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Economic Stimulus Package

Location: Washington, DC

Mr. CRAIG. Mr. President, I am pleased to see the chairman of the Budget Committee in the Chamber talking boldly and responsibly about getting this economy back on its feet and getting it moving. It is critically important that this Senate operate in the legal fashion that it was by law directed to do. I know what the chairman will do is produce a budget and a budget reconciliation process that will allow this Senate to be guided and directed not only in its expenditures but hopefully in providing for this country—and to the producer side of our country the type of incentives that the President has offered in a very bold move to get this economy moving again.

It is pleasing for me to see a President stand forth in a rather "Reaganesque" way and say let us grow ourselves out of this problem. Let us not dig ourselves deeper into a hole or a cave that ultimately will create a greater problem. How you do that is you create incentives for the worker and you create incentives for the investor to get out and create new jobs and to move the economy.

The President said it well when he offered his tax proposal—that he would not cave in to the rhetoric of class warfare. Yet from day 1 that is exactly what we have heard from the Pelosi-Daschle plan—a class warfare approach that really denies middle-income Americans, investor-Americans, and working Americans an opportunity to keep more of their money.

What did the Pelosi-Daschle plan really set forth? It was all a Government-related, a Government-oriented kind of plan. It talked about increasing Government expenditures for States and economic strategy that we already know has failed. If we can get this economy going, State governments are going to be much better off than they were. Over the last 5 years, State governments were running with large surpluses. In so doing, they spent more. Now they are tightening their belts. Sure. Some State governments are worse off than others.

My State of Idaho is going to have to make some very tough choices this year between tax consideration and cutting some programs, or reducing some levels of increases. It will not be easy. But one way to solve that problem is for the Federal Government to write an even bigger check to the State. There are areas where we can help—areas where there is a Federal mandate for a State response. We ought to try to help some in that instance. But, clearly, to simply write them a check does not make a good deal of sense. I see no way that it stimulates the economy or that it solves the kind of revenue problem the Senator from Oklahoma was talking about. It does nothing to help us solve a much larger problem of the kind with which the President has proposed we deal.

What I find fascinating is this class warfare argument. And in what the President has proposed, the first Bush tax cut law in 2001, says the National Tax Foundation, effectively eliminated income tax for families of four earning less than $35,000. That is simply the reality. If enacted, the new Bush tax proposal would eliminate 96 percent of the current income tax bill for families of four earning $40,000.

Those are not rich people. That is a 96-percent tax cut as a percentage of tax liability on a family of four making $40,000 a year.

What does the Daschle-Pelosi plan do? To my knowledge, it doesn't address it.

Take a $50,000 family of four. That is not a big income. My guess is probably both mom and dad are working; that is, almost both working at minimum wage. What does it do for them? It reduces their tax on taxable money by 42 percent.
That is the Bush plan we are talking about—not the Daschle-Pelosi plan. That is a significant cut in lower middle income America.

What does it do for the rich, let's say a $200,000 income a year. That is a pretty good income. You can live well at that—buy a nice home, provide for your children—not a great big home, not a multimillion-dollar home but a certain suburban-style home in which middle-income Americans enjoy living. Family of four, $200,000; tax cut, significant, $3,000, or a percentage of total liability, good, but it is only 9 percent on $200,000. It was 96 percent on $40,000—a significant difference there.

I say to my friends on the other side of the aisle before the Daschle-Pelosi tax plan rhetoric gets out in front of its headlights, they ought to look at the facts. These are the kinds of facts that any of us will find important to debate on the floor of this Senate.

I hope the Budget Committee recognizes the process and that the Finance Committee stays as close as they can to the Bush tax plan.

I think that is the kind of process that turns this economy back on, that puts people back to work, and that creates the kind of long-term economic drive that the Reagan tax plan did in the early 1980s. They said it created great deficits. Deficits were created because Congress wouldn't quit spending, and wouldn't hold its job in line and be fiscally responsible. We have that job to do here now. We are going to have to tighten our belt to slow the deficit process down. But, of course, I think at the end of the year when we tally up the proposed expenditures versus actual expenditures and when we get that 2004 budget out, the folks on the other side who are talking now about class warfare rhetoric will have proposed tens of billions dollars more in spending. Why? Because of its political popularity and not because it will have actually been spent.

Those are some of the realities we are going to have to deal with here.

I am glad our President is bold—bold in saying to the American people: I am going to ask you to save more of what you have. I am going to give you the opportunity to keep more of what you earn. I hope you will invest it. I hope you will go out into the market and I hope that you as consumers will help turn this economy back on. That is what is fundamentally important.

Lastly, as it comes to double taxation of dividends, when you double tax, you tax them at a rate of nearly 70 percent. That is a phenomenally high rate. When you look at corporate income tax versus a tax on dividends, there are few companies paying dividends today. And why are they keeping large blocks of cash? Why do corporate executives get into trouble going out and buying companies they don't know how to run or don't fit the culture of the company they are currently operating? It is because they have big buckets of cash which they are not moving through to their stockholders. One of the real important reasons they are not moving it through is the double taxation environment.

When we talk about that particular part of the Tax Code being changed, what we are also talking about is corporate reform along with tax reform. I see nothing wrong with that. I see nothing wrong with those who save and invest and our seniors in America getting a large portion of their income from dividends being strengthened by that very reality.

I think the tax package that has been presented by our President is bold, yes, but balanced. As I have shown you with some of the figures that exist today coming from the Tax Foundation, it really goes at lower middle income America. When you can say to a family of four earning $40,000 a year that we are going to reduce your taxable liability by 96 percent, friends on the other side, that is not the wealthy. That is working-class Americans. When you say to a family of four earning $50,000 a year that we are going to reduce your taxable liability by 42 percent, friends on the other side, those folks aren't rich unless you define "rich" much differently than the people of my State do. That is called responsibility in helping lower- to middle-income Americans keep more of their hard-earned dollars for the purpose of providing for themselves, for their families, and for the pursuit of the American dream.

I yield the floor.

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