Baucus Statement at Senate Finance Committee Markup of Stimulus Bill

NEWS RELEASE FROM THE COMMITTEE ON FINANCE

[2] The September 11th attacks took a bad economic situation and made it significantly worse. Unemployment is rising, corporate profits are falling, and businesses are cutting back on investments in new plants and equipment.

[3] We had virtually no economic growth in the second quarter and negative growth in the third quarter. According to the National Association of Purchasing Managers, "the current declines in production and new orders are among the largest in . . . the history of reporting of these statistics."

[4] Last Friday, the news was especially bad. We learned that 415,000 Americans lost their jobs in October. That's the highest number in more than 20 years.

[5] Almost every sector lost jobs in October. Manufacturing lost 142,000. Services, 111,000. Retail trade, 81,000. Construction, which had been a pillar of strength, lost 30,000. boom. For the past decade, we've had low growth.

[6] Like all Americans, we're struggling to respond. To pull together. To be resilient. To make a contribution. That's why we're here today.

[7] Others have responsibility to fight the war. We all have a responsibility to support them. And to fight terrorism at home. And we, in this committee, also have a responsibility to help get the economy back on track.

[8] It's partly a matter of restoring public confidence. Business confidence. It's partly reducing interest rates, which the Federal Reserve is handling well. But it's also coming together to write what we've come to call an economic stimulus bill. What does this mean? There's no magic recipe, that will send us roaring back to double-digit growth. But there are sensible, responsible steps. The leaders of the Budget Committees have done a great service. They came together, from the House and Senate and both political parties, to give us guidance.

[9] Let me try to put in my own words. To stimulate economic recovery, our bill should be temporary. It should cost little over the long run. And it and should get money into the hands of those who'll spend it. Consumers who will spend it on goods and services. Businesses that will spend it on capital equipment.

[10] The Chairman's Mark is designed to accomplish these goals. It has six main elements.

[11] First, we provide a tax rebate to taxpayers who didn't get a full rebate this summer. That's 45 million taxpayers, who have relatively modest incomes and are likely to spend the money right away.

[12] Second, we temporarily speed up depreciation deductions to encourage businesses to invest in new plants and equipment.

[13] Third, we provide assistance to the hundreds of thousands of Americans who've lost their jobs. How? We strengthen unemployment benefits and families maintain health insurance. To put it bluntly, you can be darned sure that these dollars will be spent.

[14] Fourth, we provide help to states. The economic crisis is creating a budget crisis. States are trying to balance their budgets while revenue falls. Our depreciation provisions will indirectly exacerbate the problem, by reducing the revenue of states that tie their tax collections to the federal income tax. Therefore, we lend states a hand, by temporarily increasing federal matching payments under Medicaid.

[15] Fifth, we provide help to rural areas. We temporarily extend disaster assistance, and we strengthen rural economic development programs.

[16] I know that some members are concerned about these rural provisions. So let me explain. When our national economy declines, rural areas are often among the areas that are hit the hardest and that recover slowest. And that comes on top of a rural economy that, in many areas, never experienced an economic boom. Business farm income in 1999 and 2000 was at a ten-year low. We had hoped that it would improve modestly in 2001. At times like these, agricultural disaster assistance and rural economic development assistance are a lifeline. And they'll put money into the national economy.

[17] I fully understand that these provisions are not within the jurisdiction of this committee. But, as we all know, there's not much time left. We're trying to move quickly, and the Chairman of the Agriculture Committee supports including these provisions in our bill.

[18] Finally, we temporarily extend various tax and other incentives for one year. These incentives also will increase spending by businesses and households.

[19] That's the Chairman's Mark.

[20] It's temporary. It provides a strong, balanced stimulus for economic recovery. It provides important assistance to workers who've lost their jobs. And the long term cost is low. In fact, because a lot of the stimulus that's provided in the first year is recouped in later years. So the bill actually cost less over ten years than it does in the first year. Over ten years, the cost is $45 billion.

[21] One final point, before I turn to Senator Grassley.

[22] I'm proud of this bill. It will provide an effective stimulus for economic recovery. And it provides some basic help to folks who have lost their jobs and risk losing their health insurance. It's balanced. It's compassionate. And it's what business leaders and economists tell us will work.

[23] I understand that other people have different views. The bill can be improved. And, if we're going to get something done, we need to work together. Nobody feels this more strongly than I do.

[24] Right after the attacks, I began discussions on a bipartisan economic recovery package. Working with Senator Grassley, I called everyone together. Secretary O'Neill. Chairman Thomas. Congressman Rangel. The leaders of the budget committees. There seemed to be a spirit of bipartisan cooperation. We were making progress. For whatever reason, the House Republicans withdrew from our discussions and wrote a partisan bill. That's their right, and I respect it. I still kept trying. I met further with Senator Grassley and Secretary O'Neill.

[25] We're not there yet. But I'm patient. I pledge to listen carefully to the arguments on the other side. In fact, I hope that today's markup will help us understand each other's point of view a little better. That will help pave the way to a solid, balanced, bipartisan bill that we all can be proud of.

[26] With that, I'll turn to my friend, Senator Grassley.