American Recovery and Reinvestment Act of 2009--Conference Report

Floor Speech

AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009--CONFERENCE REPORT -- (Senate - February 13, 2009)

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Ms. SNOWE. Mr. President, I rise on this occasion to speak on the economic stimulus conference report that is before this chamber--at a time when we face the longest and deepest recession since World War II, and a moment of economic peril not seen since the days of the Great Depression almost 80 years ago.

There has been a great deal of healthy and vigorous debate about this stimulus package--here in the Congress and certainly throughout America--and rightfully so, given the magnitude of the legislation we have deliberated upon over the past few weeks. And let me say, I well recognize this process got off to a less than stellar start.

And yet, especially given that people look to the Senate to temper the passions of politics--to provide an institutional check that ensures all voices are heard and considered--should we have allowed that inauspicious beginning to establish a permanent detour from ultimately passing an economic stimulus package that economists from across the political spectrum have said is urgently required?

I believe the answer to that question is no. And in that light, I extend my gratitude to Majority Leader Reid for bringing us together in forging the much improved package we consider today. I thank Chairman Baucus and Ranking Member Grassley of the Senate Committee on Finance, Chairman Inouye and Ranking Member Cochran of the Senate Committee on Appropriations, as well as Senators Collins, Specter, Nelson, and Lieberman for their yeoman leadership in yielding this consensus-based solution. I also thank those who argued against this package--because, frankly, I agreed with a number of their arguments, and ultimately the concerns expressed have helped to improve this final product.

Indeed, we lost 3.6 million jobs since the onset of the recession, the most since 1945. The Department of Labor has reported the number of people receiving unemployment benefits has reached 4.8 million, an all-time high since record keeping began in 1967--and that doesn't include the nearly 1.7 million getting benefits through an extension last summer. At the end of January, we learned that the economy shrank at its fastest pace in nearly 27 years in the fourth quarter of 2008. Our gross national product dropped at a 3.8 percent annual rate, worst since 1982.

And with more than 11 million jobless Americans today, inaction has, frankly, never been a viable option. In fact, economist Mark Zandi of Moody's Economy.com--who advised both Presidential candidates McCain and Obama, I might add--projects an even higher unemployment rate of a remarkable 11.1 percent--should we fail to pass a vigorous economic stimulus package. That is 11.1 percent--and that is unacceptable. We cannot stand on the sidelines.

That is why I have said from the outset--as I stated on the Senate floor at the beginning of last week--that I wanted to support a stimulus package. But at the same time as I also said, I could not support just any package. The fact is, we are confronting a multidimensional crisis that requires a multidimensional approach, and we can ill afford to get it wrong.

Our approach must be successful, as it must also go hand-in-hand with monetary policy to ensure that vital credit--that is the lifeblood of our economy--is flowing to American individuals and businesses.

Already Congress passed a rescue plan for financial institutions, but the lending expected to free up our credit markets has yet to take effect. Already, the Treasury Department has issued a second component to the rescue plan, which I might add is regrettably long on aspirations and short on details. And already the Federal Reserve has essentially exhausted its options to improve the economy through monetary policy, having reduced interest rates to zero--something else that hasn't happened since the 1930s--and lent more than $1 trillion to stabilize the financial and credit markets. So, as I said during the mark-up in the Senate Finance Committee, we ought to remember that for us, in crafting fiscal policy to meet this historic challenge, there are no ``do-overs.''

That is why I have said repeatedly that this isn't about how much we label as ``tax relief' and how much we label as ``spending.'' Rather, in the final analysis, it's been about the merits of the individual measures in this legislation, and whether the totality of a package can deliver job creation and assistance to those who have been displaced--because both elements are essential to turning the economic tide and aligning our nation for a more prosperous future. In short, the challenge has been to fashion a measure that meets the ``what works'' test.

Critical to that test is whether a stimulus measure is timely, targeted, temporary, and achieves the critical equilibrium of creating jobs and assisting those displaced by this economic crisis through no fault of their own. There has been widespread agreement, even from the harshest critics of this bill, that economic stimulus must meet this standard. That is exactly what a Washington Post editorial called for when it advocated a focused stimulus as the most viable approach. And after a week of intense, bicameral negotiations and compromises, this economic stimulus package--while not what everyone may have wanted--while not everything I would have wanted--meets that threshold.

It has not been easy arriving at this point. At the beginning of deliberations on the floor and throughout the amendment process, I was deeply concerned this bill more closely resembled omnibus legislation rather than emergency stimulus legislation. Indeed, as the Senate considered and adopted amendments on the floor, this package had actually ballooned to $920 billion. Let me repeat that--$920 billion.

Let's look at the House-passed bill. The House bill was voted out at $819 billion. And then the Senate bill ultimately passed at $838 billion. But now, with our efforts over the past week, this package has emerged as a $787.2 billion conference report that is not only more narrowly tailored toward stimulus, but actually has a lower overall cost than either the House-passed bill at $819 billion or the Senate-passed bill at $838 billion. And that is no insignificant achievement.

At the same time, the package isn't only right--it is right sized. As the President has stated, we will lose $2 trillion in consumer demand this year and next--demand, I might add, that must be ``backfilled'' in our economy with a substantial investment in both tax relief and targeted, effective expenditures that will create jobs. The fact is, given the monumental level of this recession, we can't just be throwing pebbles in the pond. Rather, we require the ripple effect of a boulder--while at the same time ensuring that this is not an open-ended passport to spending in perpetuity.

I know that there are those who criticize the top-line number on this package. And given this legislation is deficit-financed, the cost and the stimulative affect of each of the elements of this bill should be of concern to all of us. I said on the floor at the beginning of this process that we cannot overload this bill with items that are not within the strictures of stimulus. We must ensure that programs that may well be worthwhile policy but not economic stimulus are not considered in this package, and instead are vetted through the budget and regular legislative process. We cannot, under the auspices of stimulus legislation--open the door to permanent spending that exceeds the life and purpose of what is before us today.

But in terms of the actual size of the package, let's consider for a moment the economic stimulus packages passed in 2001 and in 2003--and compare the cost of those measures with the cost of this package, and the economic conditions at those times, with the far worse economic conditions of now.

In June 2001, when the economy was in recession as well, we responded with a $1.35 trillion package. In the quarter when that bill passed, the economy grew by 1.2 percent, and unemployment was at 4.5 percent. In 2003, we passed a bill that was essentially a trillion dollar package masquerading as a $350 billion bill. During the spring of 2003, when that bill passed, the economy grew by 3.5 percent and unemployment was at 6.1 percent.

Fast forward to today with this $787 billion package on the floor. The economy shrank at an annual rate of 0.5 percent in the third quarter of 2008, and 3.8 percent in the fourth quarter of 2008. The unemployment rate is currently at 7.6 percent. Furthermore, over the past 13 months alone, as I mentioned earlier, the economy has lost 3.6 million jobs. By comparison, we lost a total of 2.7 million total jobs in the 2001 recession. The bottom line is this package is not by any means out-sized for the times--it is right-sized.

When we began our deliberations in the Senate, the spending in the Senate package reached $366 billion. Fortunately, through our bipartisan efforts, we were able to trim that spending by an additional $55 billion in nonstimulative items. Today, this package contains a total of $286.5 billion in tax provisions, $311 billion in discretionary spending appropriations, and $192.4 billion in nondiscretionary spending items more narrowly focused on job creation and assistance to those displaced.

On the spending side of the ledger, we demonstrated our commitment to job creation by investing in infrastructure. For example, the compromise accelerated the timeline for spending out 50 percent of the money for roads and bridges from 180 days to 120 days--with the remaining 50 percent required to be obligated within one year--to further frontload the stimulative effect. Right now, the U.S. Conference of Mayors has a list of nearly 19,000 shovel-ready projects nationally, totaling almost $150 billion. Moreover, the Federal Highway Administration projects that for every one billion dollars spent, 28,500 jobs are created, and with the 7.5 billion contained in this Conference Report for highways alone. That is 783,750 jobs just for roads and bridges.

We included $40 billion for enhancing unemployment insurance as CBO said last year that the cost-effectiveness of such a policy for stimulative effect is ``large''..... the length of time for impact is ``short''..... and recently, Moody's Economy.com estimated that every dollar spent on unemployment benefits generates $1.63 in near term GDP. I thank Chairman Baucus for including in this conference report my provision to exclude the first $2,400 of unemployment benefits from taxation, to further maximize the provision's stimulative impact. And as increasing food stamps is also among the most immediate and effective stimulative steps we can take--we provided $19.9 billion to do just that.

I am also particularly pleased, as ranking member of the Small Business Committee, that we included such critical job-creation funding as $730 million for the Small Business Administration's lending programs. This spending is targeted toward increasing access to capital and lowering the cost of capital for our Nation's small businesses that have created fully two-thirds of America's net new jobs, that created or retained 770,000 jobs in FY 2008 alone, and will unquestionably be at the forefront of leading us out of this crisis. The bill contains many of Chair Landrieu's and my priorities, such as ones to slash fees for SBA borrowers and reduce them for lenders; increase funding for the microloan program; and a new program targeted toward small businesses struggling to make loan payments.

Additionally, on the spending side we provided vital Medicaid assistance to the states--and I have heard the arguments against it. But does anyone seriously believe that with 45 states currently experiencing a shortfall and a projected, combined budgetary gap of $350 billion over the next 2 years won't have a profound impact on our national economy, as States grapple with raising taxes or slashing spending to balance their budgets?

We also included $28 billion for adoption of Heath Information Technology by health care providers. This would not only actually result in an eventual $10 billion in savings, but also improvements in care and costs, while creating an additional 40,000 jobs that will endure. As we grapple with the gravity of our economic circumstances, doesn't it make sense to simultaneously create transformational, well-paying jobs that, rather than looking to the past, will endure and ensure that America is competitive in the global economy of the 21st century?

As I mentioned earlier, this package also contains more than $286 billion in tax relief--with many provisions I was proud to ensure were included as a member of the Senate Finance Committee--that will directly result in job creation and retention, and bolster our economy.

The President's signature making work pay tax credit, which the President agreed to trim in this conference report, will provide additional money in every paycheck to more than 95 percent of working families in the United States, which Mark Zandi has said will be ``particularly effective, as the benefit will go to lower income households ..... that are much more likely to spend any tax benefit they receive.''

I am pleased to have helped retain in this legislation relief from the alternative minimum tax as it will not only boost the value of the making work pay credit but will also ensure that around 30 million Americans won't be ensnared by this onerous levy. We increase eligibility for the extraordinarily successful refundable portion of the child tax credit that I originally spearheaded to reach low-income families earning between $3,000 and $9,667 a year. I have heard the arguments before against refundability, but this program reaches people who may not earn enough to have federal tax liability but who work and contribute local taxes and payroll taxes and will, therefore, get additional money into the pockets of those most likely to spend it.

When it comes to tax relief and America's greatest job generators, our Nation's 27.2 million small businesses, this package contains provisions I authored to help them sustain operations and employees. This includes enhanced section 179 expensing for 2009, allowing small businesses throughout the Nation to invest up to $250,000 in plant and equipment that they can deduct immediately, instead of depreciate over a period of 5, 7, or more years.

The conference report also contains a provision to extend to 5 years the carryback period of net operating losses for small businesses with up to $15 million in gross receipts which will help small businesses sustain operations with a cash infusion during these trying times. This modification was the result of a last-minute negotiation, and I very much appreciate the personal efforts of Chairman Baucus.

This agreed-upon measure makes a welcomed, commonsense change to reduce to 90 percent the requirement that small business owners prepay 110 percent of their previous year's tax liability. The purpose of quarterly prepayments is to ensure that the Government gets every penny owed. Because of the recession and the credit crunch, the overpayment of quarterly income taxes by America's small business owners is unnecessary, because few businesses are experiencing 10 percent growth, and harmful because it drains vital cash flow away from an ongoing business.

The conference report also retains a provision I joined Senators Lincoln and Hatch in spearheading to lessen the impact of the built-in gains tax on small businesses. This change is absolutely essential at a time in which our Nation's credit markets remain frozen and small businesses are struggling to meet their financing requirements. This provision will benefit up to 900 small businesses in my home state of Maine and hundreds of thousands across the country.

We must not neglect our Nation's distressed and rural communities. This conference report rightly recognizes that imperative by including an additional $1.5 billion in each 2008 and 2009 allocation authority for the new markets tax credit. And my understanding is that the Community Development Financial Institutions Fund, which administers the incentive, can allocate the augmented 2008 credit authority within 90 days, which will create 11,000 permanent jobs and 35,000 construction jobs.

This agreement also contains tax credits for renewable energy that I have long fought for that will create more than 89,000 jobs. Frankly, if we had not dithered last year and opted to pass the extension of the renewable tax credits at the beginning of 2008, we would have already been on the road to creating 100,000 new jobs. I know in my home State, there are a number of wind farm projects, for example, that could be ready to move forward right now.

I am also pleased that the stimulus bill contains a provision I helped to draft that will allow base communities across the Nation that have been significantly affected by a closure or realignment to qualify for vital recovery zone economic development bonds.

Finally, I am pleased this bill includes a provision I wrote to expand the definition of ``manufacturing'' as it pertains to the small-issue Industrial Development bond, or IDB, program to include the creation of ``intangible'' property. For example, this would allow the bonds to be used to benefit companies that manufacture software and biotechnology products by helping them get the financing necessary to assist their operations in innovating and create new jobs. Knowledge-based businesses have been at the forefront of this innovation that has bolstered the economy over the long-term. For example, science parks have helped lead the technological revolution and have created more than 300,000 high-paying science and technology jobs, along with another 450,000 indirect jobs for a total of 750,000 jobs.

There will be those who say the cost of this package is too much, and others will say it is too little. Some will say it should have higher levels of tax relief, others that we should focus almost entirely on spending. There are 535 Members between the House and the Senate who all have their own legitimately held beliefs about this legislation. There are millions of Americans with their own, differing views, questions, concerns, and expectations.

At the end of the day, I must return to my own evaluation--again, shared by so many across the political spectrum--that inaction is not an option and, frankly, time is of the essence. I also return to my standard for evaluating a stimulus: Is it sufficiently focused on creating jobs and assisting those who have been displaced. In that light, this package deserves to be passed now and signed into law. It is supported by organizations such as the National Association of Manufacturers, the U.S. Chamber of Commerce, the National Institute of Building Sciences, because they also believe it will create jobs. On balance, this is the right approach at the right time that offers us the best course for economic recovery and, therefore, I will be supporting this conference report.

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