Recovery Rebates and Economic Stimulus for the American People Act of 2008
Floor Speech
RECOVERY REBATES AND ECONOMIC STIMULUS FOR THE AMERICAN PEOPLE ACT OF 2008 -- (Senate - February 06, 2008)
BREAK IN TRANSCRIPT
Mr. KENNEDY. Mr. President, I commend Senator Reid and Senator Baucus for their leadership in getting stimulus legislation to the floor so quickly. It is not a moment too soon. In recent weeks, the many warning signs of a troubled economy have turned into loud alarm bells that we cannot ignore.
Last week's worrisome GDP figures show that economic growth has ground to a near halt. Savings are plummeting. Debt is rising. The Fed has cut short-term interest rates more rapidly than at any time in its history. For the first time in years, we are losing more jobs than we are producing. It is clear that we are facing an economic crisis that will present enormous challenges in the months and years ahead.
This crisis will affect every man, woman, and child in our country, but it will be particularly hard on the millions of families who are already struggling who are having trouble finding work, heating their homes, and paying the mortgage. For these families, a recession isn't just part of the business cycle--it's a life-altering event from which they may never recover.
Already far too many families are on the brink. Unemployment has skyrocketed more than 7.6 million Americans are looking for work but can't find a job. Foreclosures are rising 200,000 families each month are at risk of losing their homes. Bankruptcies soared by 40 percent last year, and experts predict they will rise even faster in 2008.
Our actions today are vital for the entire economy, but they are most critical for these struggling families. Our decisions will help determine whether they keep their homes, whether their teenagers stay in college, and whether their children go to bed hungry.
The current recession is a major turning point for our country. We have to choose a path out of this crisis, and the path we choose will determine the kind of America we will be for years to come. Do we choose to help some, or do we choose to help all? Do we choose a path of shared prosperity, or a path that leaves countless hardworking families behind?
These are questions of basic fairness, and the American people understand fairness. They don't want to see their friends and neighbors who are struggling get left behind. They want us to do what is right for all.
Today we have the opportunity to take a few basic steps forward to demonstrate our commitment to a fair economy.
First, we have to tackle unemployment. It is clear that no matter what we do to boost economic activity, we will continue to have a significant unemployment problem for at least the next 2 years. Goldman Sachs predicts that the national unemployment rate will rise to 6.5 percent by the end of 2009. Many States around the country are already struggling with high unemployment. Michigan's unemployment rate is 7.6 percent. South Carolina's is 6.6 percent. Ohio just hit the 6 percent mark as well.
Workers who lose their jobs are having much more trouble finding work now than before the last recession. Today, 18 percent of workers have been looking for a job for more than 26 weeks, compared to only 11 percent in 2001. This problem is affecting workers across the economic spectrum even those with college educations and years of experience can't find work. There are nearly two unemployed workers for every job opening across the country.
Because it is becoming much harder to find a job, many more families are finding that our unemployment insurance system doesn't provide enough support. Across the country, 37 percent of workers are running out of benefits before finding a job, and more will follow as the recession deepens. Mr. President, 2.6 million people ran out of benefits in the year ending in October of 2007 that is far more than before the last recession.
These shocking numbers represent real hardship for millions of hardworking people across the country. It is all too easy for a job loss to turn into a financial crisis, and many families never fully recover. In the last recession we saw the real impact of unemployment on working families parents cutting back on spending for their children, or even pulling older children out of college to cut back on expenses. We saw teenagers who should be in school forced to take jobs to help support their families.
To prevent this downward spiral, we must act immediately to shore up the safety net for families struggling to find work. These workers have paid into the system for years. It is wrong to abandon them when they need our help the most.
The Senate bill is a major step forward. By extending unemployment benefits for up to 13 weeks, and providing as much as 13 additional weeks of benefits in high-unemployment States, we provide an immediate boost for our economy. And, at the same time, we help working families weather the storm.
Economists agree that extending unemployment benefits is a powerful, cost-effective way to stimulate the economy. Every dollar invested in benefits to out-of-work Americans leads to a $1.64 increase in growth. That compares with only pennies on the dollar for cuts in income tax rates or cuts in taxes on investments.
I hope that all of my colleagues will join me in supporting an extension of unemployment insurance benefits. It's an essential solution that will jumpstart our economy and help families in crisis get back on track.
Unfortunately, jobless families are not the only ones facing tough times. Millions of families today are facing a ``perfect storm'' of high costs and low wages. Every bill that comes in the mail just adds to the flood, until everyone ends up completely overwhelmed.
Working families are being swamped by the extraordinary increase in the cost of living. On President Bush's watch, the price of gas is up 73 percent. Health insurance costs are up 38 percent. College tuition costs are up 43 percent. Housing costs are up 39 percent. Yet in the face of these skyrocketing costs, employees' wages have been virtually stagnant, rising only 5 percent. Family budgets can no longer make ends meet, and families across the country are feeling the painful squeeze.
In the face of these economic pressures, workers are struggling to keep their families warm. The winter has been bitterly cold in many parts of the country, and the cost of heating oil is rising so rapidly that it is impossible to keep up. Since last year alone, the price of a gallon of heating oil has increased by more than 40 percent. A typical household may have to spend $3,000 or more on heating oil this winter.
Our Senate HELP Committee held a field hearing on fuel assistance in Boston last month. One of our witnesses was Margaret Gilliam, a senior citizen taking care of her grandchildren in Dorchester. She has already spent $4,000 on heating oil this winter, which is nearly as much as she spent all last year, and there are still 6 or more weeks of winter to go.
She told us that she tries to make each Social Security check stretch by asking her fuel company to deliver just 50 gallons at a time, because she can't afford to pay to fill her tank. Most often, heating oil companies will not deliver less than 100 gallons.
Even for those fortunate enough to have fuel assistance under LIHEAP, the benefits will cover less than a third of these costs. Most households won't get any help at all--of the 35 million households eligible for fuel assistance nationwide, fewer than 6 million receive these benefits.
The high cost of basic essentials forces families to make impossible choices between paying for fuel, paying for groceries, paying for health care, or paying their mortgage. If parents choose to keep their children warm and fed, they risk losing their home. The lack of even a small amount of assistance--just an extra 100 or 200 gallons of fuel oil--can mean the difference between security and homelessness.
There are simple steps we can take to end this ``perfect storm.'' One of the most important is the provision in the Senate bill providing additional home heating assistance for families struggling to stay warm this winter. Mr. President, $1 billion in additional LIHEAP funding will help 2.8 million families pay their heating costs and make it through the winter. Helping families meet this basic need is also one of the quickest ways to jumpstart the economy. An increase in LIHEAP benefits takes as little as 2 weeks to get to the pockets of working families.
This year, we provided a significant increase for LIHEAP. But it is far from enough and we still have a long way to go to get to the program's authorized level of $5.1 billion.
It has been said that some people know the price of everything but the value of nothing. How else can you explain the administration's latest budget request which cuts the program by 22 percent?
LIHEAP represents a tiny fraction of 1 percent of the entire Federal budget.
Yet it does so much for those most in need.
Programs like LIHEAP are the best economic stimulus money can buy. But even if they werem not, we would still have an obligation to support them--simply because it is the right thing to do.
Finally, there is widespread agreement that we need to put money into workers' pockets to encourage consumer spending that will boost our declining economy. The Senate bill includes a tax rebate to do just that.
In order to create an effective stimulus, any tax cut must be designed to give the money to those who are most likely to spend it immediately--middle and low income families who are strapped for cash because of these dramatically higher costs.
These families are the ones who need the help the most, and the dollars they receive from a one-time tax cut will be quickly spent. The money will be used to buy things they need but currently cannot afford. In contrast, wealthier taxpayers already have the money to purchase what they need. A tax rebate for them is much more likely to be deposited in their saving accounts than spent. Unless the tax cut is spent, there will be no increase in economic activity generated.
That is precisely what the rebate proposal in the Senate bill will do--provide direct assistance to the millions of working families who are feeling the squeeze of this economic downturn the most. They work the hardest, and they deserve our help. They are also the ones who will spend the money most quickly, for necessities they otherwise couldn't afford.
The Senate package also includes needed relief for seniors and disabled veterans. Both of these populations live on fixed incomes. Rising prices means a choice between buying food or needed medication. These Americans have sacrificed so much and worked so hard to build up our country, and they deserve our best efforts to help them weather the storm.
In all of these respects, the Senate bill makes major improvements over the measure passed in the House of Representatives. It is fairer, and it produces a greater stimulus effect by paying low and moderate income workers the same size tax rebate that more affluent taxpayers would receive. It also extends the tax rebate to include 20 million retirees struggling to make ends meet. The Senate bill will provide 14 billion more dollars in tax cuts to households with incomes below $40,000. That is the best way to get the American economy moving again.
There is no question that every family in America is struggling in today's economy, and that they face difficult times ahead. But today we have a choice about how to move forward. Do we do what it easy, or do we do what is right? Do we go part way or do we do what it takes to add dignity to the lives of all of America's working families?
I hope that each and every one of my colleagues will listen to their conscience, do the right thing, and support the kind of stimulus that will help all Americans achieve better days ahead.
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