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SUBCOMMITTEES: Privacy, Copyright, and Permission to Link Statement |
Committee on Ways and Means For Immediate Release CHAIRMAN BILL THOMAS OPENING STATEMENT As delivered October 12, 2001 Our national economic security faces an immediate and urgent threat, in part as a result of the attacks on the symbols and the people of America. The economy was already in some distress, as we know, prior to the nightmare of September 11. It has worsened in the wake of the attacks. In the face of layoffs, tumbling corporate profits, falling stock markets and shakier consumer confidence, no doubt remains that this legislation is needed. It’s time to face facts: a short-term recession is unavoidable. But the depth and duration of a recession can be minimized with concrete action on a stimulus package that carefully balances the need for an immediate and vigorous jumpstart with recognition of the long-term repercussions on the Federal budget. How we do this is, I believe, as important as what we do. This stimulus package must be big enough to make a difference, focused on improving incentives to work and invest, and immediately effective. The nation faces an economic crisis now; the impact of a package must be visible six and twelve months down the road, not three or five years in the future. Infrastructure spending that creates economic growth years from now, to me, misses the point altogether. Also, good policy isn’t always popular or politically appealing. The need to give the economy an assist cannot be an excuse to abandon fiscal responsibility. Economic stimulus isn’t about dividing up the pie – or a food fight - it’s about strong and decisive action to achieve a very specific goal: immediate economic growth without long-term inflationary pressure. No particular sector of the economy should be singled out for special attention. The Economic Security and Recovery Act of 2001 before us today offers immediate help. It is big enough to make a difference in a $10 trillion economy. It is focused on improving incentives to work and invest. And it is effective now. Its ten-year cost of about $150 billion in exchange for almost $100 billion in immediate stimulative effect, or about a one percent economic boost, makes fiscal as well as political and economic sense. The legislation addresses the devastating impact of the attacks on the economic life of individuals. Nine billion dollars in surplus Federal unemployment funds will be made available for cash benefit needs. States can use this new money for regular or extended unemployment benefits as well as for services to get workers back on the job. The legislation also uses an existing block grant to channel $3 billion more to states to provide health care coverage assistance for unemployed workers and their families. Together, these policies provide states with significant immediate assistance to support unemployed workers, as well as the flexibility to target assistance to those who need it most. For example, states experiencing a rapid rise in unemployment could adopt the President’s plan and provide extended benefits to those who have exhausted their regular 26 weeks of benefits. Alternatively, they might increase regular unemployment benefits, or provide training to help unemployed workers find new jobs. The choices – and the funds – are theirs. The proposal includes stimulus payments for some who received a partial rebate under this spring’s tax bill, and a stimulus payment of $300 for individuals, $500 for heads of household, or $600 for married couples filing jointly, who filed a tax return in 2000 but had no income or payroll tax obligations, although they filed an IRS return. Working families get immediate help by advancing the effective date of the 25 percent marginal rate cut from last spring’s tax bill. And the current $3000 deduction for capital losses will be increased for two years, to $4000 in the first year. The bill also offers incentives for businesses to generate jobs, spur innovation, and invest in our country’s future through a creative range of tax adjustments that will help businesses stabilize, recover and move forward after September 11th. Indeed, those of you familiar with the way tax legislation is written will note that the effective date is unusual. The recovery components of this bill take effect on September 11, 2001. Thirty percent expensing of investment in most forms of depreciable property during a two-year period will create jobs and promote business investment. Small businesses, where most jobs are created, will particularly benefit. A five-year carryback of net operating loss write-offs for corporations and individuals will help stabilize businesses affected by the current downturn by allowing them to claim refunds based on losses that they’ve suffered. This will put cash back into businesses to help them stabilize or expand. Permanent repeal of the corporate alternative minimum taxwill put resources in the hands of managers who must pay salaries and make capital investments. Simplifying capital gains taxation by repealing the five-year holding period means businesses and individuals will face a lower tax burden and significantly less complicated paperwork. Additional expensing for small businesses will enable them to write off even moreof their capital investments. That money can be directly invested in paying salaries and keeping their businesses afloat through tough economic times. Members of Congress from both parties are serious in our determination to quickly repair this increasingly dangerous fault line in our economy. The time has now come for action. Congress must do what is necessary to help the economy recover through this difficult period. But we need to move swiftly. America is strong, in part, because we are strong economically. We need to remain strong to remain free. |