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CNN Live Event/Special
Democrats Annouce Economic Stimulus Package
Aired January 06, 2003 - 15:15 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ARTHEL NEVILLE, CNN ANCHOR: OK. Let me cut you off, sir, and go to Ms. Pelosi.
REP. NANCY PELOSI (D-CA), MINORITY LEADER: ... economic stimulus package.
For the time since the election we've been working very hard to present to the American people a plan that is a real stimulus, that is fair, that is fast-acting and that if fiscally responsible.
We are doing so because there is tremendous need in our country. In the Bush administration, joblessness is rampant. It is the first presidency in modern history where the jobs are going below the line instead of increasing.
In order to address joblessness in our country, in order to create an economy that does create jobs and does so quickly, members of the Democratic caucus, led by our leadership team -- Steny Hoyer, Bob Menendez, Jim Clyburn, Rosa DeLauro and John Spratt, who will make our presentation -- as well as working with ranking members of the appropriate committees -- Ranking Member Rangel, Ranking Member Dingell, Ranking Member Oberstar, Ranking Member Obey and, again on the Budget Committee, Mr. Spratt -- and many other members of the caucus, as you know, we came together the beginning of December for our economic forum. Since then, members have been working together here and on conference calls, et cetera, to come to consensus.
We believe we have a package that has clarity, that has credibility and that has consensus within our caucus.
And with that, I'd like to bring on Mr. Spratt, who is the ranking member on the Budget Committee. He also serves as assistant to minority leader and, as such, is part of the Democratic leadership. He has put this package together. Under his leadership, all of the members of the caucus and leadership of the caucus have worked together for a fair, fast-acting, fiscally sound package that helps the states and protects our homeland.
Mr. Spratt?
REP. JOHN SPRATT (D), SOUTH CAROLINA: Thank you very much, Madam Leader.
Let me begin by stating the obvious. This package that we're unveiling today is a stimulus package, an economic stimulus package. Its aim is to get the economy moving and to get people back to work.
And it's true to its mission. It's not something else.
Because what we have done is design a package that is front- loaded and fast-acting, deliberately. Our purpose is to concentrate as much clout, impact as we can in fiscal year or calendar year 2003, but not to have a tail into the out-years beyond 2003, so that we get the economy going only to bog it down in the future with enormous deficits and endless debt.
So we have a theme to this package. It is short-term stimulus, long-term balance. And that's what you'll find lacking in the proposal the president makes tomorrow.
We believe -- we haven't seen his yet, but we believe that ours will have more impact in the year 2003 when the economy needs it. It'll go to the people who need it. It'll have an effect in the near term, which is what we desire, without wrecking the budget in the long term, adding another couple trillion dollars to the national debt.
What's the size of it? For good measure, we said, "Let's try to bring something in in the range of 1 percent of GDP. That should be sufficient, if it's well targeted, to get this economy on its feet and moving." So that's about what we've done.
In 2003, the impact is $136 billion. Over time, over a 10-year period of time, some of that cost is recouped for reasons I'll explain to you momentarily.
So the net cost over 10 years is $100 billion. The immediate impact in 2003 is $136 billion.
The eight proposals in this package, the first is one of the most important, is tried and true. In every recession since the Second World War, Congress has extended unemployment benefits. In the last recession, '90-'91, Congress extended unemployment benefits on four separate occasions -- four separate occasions over a period of two and a half years. Our Republican colleagues have now extended them one time for nine and a half months, and cut them off callously so that people were terminated three days after Christmas.
So the first provision in our plan is simply this: put folks back on unemployment who have been unemployed and are looking for a job. Let's help them, and that, in turn, will help our economy.
We have an unemployment insurance trust fund. It has a balance of $26 billion in it. From '95 to 2000, it built up funds. Those funds were built up for one main purpose: so they could be paid out at this very time as insurance for those who were working and couldn't find a job in an economic down cycle.
So the first proposal is pass the Rangel bill. Tomorrow, when the House convenes, Mr. Rangel will file his bill. It's not a new piece of legislation. It doesn't need a lot of scrutiny or examination. It's been filed ever since July. His bill would extend unemployment basically by 26 weeks. Let's pass it, pass it this week, pass it as part of the continuing resolution. Let's not adjourn and do the shameful thing we did in November -- or that they did, and that is allow people who are on unemployment who have their benefits terminated for no good reason at all.
Secondly, we've got in our package tax relief for individuals for several purposes. One is to give them some relief, because we know they're hard pressed. But also we believe that this will boost consumer demand.
And so we are proposing that we do something like we did last year, that is have a rebate, except this time it will go to everybody who has earned income. You would be able to get up to 10 percent of $6,000 in earned income paid back to you by the Treasury, not by the Social Security trust fund, not out of Social Security payroll taxes, but by the Treasury.
You, if you are a couple filing jointly, will get $600 back if you have $6,000 in joint income. If you're an individual you would get $300 back.
What'll happen to this money? It'll be spent, particularly if you target it the way we're targeting it.
In the last package a couple with two children making $19,600 got nothing. Nearly $20,000 of earned income; they got no benefit at all. Now, who's going to spend it, go out and make the economy hum as a result of this infusion of this cash? Those people. And who needs it? They do. So we say, "Let's give these folks a break, a tax break, because in turn it'll help the economy."
Secondly, we have tax relief for small businesses. As some of you know, there's something in the code called Section 179. It says that you can, if you're a small business, write off up to $25,000 of a new purchase in the year you purchase it. We say, "For the year 2003 alone, let's allow small businesses to write off $50,000 of new purchases."
Now, this is a slack economy, there's a lot of excess capacity. You need something like this, dramatic and pointed, do it this year or you don't get it at all, to get the message across.
Similarly, when we did the stimulus package last year, we said to firms, "In '02, '03 and '04, if you make a major investment in plant and equipment, we'll let you have a bonus depreciation in those years, those three years, 30 percent of the asset's value. Then you have to depreciate it over the rest of its remaining life."
We argued at the time that our Republican colleagues were making a mistake by extending that over three years. It let people put off their capital investment plans and still reap the tax consequences.
So we say, "We'll sweeten the bonus. Major business, you can get a 50-percent bonus under our bill, our proposal, a 50-percent bonus if you invest in 2003."
So we increase the bonus -- the first-year bonus, in '03. We reduce it in '04 so that the net cost is virtually a wash. That's one reason that the one-year cost is $136 billion, the 10-year cost is $100 billion. Then we go to the states. Every one of us comes from a different state and every one of us has a different tale to tell about how hard- pressed, fiscally burdened our states are. And they're doing things, or almost forced to do things that are pro-cyclical, that worsen the business cycle at this point in time: raise taxes, cut spending and particularly cut vital programs like Medicaid.
So we are saying to our states, "We are providing up to $31 billion in targeted assistance to states and localities and others."
First of all, we propose to spend $10 billion of it on homeland security-type projects to help equipment and gear-up our first responders, a need that's not yet been met or funded; to help enhance security at airports and sea ports and rail terminals and rail tunnels and places that obviously need homeland security enhancement, but the need is unmet because it's unfunded.
We're saying you can get here a three-for. You can spare the states the expense of making that investment now, you can boost the economy by funding that investment, and you can enhance national security all in one. So homeland security we would put $10 billion aside for that purpose.
Highways and transportation: Under a law that was written a couple of years ago, the state highway departments will be getting this year at least $5 billion less than they got last year. Now, there's something that is truly pro-cyclical, something that doesn't need to happen, even if it is written into the law. So we're saying, "Let's give the state highway departments at least $5 billion to continue spending on highway projects that they already have scheduled; they're off the shelf."
And then, finally, if you talk to your governors, your state legislatures, the one thing they will mention over and over again, the biggest burden they have to bear is the cost of the Medicaid program. In recent years it's been going up at well above the rate of inflation, and in recessions it goes up sharply.
So we're saying to the governors, "We will help you bear the cost of the Medicaid program for one year, one time; we will change the federal percentage, the formula by which the state, the federal government, determines what percentage it will pick up of the cost of that program."
That will cost $10 billion. That's a bill that was already filed, too. Mr. Brown -- Sherrod Brown, Chairman Dingell -- Ranking Member Dingell, and Henry Waxman and others, including Peter King, a Republican, filed it six months ago.
We say, pass it now and you can give the states the kind of relief that they've been seeking.
So there you have it. We got a program with an impact of $136 billion in 2003, but no out-year tail, no consequences for the deficits in the out-year, because we want to have the budget recover, the bottom line of the budget get better as the economy gets better. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired January 6, 2003 - 15:15 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ARTHEL NEVILLE, CNN ANCHOR: OK. Let me cut you off, sir, and go to Ms. Pelosi.
REP. NANCY PELOSI (D-CA), MINORITY LEADER: ... economic stimulus package.
For the time since the election we've been working very hard to present to the American people a plan that is a real stimulus, that is fair, that is fast-acting and that if fiscally responsible.
We are doing so because there is tremendous need in our country. In the Bush administration, joblessness is rampant. It is the first presidency in modern history where the jobs are going below the line instead of increasing.
In order to address joblessness in our country, in order to create an economy that does create jobs and does so quickly, members of the Democratic caucus, led by our leadership team -- Steny Hoyer, Bob Menendez, Jim Clyburn, Rosa DeLauro and John Spratt, who will make our presentation -- as well as working with ranking members of the appropriate committees -- Ranking Member Rangel, Ranking Member Dingell, Ranking Member Oberstar, Ranking Member Obey and, again on the Budget Committee, Mr. Spratt -- and many other members of the caucus, as you know, we came together the beginning of December for our economic forum. Since then, members have been working together here and on conference calls, et cetera, to come to consensus.
We believe we have a package that has clarity, that has credibility and that has consensus within our caucus.
And with that, I'd like to bring on Mr. Spratt, who is the ranking member on the Budget Committee. He also serves as assistant to minority leader and, as such, is part of the Democratic leadership. He has put this package together. Under his leadership, all of the members of the caucus and leadership of the caucus have worked together for a fair, fast-acting, fiscally sound package that helps the states and protects our homeland.
Mr. Spratt?
REP. JOHN SPRATT (D), SOUTH CAROLINA: Thank you very much, Madam Leader.
Let me begin by stating the obvious. This package that we're unveiling today is a stimulus package, an economic stimulus package. Its aim is to get the economy moving and to get people back to work.
And it's true to its mission. It's not something else.
Because what we have done is design a package that is front- loaded and fast-acting, deliberately. Our purpose is to concentrate as much clout, impact as we can in fiscal year or calendar year 2003, but not to have a tail into the out-years beyond 2003, so that we get the economy going only to bog it down in the future with enormous deficits and endless debt.
So we have a theme to this package. It is short-term stimulus, long-term balance. And that's what you'll find lacking in the proposal the president makes tomorrow.
We believe -- we haven't seen his yet, but we believe that ours will have more impact in the year 2003 when the economy needs it. It'll go to the people who need it. It'll have an effect in the near term, which is what we desire, without wrecking the budget in the long term, adding another couple trillion dollars to the national debt.
What's the size of it? For good measure, we said, "Let's try to bring something in in the range of 1 percent of GDP. That should be sufficient, if it's well targeted, to get this economy on its feet and moving." So that's about what we've done.
In 2003, the impact is $136 billion. Over time, over a 10-year period of time, some of that cost is recouped for reasons I'll explain to you momentarily.
So the net cost over 10 years is $100 billion. The immediate impact in 2003 is $136 billion.
The eight proposals in this package, the first is one of the most important, is tried and true. In every recession since the Second World War, Congress has extended unemployment benefits. In the last recession, '90-'91, Congress extended unemployment benefits on four separate occasions -- four separate occasions over a period of two and a half years. Our Republican colleagues have now extended them one time for nine and a half months, and cut them off callously so that people were terminated three days after Christmas.
So the first provision in our plan is simply this: put folks back on unemployment who have been unemployed and are looking for a job. Let's help them, and that, in turn, will help our economy.
We have an unemployment insurance trust fund. It has a balance of $26 billion in it. From '95 to 2000, it built up funds. Those funds were built up for one main purpose: so they could be paid out at this very time as insurance for those who were working and couldn't find a job in an economic down cycle.
So the first proposal is pass the Rangel bill. Tomorrow, when the House convenes, Mr. Rangel will file his bill. It's not a new piece of legislation. It doesn't need a lot of scrutiny or examination. It's been filed ever since July. His bill would extend unemployment basically by 26 weeks. Let's pass it, pass it this week, pass it as part of the continuing resolution. Let's not adjourn and do the shameful thing we did in November -- or that they did, and that is allow people who are on unemployment who have their benefits terminated for no good reason at all.
Secondly, we've got in our package tax relief for individuals for several purposes. One is to give them some relief, because we know they're hard pressed. But also we believe that this will boost consumer demand.
And so we are proposing that we do something like we did last year, that is have a rebate, except this time it will go to everybody who has earned income. You would be able to get up to 10 percent of $6,000 in earned income paid back to you by the Treasury, not by the Social Security trust fund, not out of Social Security payroll taxes, but by the Treasury.
You, if you are a couple filing jointly, will get $600 back if you have $6,000 in joint income. If you're an individual you would get $300 back.
What'll happen to this money? It'll be spent, particularly if you target it the way we're targeting it.
In the last package a couple with two children making $19,600 got nothing. Nearly $20,000 of earned income; they got no benefit at all. Now, who's going to spend it, go out and make the economy hum as a result of this infusion of this cash? Those people. And who needs it? They do. So we say, "Let's give these folks a break, a tax break, because in turn it'll help the economy."
Secondly, we have tax relief for small businesses. As some of you know, there's something in the code called Section 179. It says that you can, if you're a small business, write off up to $25,000 of a new purchase in the year you purchase it. We say, "For the year 2003 alone, let's allow small businesses to write off $50,000 of new purchases."
Now, this is a slack economy, there's a lot of excess capacity. You need something like this, dramatic and pointed, do it this year or you don't get it at all, to get the message across.
Similarly, when we did the stimulus package last year, we said to firms, "In '02, '03 and '04, if you make a major investment in plant and equipment, we'll let you have a bonus depreciation in those years, those three years, 30 percent of the asset's value. Then you have to depreciate it over the rest of its remaining life."
We argued at the time that our Republican colleagues were making a mistake by extending that over three years. It let people put off their capital investment plans and still reap the tax consequences.
So we say, "We'll sweeten the bonus. Major business, you can get a 50-percent bonus under our bill, our proposal, a 50-percent bonus if you invest in 2003."
So we increase the bonus -- the first-year bonus, in '03. We reduce it in '04 so that the net cost is virtually a wash. That's one reason that the one-year cost is $136 billion, the 10-year cost is $100 billion. Then we go to the states. Every one of us comes from a different state and every one of us has a different tale to tell about how hard- pressed, fiscally burdened our states are. And they're doing things, or almost forced to do things that are pro-cyclical, that worsen the business cycle at this point in time: raise taxes, cut spending and particularly cut vital programs like Medicaid.
So we are saying to our states, "We are providing up to $31 billion in targeted assistance to states and localities and others."
First of all, we propose to spend $10 billion of it on homeland security-type projects to help equipment and gear-up our first responders, a need that's not yet been met or funded; to help enhance security at airports and sea ports and rail terminals and rail tunnels and places that obviously need homeland security enhancement, but the need is unmet because it's unfunded.
We're saying you can get here a three-for. You can spare the states the expense of making that investment now, you can boost the economy by funding that investment, and you can enhance national security all in one. So homeland security we would put $10 billion aside for that purpose.
Highways and transportation: Under a law that was written a couple of years ago, the state highway departments will be getting this year at least $5 billion less than they got last year. Now, there's something that is truly pro-cyclical, something that doesn't need to happen, even if it is written into the law. So we're saying, "Let's give the state highway departments at least $5 billion to continue spending on highway projects that they already have scheduled; they're off the shelf."
And then, finally, if you talk to your governors, your state legislatures, the one thing they will mention over and over again, the biggest burden they have to bear is the cost of the Medicaid program. In recent years it's been going up at well above the rate of inflation, and in recessions it goes up sharply.
So we're saying to the governors, "We will help you bear the cost of the Medicaid program for one year, one time; we will change the federal percentage, the formula by which the state, the federal government, determines what percentage it will pick up of the cost of that program."
That will cost $10 billion. That's a bill that was already filed, too. Mr. Brown -- Sherrod Brown, Chairman Dingell -- Ranking Member Dingell, and Henry Waxman and others, including Peter King, a Republican, filed it six months ago.
We say, pass it now and you can give the states the kind of relief that they've been seeking.
So there you have it. We got a program with an impact of $136 billion in 2003, but no out-year tail, no consequences for the deficits in the out-year, because we want to have the budget recover, the bottom line of the budget get better as the economy gets better. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
