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Recovery Rebates and Economic Stimulus for the American People Act of 2008

Floor Speech

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Date:
Location: Washington, DC


RECOVERY REBATES AND ECONOMIC STIMULUS FOR THE AMERICAN PEOPLE ACT OF 2008 -- (Senate - February 06, 2008)

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Mr. COBURN. Madam President, we have heard a lot in the press, and we have certainly heard a lot from our own Finance Committee, and we have seen what the House passed in terms of the stimulus package.

I think, once again, in our hurry to address a problem, we have not asked: Are we fixing the right problem, the problem in connection with the House leadership passing a bill that will spend $150 billion. One of the first questions we ought to ask is, Where is that money coming from, the $150 billion? Nobody can dispute the fact that we are going to borrow that from our grandchildren; we are going to go to the markets and borrow the money to stimulate our economy. Nobody will dispute the fact that there is very little payback into the Treasury, in terms of tax collections, from this stimulus plan.

The facts as they are, we had an overheated housing boom. We can deny economic reality, but until we mark the market--the overinflated cost that has extended credit in our country--and recognize that is going to have to be paid for, we are not going to walk out of this slowdown we appear to be facing. The reality is that the model is the Japanese banking industry: When they refused to recognize the losses, what it did was impact their economy for 10 years. So the realities are that there has to be an economic price when we have an economic excess. Our job should be to make that as easy on our economy as we can, thinking about the future of our economy.

Now, all the options that have been presented, when scored in the long term, have very little beneficial effect for the economy other than the psychology we are putting through. The reason it is important to discuss alternatives is because there is a way, which is proven in economics, proven in capitalistic societies, in free market societies, where you can generate stimulus and revenue back to the Government so that, in fact, you solve the right problem, the real problem, and you don't bankrupt your children further, which is what we are going to do whether we pass the House bill or the Senate bill. We are going to steal $150 billion or $190 billion from our grandchildren. I think we ought to think twice about that. Do we really, as senior citizens, want to steal $600, to $800, to $1,200 from our grandchildren for us today? Do we want to do that? Is there another way in which we can stimulate our economy without stealing from our kids and ultimately putting the money back in so that our children don't have to pay for this stimulus package? There is. There are a lot of economic theories and experience in this country that prove that.

So let's talk some about what we should be doing that we are not. Instead, we are pandering to people, thinking they are going to get $600 or $800, and we don't have any idea other than to think a third of that money might have a stimulus effect, but it will have a negative effect in terms of what our kids have to pay back.

One thing we can do is create certainty about economic decisionmaking. We can extend the Bush tax cuts. We can extend them so people will continue to make positive decisions based on a tax rate they know is there rather than one they know is going to go away in 2 years, which will limit their investment.

Second, we can lower corporate tax rates. We now have the second highest corporate tax rates in the world. That hasn't been part of any discussion. We know that when we lower corporate tax rates, we see increased investment, which increases the tax revenues for the country, and we also see economic growth. So there is a positive there, but it is not complete. There is a cost associated with that, but at least there is some feedback. But we have not considered that.

We have not reduced the capital gains tax rate on corporations--the people who invest great sums of money on the basis of the fact that if there is a capital gain, if we were to lower that, they might invest more or they might recognize the gain they have today, consequently, even generating taxes. We can index capital gains for inflation. That creates a stable investment environment whereby business decisions will invest in capital, create jobs, which create salaries, which create income, which create tax revenue.

We can markedly advance--much more so than we have done in this bill--depreciation schedules if we want to have an impact. We could go to full expensing for capital equipment forever. We don't have to stop it now. What that would do is create investment in capital goods in this country, which would create jobs, which would raise wages, which would create incomes, which would create tax revenues for the country.

There are other things we can do besides just send money out the door. We can establish a repatriation window for corporate taxes overseas. The best way to not ever have to deal with this again is to have a corporate tax rate equivalent to what is going on in the rest of the world--have one at 25 percent instead of 35 percent so that we, in fact, are competitive worldwide, so that corporations don't refuse to bring income they have earned overseas back to this country because we have an excessive tax on it, so they decide not to do that.

Finally, what we can do is make the Small Business Administration work. Seven years ago, the impact of Government regulation on small business was less than $4,000. It is $7,400 per employee. That is the impact of the Federal Government. That is not the taxes you pay, that is the impact of the regulations in terms of the cost impounded onto small business by the Federal Government.

I will end with talking about the budget that was just submitted by the administration. We are going to spend probably $150 billion or $190 billion, and we are not going to pay for it. We are not going to reduce any of the wasteful spending, including the inappropriate payments in Medicare, and there is another $40 billion in fraud. Medicaid has $30 billion worth of fraud and another $7 billion in improper payments. Food stamps has $6 billion worth of improper payments, not counting the fraud.

There is nothing associated with fixing what is wrong with the Government so that the American people get value from it. We are going to throw money at a problem rather than secure the future for our children and grandchildren. We can do better. We ought to do better. We should not say we are just going to throw money at the problem.

Let's make long-term structural changes in the Tax Code that raise the opportunity for our children rather than lower it by putting debt on their shoulders. Let's make the long-term changes and tough choices of eliminating programs that aren't working effectively, or let's refine programs that are wasteful, not efficient, and loaded with fraud. Let's eliminate the wasteful programs that account for $150 billion of money spent each year. Let's get rid of the $30 billion in waste at the Pentagon. Let's get rid of the $3 billion we spend every year maintaining buildings the Pentagon doesn't want. We don't have a way to get rid of them, but we don't have the courage to change the law.

There are all kinds of ways to save a couple hundred billion dollars a year, but it means you have to ruffle some feathers. It is time we do that and do the hard work, rather than the easy work.

Thank you for the opportunity to speak in terms of what I think is a long-term way to resolve this economic trough we appear to be facing. I am not confident we are going to do it the right way. I think we are going to do it the politically expedient way, which helps people get reelected but doesn't fix the real problem. To me, to my regret, that is a sad misnomer for this body.

I yield the floor.

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