American Recovery And Reinvestment Act Of 2009
Floor Speech
American Recovery And Reinvestment Act Of 2009
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Mr. HATCH. Madam President, at the center of our Nation's current financial crisis are our Nation's automakers and our homeowners. These are our two areas that we cannot afford to ignore, if we are to have any hope of an economic recovery.
I would like to focus on our automakers. Some economists have remarked that as our automakers go, so goes our Nation. Other economists have complained that the auto industry has been too slow to modernize and too slow to prepare for the future.
We all know that 97 percent of our vehicles run on gasoline and diesel. But what you don't hear often enough is that American automakers are actually poised to lead the world into the next era of vehicle technology. They are prepared to produce flexible, affordable, attractive, and long-range vehicles that run on an alternative fuel that is much cheaper, much cleaner, more abundant, and completely domestic. That alternative fuel is electricity from our electric grid. Other than natural gas, there is no other alternative fuel that comes close to having so many of these qualities.
Last Congress, Senator CANTWELL and I came together to introduce the Freedom Act, and with the assistance of Chairman BAUCUS and Senator GRASSLEY, the committee's Republican ranking member, we were able to get major provisions of that bill passed into law, including tax credits for consumers who purchase the plug-in electric and plug-in hybrid vehicles.
I was the author of the CLEAR ACT, which promoted hybrid and alternative vehicles and which passed in the Energy Policy Act of 2005. It was pretty clear at the time that the Japanese automakers had the jump on this technology. However, I was pleased to see that it didn't take too long for our American automakers to respond and to produce very good and very efficient hybrid electric vehicles.
The next step of using electrons off the grid is a more revolutionary shift, because it will have a more dramatic impact on our Nation's dependency on oil.
Many of my colleagues may not be aware that American automakers and American technology companies are poised to lead the world in plug-in electric and plug-in hybrid vehicles. In the next 2 years, General Motors will be offering two new plug-in vehicles for commercial sale. These will be vehicles developed and manufactured right here in America. American lithium ion battery makers lead the world in technological advances, and are also ready to set up major manufacturing operations here on our shores. American companies also lead the world in electric motor technologies, ultra-capacitors, and other important electronic controller technologies.
Senator CANTWELL and I are offering an amendment that would ensure that this manufacturing stays here at home. In most cases, these American companies are prepared to begin manufacturing immediately. So this amendment is timely and goes to the heart and soul of the stimulus bill we are now considering.
I personally do not believe our auto industry will survive on old ideas and past technologies. What could be more important in this stimulus bill than to assist the auto industry as it attempts to lead the world in a new era of vehicle technologies. I am very grateful to Senator CANTWELL, and Chairman BAUCUS and Senator GRASSLEY for making this proposal a priority.
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Mr. HATCH. Mr. President, I appreciate the remarks of the distinguished Senator from Michigan.
I rise in support of the substitute offered by the distinguished Senator from Arizona. As usual, John McCain does not mince any words. He says what he believes, and in this particular case, what he is trying to do is make this bill better and also to make it bipartisan so it would have an overwhelming vote, including mine. But I cannot help but express concern about the misguided direction we are headed toward in stimulating our economy if we go with the bill the majority has come up with, even as amended.
Our new President recently told the Washington Post:
The tone I set is that we bring as much intellectual firepower to a problem, that people act respectfully towards each other, that disagreements are fully aired, and that we make decisions based on facts and evidence as opposed to ideology, that people will adapt to that culture and we'll be able to move together effectively as a team.
Now, I make decisions based on ``facts and evidence as opposed to ideology.'' That is what our President said.
To me, that means we must do what is necessary and what will be effective, and I could not agree more with President Obama's statement. Unfortunately, in this bill, my friends on the other side of the aisle have not followed the President's leadership and at a time when such leadership is critical.
There is no doubt we are in a serious recession. There is widespread agreement that quick action is necessary to stop our economy's downward spiral. The facts are conclusive and Democrats and Republicans all agree economic conditions are severe. Both commonly accepted definitions of ``recession'' have clearly been met, and we have seen a constant decline for all economic indicators.
Our current economic condition: GDP has declined at 3.8 percent, unemployment at 7.2 percent. Manufacturing is at a 28-year low. We had the worst January in over a quarter of a century. These are very important indicators. I could go on, but we are here today to look toward the future, to look toward recovery and reinvestment.
Moreover, I am not here to cast blame as to how we got here. Both sides are guilty of making poor decisions on shaping our economy. But today is critical. We need, as the President has stated, to put aside our ideological differences, focus on our economic condition, and make decisions based on what the facts and the evidence indicate will be effective.
We cannot afford to waste more American taxpayer dollars. We cannot afford to advance political dogma at the expense of doing what is right. We cannot afford to make a trillion-dollar mistake.
If we are going to spend billions to stimulate the economy, we had better get it right. The central question is whether this enormous spending-and-tax bill would be effective, or will be effective, in turning around the economy, preventing further layoffs, and creating new jobs. If it will do what is needed, it is worth the money, and we must pass it immediately.
While both sides of the aisle agree about what we want to achieve, we disagree about the means and how to achieve them. Despite popular Democratic belief, Republicans are not trying to block the stimulus package. We are trying to improve it, and the distinguished Senator from Arizona has some great ideas and has improved it considerably. While Senate Republicans have tried to offer our ideas to the American Recovery and Reinvestment Act, we have largely been excluded from helping formulate this bill.
The February 2 Los Angeles Times editorial, titled ``The Nation Needs Jobs, Not a Political Agenda,'' correctly points out this stimulus package--the largest stimulus since World War II--could and should have been crafted to garner extensive Republican support.
Instead, the stimulus is a hodgepodge of liberal-targeted spending projects with a few decent ideas thrown in to try to appease Republicans. The majority of the bill is aimed at promoting mostly public-sector jobs for short-term projects, such as building roads and infrastructure.
A large fraction of the proposed stimulus package is devoted to infrastructure projects that would spend out very slowly, not with the speed needed to put the economy on the path to recovery in 2009 and 2010. While some of these public jobs are necessary, we also must provide incentives for private sector jobs. Furthermore, the stimulus needs to take effect immediately and not continue to provide a stimulus once the economy has turned around.
While President Obama has said he believes Government spending provides the most ``bang for the buck'' and that there is ``near unanimity'' among economists that Government spending will help restore jobs in the short term, I must respectfully disagree. I believe, as do many economists, that our problems cut much deeper than what temporary Government spending will be able to cure.
Harvard economics professor Martin Feldstein, president emeritus of the National Bureau of Economic Research, wrote in a recent Washington Post article:
The fiscal package now before Congress needs to be thoroughly revised. In its current form, it does too little to raise national spending and employment.
Gregory Mankiw, another Harvard economics professor and the former chairman of the President's Council of Economic Advisors, notes in a New York Times op-ed that each dollar of Government spending increases the gross domestic product by only $1.40, while a dollar of tax cuts--or tax relief, I would prefer to say--raises the gross domestic product by about $3.
This is based on a study conducted by Christina and David Romer, then economists at the University of California, Berkeley. Christina Romer will now serve as the chair of President Obama's Council of Economic Advisers. President Obama, there is not ``near unanimity'' among economists that Government spending delivers the most ``bang for the buck''--indeed, not even among your own top economic advisers.
Democrats have stressed they believe we need solutions that are temporary, targeted, and timely. Beyond spending for expanding Government projects, there is serious wasteful spending in this bill. The current bill provides up to $500 for individuals and up to $1,000 for families in the so-called Make Work Pay tax credit, which would encourage work at the margin only for people who produce and earn less than $8,100 per year.
Studies show that in the past, these rebate checks do not stimulate the economy. For instance, studies of the 1975 rebate--and earlier tax changes--suggested that only 12 percent to 24 percent of the rebate was consumed in the quarter it was received. Moreover, it is estimated that only 15 percent of last year's rebate checks was put back into the economy. Based on these estimates, of the $142 billion that would be allocated through the ``Making Work Pay'' tax credit--through that tax credit--the average of only $24 billion would find its way back into our economy. That is after an expenditure of $142 billion.
Now, this is what it says: The Democrats' Stimulus Plan. Make Work Pay tax credit. Make Work Pay--the cost is $145 billion. Only $24 billion will be put back into the economy. These are important estimates.
Well, is this the most effective way to spend taxpayer money? The Make Work Pay credit is a refundable credit. Anyone who works would be eligible to receive up to $500, even if that person never paid income taxes. There are other refundable credits in this bill as well, including a provision increasing the refundable portion of the child tax credit.
But the bill also creates a new category of tax credit bonds called ``Build America Bonds,'' in which a State or a local government could elect to receive a direct payment from the Federal Government equal to the subsidy that would otherwise have been delivered through the tax credit. Whom are we kidding? This is nothing more than an innovative way of delivering more spending through the Tax Code. The majority wants to claim these are tax cuts, but these are not tax cuts. This is spending. I ask my colleagues: What is wrong with using the appropriations process for spending? Some of these projects may fit the appropriations process well, but they do not fit in a stimulus bill such as this and especially one where the American taxpayers are called upon to spend so much.
Beyond these so-called ``tax cuts,'' we see even more spending for State and local governments. Until recently, my friends on the other side of the aisle have promoted their ideology to the extent that House Speaker Pelosi suggested that contraception will stimulate the economy because it is a cost-saving measure for the State and Federal governments. Even though this measure has been taken out, the bill includes plenty of other Government-expanding and ideology-promoting projects. State aid will only fund temporary projects that would need to be funded later down the road. Conversely, spending in the private sector would create permanent jobs that would give people more to spend and would lead to even more permanent job creation.
Look, it is not just Republicans sounding the alarm over this bill. Even the very liberal San Francisco Chronicle has characterized the bill as a wasteful grab bag of spending. For example, this bill could make available billions of taxpayer dollars to leftwing groups, such as the Association of Community Organizations for Reform Now, commonly known as ACORN. The plan further establishes 32 Government programs at a cost of well over $136 billion.
There is a difference between permanent tax cuts and short-term stimulative spending.
If we base this bill on measures we know will work, it should include a proper balance of both permanent tax cuts and short-term spending. Instead, this bill is tilted toward government spending either through appropriations or tax expenditures. Less than 3 percent of this bill contains business tax relief. How do we expect to create jobs in the private sector when you spend that little on the people who can create the jobs?
I wish to turn my attention to the health care provisions contained in this package. As I have said before, health care reform is not a Republican or Democratic issue; it is an American issue. When we are dealing with 17 percent of our economy--and that is what the health care economy is--it is imperative that we address solutions in an open and honest, bipartisan process. Although the congressional Democrats and the administration have given a great deal of lip service to bringing change and bipartisanship to Washington, let us all remember that actions speak louder than words.
I am mostly disappointed the Democrats have decided to use the stimulus legislation to address health care reform in a partisan and piecemeal fashion. Health information technology is a perfect example. It is an area of consensus that should have been part of the comprehensive and bipartisan health care reform dialog.
Last Congress, Senator Mike Enzi and I worked very closely with Senators Ted Kennedy and Hillary Clinton on the Wired For Health Care Technology Act which resulted in a bipartisan bill that was unanimously approved and reported by the Senate Health, Education, Labor and Pensions, or HELP, Committee. While the stimulus package before the Senate contains provisions on health information technology--that is health IT--it does not resemble that bipartisan bill we introduced and passed unanimously out of the committee last Congress. The most important difference is that these provisions do not represent a bipartisan agreement because Members on both sides of the aisle were not involved in the discussions.
Secondly, the stimulus bill undermines the work of former Health and Human Services Secretary Mike Leavitt and the Bush administration by federalizing the National eHealth Collaborative. While I believe the Federal Government should play a role in this area, it should not take over such an initiative. The intent of our legislation, and the intent of Secretary Leavitt, was to encourage a partnership between the private sector and the Federal Government to improve the quality and efficiency of health care. The stimulus legislation dissolves this public-private partnership.
Finally, the stimulus bill provides $1.1 billion for clinical comparative effectiveness, including a $400 million slush fund to be used by the Secretary at his discretion. Once again, this is a topic of bipartisan interest and concern that should have been discussed in the context of comprehensive reform.
We have not even discussed the overall cost of this bill. When interest is included, the almost $900 billion Senate version reaches close to $1.3 trillion. That is enough to give every man, woman, and child in America $4,000, or every person in my home State of Utah $480,000. Indeed, $1.2 trillion is more than the cost of the New Deal and the Iraq war combined in today's dollars. The interest alone would be costlier than the Louisiana Purchase or going to the Moon adjusted for inflation--in fact, four times the cost adjusted for inflation and time--than the Louisiana Purchase.
The bill is estimated to cost $1.3 trillion with interest. The congressional budget authority has estimated that the stimulus bill will produce between 600,000 and 1.9 million new jobs by 2011. That means it would cost anywhere from $700,000 to $2.1 million to create one job. That is absurd.
To make this bill economically stimulative, we must make decisions that will be effective. Our economy began this downturn when our housing market collapsed. No stimulus will work unless we address the root of the problem. Some of my Republican colleagues are proposing to add the Fix Housing First Act which would refinance and lower fixed rate, 30-year mortgages for primary residences and provide a $15,000 tax credit for all homebuyers. I support this idea because it would encourage people to buy houses and would help homebuilders, and it would put a lot of people to work. In addition, we have offered a proposal to permanently lower the corporate income tax rate which again would give the corporations in this country the ability to hire a lot more people, expand their businesses, and do what should be done. We need to enact tax relief that will help save and create jobs now.
I believe one way to truly stimulate the economy is by making the research tax credit permanent. If we lifted the quota on H2B people--these are generally highly educated people, educated in our country, who are forced out of our country to go home and compete with us, where otherwise they would stay here and help us be more competitive than we are. For too long, companies have been waiting on a short-term basis to see whether this vital tax credit will be extended for yet another year or two. When 80 percent of the research credit is based on salaries and wages, I doubt that anyone in this Chamber could honestly say that making the research tax credit permanent would not provide a great deal of bang for the buck.
We should also look at middle-class tax relief by lowering the 15-percent bracket to 10 percent and the 10-percent bracket to 5 percent, increasing the capital loss deduction and lowering the capital gains rate to encourage investment which would lead to job creation. I think I have the right to say these things because I was one of the original supply siders in the Reagan administration. Not only did we have the arguments that if we reduced taxes, we will have less revenues, not only did that turn around, but we had many more revenues that were planned or contemplated because we did reduce those taxes.
The fact that 11 Democrats and every Republican voted against this bill in the House is evidence that bipartisanship did not prevail. The reason it did not prevail is that there was too much spending in the legislation and not enough incentives to spur job growth and economic development. For this stimulus package to be effective, it should incorporate ideas from both sides of the aisle. We should be focusing on incentives that are permanent and broad, not temporary and targeted. We owe this not only to taxpayers today, but also to future generations of taxpayers who will be saddled with this trillion dollar spending bill--$1.3 trillion. In short, we owe it to every American to craft a bipartisan stimulus package that will rouse the economy instead of coming up with a partisan bill that produces little and provokes American anger.
Again, as I said at the beginning of my remarks, I wish to thank the distinguished Senator from Arizona for the work he has done in trying to come up with a reasonable compromise on this approach that will create many more jobs at much less cost, and for his willingness to stand on this floor and the guts he has to be able to take on all of us as colleagues in the Senate to try and do what is right.
Mr. President, I yield the floor.
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