Hatch Statement Before Markup of Senate Economic Stimulus Package

NEWS RELEASE FROM SENATOR ORRIN HATCH OF UTAH

[2] Frankly, this puzzles me. I know you are sincere when you say you want a bipartisan product, and I am aware of the many hours you have spent with Senator Grassley trying to find a compromise. But I just cannot understand how we have so miserably failed to find some middle ground.

[3] Earlier this year, before the Chairman and Ranking Republican member of this committee switched places, we faced another difficult challenge -- how to find a compromise on the largest tax cut in a generation. With the bipartisan cooperation for which this committee is known, we were able to forge a package that was supported by a solid majority. More importantly, that compromise survived with a strong vote on the floor of the Senate and the tax cut became law.

[4] Enactment of a bill that will effectively stimulate the economy, I hope, is the goal for all of us here today. Unfortunately, Mr. Chairman, the path you have set us on with this mark does not lead to that destination. This bill will require 60 votes to pass on the floor, and I just do not see how we can build that result on this shaky foundation.

[5] I understand that Democrats and Republicans have different views as to what will work to stimulate the economy. And I also know that my side cannot entirely get its own way. What it so troublesome to me, though, is why at least some of your mark cannot represent bold economic stimulus, as defined by Republicans.

[6] Let me just mention two examples of where this mark falls way short, Mr. Chairman. The first deals with bonus depreciation. This is a provision you have in your mark, but at only 10 percent, it is so weak that it is almost meaningless.

[7] Bonus depreciation is one provision that almost everyone -- Democrats, Republicans, Secretary Rubin, Chairman Greenspan, the President -- agrees should be part of the package. It makes sense to include it, because stimulating the economy is about changing behavior. Bonus depreciation lowers the cost of an asset. When the incentive is a strong one, behavior is changed, a purchase is made that otherwise would not be, and the economy is stimulated.

[8] But what happens if the incentive is weak, such as a 10 percent bonus depreciation deduction? Obviously, a tepid incentive will yield a tepid response.

[9] But do not simply take my word for it, Mr. Chairman. A recent study by the National Association of Manufacturers shows significant advantages of a 30 percent bonus depreciation provision over a 10 percent plan. The 30 percent plan would yield $74 billion more in GDP by the end of 2004 than would the 10 percent plan. This translates into faster GDP growth, which translates into hundreds of thousands more jobs.

[10] This is not the time for timidity. We need a stimulus provision that roars with the leadership of a lion, not the whimper of a kitten.

[11] Personally, I favor a stronger depreciation measure than what was passed by the House. I introduced a 50 percent bonus depreciation bill, and I filed an amendment reflecting that level.

[12] Bonus depreciation is probably the best single stimulus idea around. So why would we include only a lightweight version of what should be the centerpiece of this bill?

[13] The second example, Mr. Chairman, is the fact that the mark does not include the repeal of the corporate alternative minimum tax. We have thousands of distressed employers in America that are being mangled by the AMT, which is contributing to the number of layoffs we are seeing.

[14] But when it comes to unemployment, this mark is trying to temporarily relieve the symptom, but is not trying to find the cure. The symptom is unemployed workers, and they need and deserve our help. But, do we better help them by merely easing their pain with extended unemployment benefits, or by helping employers create good jobs?

[15] I believe most unemployed workers would rather have a paycheck than an UNEMPLOYMENT check any day.

[16] By repealing the alternative minimum tax, we instantly strengthen employers, especially those in manufacturing and mining, where about half the companies were paying AMT in 1998, even before the economy started slowing. Now the AMT bite will be even more painful.

[17] One reason I am baffled by the omission of the AMT repeal, Mr. Chairman, is that your mark DOES include another provision to assist distressed employers -- the net operating loss carry back provision, which I support. But, why is it OK to help employers distressed by losses, but leave behind employers buffeted by the alternative minimum tax?

[18] I guess the thing that perplexes me the most, Mr. Chairman, is the fact that you have been so strong on economic growth and job creation issues in the past. You and I have together sponsored several important pro-growth tax cut measures including the permanent research credit and international tax simplification. Moreover, you demonstrated superb courage and leadership earlier this year on the Bush tax cut bill.

[19] What I am asking for is NOT a bill that is 100 percent tax cut or 100 percent Republican. I understand the need for compromise. But I do think that a stimulus bill worthy of the name should include a bold measure or two that will attack the heart of the problems of our economy. Window dressing or piddling around the edges does not address these serious matters.

[20] Although I am not optimistic that we will report a real economic stimulus bill today, I do hope we can improve this bill on the floor enough that it will earn the bipartisan support it needs to help us succeed in our job of strengthening the economy.

[21] Thank you, Mr. Chairman.