a "b." To put it in perspective, that is almost as large as our entire budget deficit.
Let me say that again the tobacco settlements resulted in a huge windfall for the States and for the American people. I daresay that, in this day and age when State budgets are more squeezed than ever as a result of Federal cuts and unfunded mandates, if the States were offered this deal again, including the attorney's fees, they would take the deal in a heartbeat. In a heartbeat.
And the money collected by the States under this settlement is only the beginning. The settlement funds a new public education program to reduce youth tobacco use; it provides money every year for tobacco-related research; it dissolves the organizations that have historically served as the tobacco companies' propaganda machines; and it prohibits tobacco advertising aimed at children, such as the use of cartoon characters.
Supporters of this amendment would have you believe that its provisions somehow make the existing system fairer. Nothing could be further from the truth.
The American way is to reward those who take a risk and succeed. We grant patents that protect inventions for 17 years. We give copyright owners exclusive rights to their works for their entire life, plus another 70 years. More importantly, we don't punish people who come up with a great idea and turn it into a success. To the contrary we let them keep the fruits of their labor. But under the logic of this amendment, we would seek to penalize Bill Gates' $40 billion net worth, simply because he started with little more than a great idea and a vision to make it happen, took the risk, and prevailed. Just like these attorneys who brought the tobacco cases.
Supporters of this bill would also have you believe that it is only the trial lawyers and their supporters who oppose this amendment. Nothing could be further from the truth. Among others, consumer advocates people who look out for the little guy strongly oppose this amendment.
I also find it ironic that this amendment, which would abrogate a settlement entered into by the States, is being offered by some of the very same Senators who have made a career of advocating for States rights. This amendment, which would abrogate the contractual rights of private parties, is being offered by some of the very same Senators who have made a career of upholding the right to enter into contracts without undue regulation.
Just to be clear my colleagues refuse to interfere in the right of States to send defendants to execution without competent counsel, but insist on interfering to undo an agreement where the States reap $246 billion from the tobacco companies. Quite simply, they have got their priorities backwards.
I might also remind my colleagues of one other historical fact: Some of the Senators who are pushing this amendment today are the same folks who, just a few years ago, were doing everything in their power to defeat Federal attempts to force the tobacco companies to pay for the huge damages they have inflicted on the American people. Fortunately for the American people, and for the 50 States, they failed. Now, however, they are trying to undo this successful settlement after the fact.
Ladies and gentlemen, this is America. We make deals and we stick to them. We do not go back on our word. I urge you to oppose this amendment.
Mr. BIDEN. Mr. President, our economy is in a slump unlike any in recent memory. In fact, we are experiencing a downturn with features unseen since the days of the Great Depression.
In the last 2 years, we have lost over 2.6 million jobs in the private sector. That is the longest continous decline in the number of jobs in over 50 years. It has almost doubled the number of Americans who are stuck in long-term unemploymentout of a job for over half a year.
The unemployment rate has just risen to 6 percent, with 8.8 million Americans out of work.
The stock market has lost value by more than ten percent each of the last 3 years. The last time that happened was, again, the Great Depression of the 1930's. A drop of almost 30 percent in the value of the stock market has decimated the retirement savings of millions of Americans, and drained over $5 trillion in wealth from their net worth.
That is why we are here today, to debate how to respond to this crisis. This crisis is real, it is affecting millions of families directly and indirectly across this country. In addition to the thousands of jobs lost with every new report, millions more families are concerned about the security of their own jobs.
In fact, the situation is so precarious that the Federal Reserve, under the leadership of Alan Greenspan, has shifted its historical concern about inflation to a worry we haven't seen since the 1930'sdeflation. Despite a series of 12 interest rate cuts in a row, that thave pushed interest rates to forty-year lows, the Federal Reserve's meetings are now focused on keeping us out of the kind of deflation trap that Japan has been stuck in for more than a decade.
When the Fed is more worried about deflation than inflation, you know you have a probiem.
And while we ended the last century with the Federal budget in balance for the first time in a generation, we now begin the new century facing deficits bigger that we have ever seen. The Congressional Budget Office has just raised its estimate of this year's deficit to $300 billion, and that doesn't even count this $350 billion tax cut before us today.
Wall Street analysts expected the actual deficit to be closer to $400 billion or even more for this yearthe biggest dollar figure ever.
This kind of budget policy is the reason why we will soon be voting to raise the national debt ceilingto allow us to borrow enough money to pay the bills we have already incurred.
This will be the single largest increase in the national debt in our history, adding almost a trillion dollars to the debt limit, raising it to over $6.7 trillion.
Just a few short years ago we were paying down the national debt.
We have gone from a projected surplus of $5.6 trillion to a $1.8 trillion deficit. This is a record of economic bad news that has not been equaled in most American's lifetimes.
Now we are piling up additional debt, and adding heavy new interest charges to the spiraling costs of this administration's irresponsible budget policy. Over the next 10 years, we will add an additional $1.7 trillion in interest costs on that Debt$1.7 trillion that will not be available for homeland defense, for health care, for education, for law enforcement.
How well I remember. How the men and women in the business community would come to me in the decades of deficit and tell me, "Balance the budget, stop borrowing money like nobody else needs it. Get the government out of the credit markets so we can invest and grow."
Where are those voices we used to hear on the Senate floor, imploring us to reverse decades of borrowing and return to the straight and narrow of balanced budgets?
We need a strong dose of those principles now. We need an economic stimulus that works. And we need an economic policy that does not mortgage our future, that does not dump the bill on our children and grandchildren.
We need a plan that we can afford, that treats the very real, specific problems that average families in Delaware and around the country are facing today. Unfortunately, the bill before us is the wrong plan, at the wrong time, at the wrong price.
We need an economic policy that has an impact right now, in the very short terman impact on consumer spending, on the demand side, to give employers a reason to bring those workers back.
That means tax cuts for the vast majority of American families who need some relief, and who can be counted on to go out and spend that moneyto create demand for more products, create more jobs.
But in addition to the very real and very serious problems we are facing today, in the very near future, just around the corner, the retirement of the baby boom generation will stretch our Social Security system to the breaking point.
Just a decade from now, surpluses in the Social Security systemextra funds that help to cover some of our current deficitsthose surpluses will disappear. Then the drain on our resources will accelerate untilaccording to the Social Security System's trusteesby 2030 Social Security and Medicare will be a third of every Federal income tax dollar, and by 2040, almost half of every Federal income tax dollar.
That is clearly an impossible situation that we cannot permit to occur. We must act now to makes sure that we have the resources to keep the promises we made to the millions of Americans who have paid their Social Security taxes over the years.
But every dime of the $350 billion tax cut before us today is borrowed from Social Securityit breaks our promise to those who depend on Social Security, and sends the bill to our children and grandchildren.
The solution we are seeking today, for the ongoing loss of millions of jobs, must not ignore the crisis in federal finances that is beginning now and crests just a decade away.
It is not just that it is unfair and irresponsible to put the burden of our choices off on our children. That should be reason enough to reject this policy out of hand.
But a moment's reflection tells us that if we borrow $350 billion, or $550 billion, orif the President had his way, $726 billionif we borrow that money from the same capital markets where our corporations and home buyers get their money, that policy is self-defeating.
It raises the cost of money, and slows the economy down, while handing out windfall tax breaks that people will get without any change in the behavior.
That policy is indeed unfair. It is irresponsible. And it is ineffective.
But a kick-start that gets people spending and businesses hiringand that has a reasonable costthat kind of policy can work.
First, we all know that the real price of this bill is not $350 billion. We have already heard that key members of the Republican leadership do not expect that the tax increases in this bill, that keep the cost of the tax cuts down, will survive a conference with the House. If those tax increases go, the cost of this bill goes up.
And key provisions in the billlike the dividend exemptionphase in slowly and then are supposed to expire after ten years. Even if you buy the ideawhich I don'tthat giving a tax break to the small percentage of Americans who receive dividends can somehow turn the economy around, how can you expect that change to happen if businessmen know they should wait a few years until the exclusion is phased in?
And what kind of permanent change in corporate behavior can we expect when we know that the door is going to slam shut on this deal 10 years out?
One answer is that they don't expect that door to close. They expect the dividend provision and others to be extended. Or more and more dividends could be excludedthat creeping expansion and acceleration has been the pattern since we passed the 2001 tax cuts.
Full exemption of dividends, if it were in place at the end of this decade, would cost $750 billion over the next 10 years.
For that and many other reasons, this tax cut, as big and irresponsible as it is, is just a place holder for even more reductions, and even more deficits, even more debt.
But designed this way, to get ten pounds of tax cuts into a five pound bag, so to speak, has resulted in a tax cut that even a conservative economist who supports the administration has called, and I quote from yesterday's Washington Post, "one of the most patently absurd tax policies every proposed."
But maybe if this bill offered the average American family some real tax relief, maybe if we could expect a little help for the millions of jobless men and women stuck in long-term unemployment, some of the cost would be worth it.
Tragically, there is no reason to expect this legislation to do anything to stimulate the economy this year or next. The way this tax cut is designed, there is no reason to expect any benefit to the economy, and every reason to believe that the deficits it creates will cause harm.
Estimates by Congressman HENRY WAXMAN, who examined corporate statements, show that the top three executives at Fortune's largest 100 companies would get a tax cut of $118 million if dividends were totally excluded from taxation, the goal that administration officials admit is the real aim of the partial exclusion in this bill. Under full exclusion, twenty one executives would get a tax cut of $1 million.
That is for doing nothing. Just for doing what they already do. That is not corporate tax reform, it is simply a windfall. I trust that those men and women earn every dime they already make. But no one can argue that a $118 million personal windfall into the already large pay packages of those executives is going to create a single new job.
I you really wanted to fix the problem of dividend taxation, even Republican economistsindeed, especially Republican economistswill tell you that you should eliminate the tax at the corporate level. That at least has the potential of changing the behavior of firms that now must choose between borrowing that is not taxed and dividends that are taxed.
That could be part of an honest debate about tax reform and job creation.
And when Alan Greenspan endorsed the idea of reforming dividend taxes, he said it should be done in a way that does not add to the national debt, and that it should be part of a bigger plan of reform. This proposal flunks all of those tests.
Only 13 percent of the impact of this bill will be felt in this year, Mr. Presidentand less than half in its first 2 years. And the vast majority of the revenue losses come in the future, as the crisis in Social Security approaches. This plan turns economic logic on its head.
This is not designed to stimulate the economyif it were, it would provide a quick, short-term boost to family incomes, and would give businesses incentives to act right now to increase investment and create jobs.
Under this bill, the one-tenth of one percent of Americans who have an income of over $1 million will receive an average tax cut of $64,000. But those Americans in the middle 20 percent of the income spectrum would get an average tax cut of $233.
That's right, the average American gets a tax cut of $233, under this bill.
That is not fair. But it is not good economic policy either. Those good men and women fortunate and hard-working enough to make over a million dollars a year are not going to change their behavior, they aren't going to create any new jobs, just because they get an additional $64,000.
But getting money to the families who will go out tomorrow and spend it, getting money to those who are about to lose long-term unemployment benefits, getting money to the states to prevent further state tax increases or spending cutsthat has the best hope of giving the economy the stimulus it needs.
The tax cut program that makes sense and that I supported would provide a tax cut for every American taxpayerfor example, $300 for every adult, $300 for the first two children. It increases the child tax credit to $700 this year and $800 next year. And for middle class and working families, this tax cut plan that I supported accelerates relief from the marriage penalty.
Altogether, a middle class family of four would have gotten a tax cut of $1630 this year under the Democratic tax cut plan.
And if you add to that my proposal to allow parents to deduct the cost of college tuition a family with kids in college could get an additional $3000 tax break. That is real help, for real families, to deal with a real problem, and frees up real money to stimulate the economy.
Incredibly, this so-called "Jobs" bill makes no provision to extend the life of the long term unemployment program that expires in just two weeks. With the number of long-term unemployed at record levels and growing, this bill simply ignores their needs.
Equally astounding, the bill provides almost nothing for the states whose fiscal crisis is dragging the economy down. State budget cuts in education, health care, law enforcementeven homeland securityslow the economy as workers lose jobs and businesses lose customers.
While there appears to be $20 billion in aid to the states in this bill, in reality, the reductions in federal dividend and income taxation will cut as much as $11 billion from state taxes based on those sources.
Under the tax cut plan I support, small businesses would get three times the tax write off for investments$75,000 worththis year, and a tax deduction for 50 percent of the cost of new equipment, along with help getting health insurance for their employees.
The tax cut I support would get $20 billion in real help to the states to confront the fiscal crisis that is compounding the national economic slump.
And the tax cut program I voted for would extend unemployment benefits to help those looking for work sustain that search in a time of record job losses.
Finally, the plan I supported is affordable. Its effects take place immediately, and it would not leave a hole in our finances for our children to repair.
That's the plan I supported, and it is the plan our country needs. I cannot vote for this bill that is now before us because it fails to do so.