Response to Democratic Attacks on Fiscal Policy
Floor Statement of Sen. Chuck Grassley, of Iowa
Ranking Member, Senate Committee on Finance
Re: Democratic Leadership’s Attack on President Bush’s Fiscal Policies
Tuesday, Oct. 1, 2002
Mr. President, I rise today to respond to a coordinated attack by the Democratic leadership
on President Bush. The drumbeat started sounding about two weeks ago. The distinguished majority
leader, Senator Daschle, took the lead in a Senate floor speech. He was joined by others in the
Democratic Leadership who pummeled the President and used many colorful charts and other props.
I was tempted to respond at the time, but the Senate was locked in debate on another matter, so I
deferred.
The attack basically blames the President for all that ails our economy. An article in the Wall
Street Journal, dated September 18, 2002, the day the attacks started, summarized the strategy and
substance. I ask unanimous consent to put a copy of the article in the record.
I’m going to quote from a paragraph in the article:
“In a Senate floor speech he plans to make following a breakfast meeting with Mr.
Bush, Mr. Daschle .. is expected to say the president’s policies are responsible for
U.S. job losses, weak growth, declining business investment, shrinking retirement
accounts, an erosion in consumer confidence, rising health care costs, vanishing
budget surpluses and record executive pay."
Indeed, we have seen our Democratic friends, on several occasions, use charts with the listing
referenced in the article.
So, Mr. President’s let’s be clear on the attack. According to the Democratic Leadership, the
President’s policies are the cause of job losses; weak economic growth; declining business
investment; shrinking retirement accounts; an erosion in consumer confidence; rising health care
costs; vanishing budget surpluses; and record executive pay.
I'll tell you that's an awesome amount of power in one individual. There's a little bit of irony
here. Sen. Daschle ascribes so much power to the President that he seems to be a king. Maybe this
much power makes the President an emperor, according to Senator Daschle. Now, how many times
have we heard the distinguished Chairman of the Appropriations Committee, Senator Byrd, say the
President is not a king. Who is right? Is it Senator Daschle who has made the President an imperial
figure? Is it Senator Byrd who says the President is not a king? Think we need to work that out. My
view is that reality and history favor Senator Byrd on this one.
So, let's go through the Democratic leadership's attack, point by point. According to Senator
Daschle, the President single handedly fired millions of workers. Funny, I thought employers laid
off workers, not the President. Seems to me the President can fire political appointees, like White
House staff, but don’t think he can fire every federal worker in America. Heck, right now, we’re
hung up on homeland security in a fight over the extent of the President’s powers with respect to
workers in the Department of Homeland Security.
Let’s take a look at the next charge. All, by himself, the President slowed economic growth.
Funny, I thought we had a global economic slowdown, war on terrorism, overcapacity in telecom,
a bubble in the stock market during the Clinton years, might have had something to do with it. Not
according to Senator Daschle. No, under the Democratic leadership's theory, it's all the fault of the
President.
Now, let’s look at the third charge. Declining business investment is all George W. Bush's
fault under the Daschle theory, too. Funny, I thought businesses made investment decisions. And
actually, the stimulus package pushed by the President, well, that hasn't had any effect, according
to the Democratic leadership. Guess the business cycle doesn't exist under Daschle economics.
Let’s turn to the fourth charge. Democrat leaders blame recent declines in 401(k) accounts
all on President Bush. Senator Daschle seems fixated on the recent stock market decline. I have
a lot of concerns myself. The Democratic leadership, however, seems obsessed with assigning
blame. By contrast, folks out in the heartland tell me they want us to look forward and do something.
They don’t want a bunch of political finger pointing.
If we look forward, we see some very good things in the area of retirement security. In fact,
last year’s bipartisan tax relief bill contained the largest expansion of tax incentives for retirement
security in a generation. There’s $50 billion in new incentives. I guess Senator Daschle's opposition
to the largest increase in IRAs and 401(k) account contributions in last year's tax bill doesn't matter.
So, while some may want to find fault, constructive legislators can point to bipartisan initiatives on
retirement security that workers can look forward to in the future. Why scare workers and whip up
anger? Why not work together? Why not recognize some of the good we do around this place, like
the retirement security package, that phases in as part of the bipartisan tax relief legislation? Why
not bring up the bipartisan Finance Committee pension bill? I introduced it early this year as a
consensus document and the Finance Committee approved it. Let’s get out of the partisan blame
game and do something bipartisan for workers. Let’s build on what we did last year.
This brings us to the fifth charge. Sen. Daschle blames an erosion in consumer confidence
all on President Bush. Funny, seems to me that the President, though an important leader, can't
stimulate consumer confidence all by himself. What he can do is propose to return more taxpayer
money to taxpayers. As policymakers in a time of slackening demand, we hope consumers will
spend the extra tax dollars left in their pockets. So, the Bush tax cut, the largest tax cut in a
generation, with checks to every taxpayer, which the Democratic leadership opposed, had a negative
effect on consumer confidence. That’s the charge Senator Daschle made. More money to spend for
every American on their needs, negatively affects their confidence, so goes the charge. Got to tell
you, Mr. President, that makes no sense to me. In the parlance of a hunter, that dog won’t hunt.
Let’s turn now to the sixth charge. The Democratic leadership says rising health care costs
are all the fault of the President. Funny, last time I checked the President isn't a physician. He isn't
a nurse. He isn't an insurance company executive. He isn't a pharmaceutical executive. He isn’t the
trial lawyer that sues the physician, nurse, or hospital. He doesn’t send you your health care bill.
None of that matters. It doesn't matter. No, Mr. President, ignore market dynamics and other
conditions. According to Daschle economics, the President, all by himself, is responsible for rising
health care costs.
Now, I’d like to turn to the seventh charge. Vanishing budget surpluses are all the President's
fault, according to Senator Daschle.
According to the Democratic leadership, their spending demands don't matter. The recession
doesn't matter. The money for rebuilding New York, bailing out the airlines, or fighting the war, all
unanticipated bipartisan responses to unexpected events, all of that does not matter. Nope, Mr.
President, under Daschle economics, it’s all the fault of President Bush, plain and simple. Well, fairminded
folks back home know it’s not that plain and simple. And they’re right. More on that in a
minute.
Now, Mr. President, I’d like to talk about the eight and final charge. Hold on to your hat.
This one is pretty amazing. According to the Democratic leadership, record executive pay is all the
President's fault. Apparently, Sen. Daschle thinks the President votes every share, controls every
board of every corporation that has suffered from excessive executive pay.
So, folks like Terry McAuliffe, the DNC chairman, who profited from insider deals, are not
accountable for their own actions. The boards, oh, they don't matter, according to Daschle
economics. Oh, and another thing, ignore the fact that a lot of these sweetheart insider deals
occurred long before President Bush took office. Don’t that little fact get in the way.
Mr. President, how can anyone take this charge seriously? The President no more sets
executive pay than you or I do. It’s true we can affect how executive pay is taxed or its disclosure.
So, let’s be clear. Either the President is an imperial figure or the charges made by the
Democratic leadership are without merit. Both cannot be true in a modern global economy.
Now, Mr. President, I’d like to take a few minutes to talk specifically about the bipartisan
tax relief package enacted last year.
Despite the sky-is-falling partisan opposition during the tax cut debate last year, the passage
of time tells a different story. And it discounts the fictitious picture of gloom and doom
portrayed last year by the my big spending friends.
According to revised economic data released by the federal government in August, the
economy started to falter earlier than previously believed. The figures show the economy started
negative growth as early as January 2001. This proves the economy needed a shot in the arm sooner
rather than later to get things rolling again. What’s more, the primary weakness causing the economy
to sputter was lackluster business investment, not waning personal consumption.
Clearly, the job-creating engine in America needed a tune-up. And that’s just what the
president set out to do when he took the oath of office. A cornerstone of his campaign for the White
House, the president made good on his pledge to return more hard-earned money to the working men
and women in America.
As the chairman of the Senate Finance Committee at the time, I had the privilege of steering
the largest federal income tax cut in a generation through the Congress. The best way to grow the
economy is not by growing government. It’s by allowing the industrious people of the United States
to manage their own money.
Reducing marginal tax rates on income and investment was exactly the right policy
prescription to cure sluggish business investments and prime the pumps that enable American
entrepreneurs, small business owners, manufacturers and corporate employers to grow the economy
and create jobs.
Letting workers, investors, entrepreneurs, employers, families and retirees to keep more of
their own money unleashes a chain reaction. They’ll spend it. Save it. Invest it. Open a small
business. Pay higher wages. Buy a house. Upgrade manufacturing equipment. Pay for higher
education. The list goes on and on.
It’s a fundamental principle that policy makers need to remember. Money recycled through
Washington doesn’t squeeze the most bang out of the buck.
And yet plenty of critics continue to blame the "Republican" tax cut for the federal budget
shortfalls. Lest they forget, more than one-quarter of the Democratic caucus in the Senate voted for
the tax cuts.
In an election year, too many candidates still like to divide the American electorate, pitting
the "rich" against everyone else.
I’m sure voters will get their fill of statistics claiming that the Bush tax cut hands out 40
percent of the benefit to the top one percent of taxpayers. This is not merely misleading, it’s false.
Some folks must be under the impression that as long as something is repeated often enough, it will
become true.
The facts certainly are thorny little details for the critics of the bipartisan tax relief package.
According to the Joint Committee on Taxation, Congress' official non-partisan scorekeeper, the
federal tax code became more progressive with the tax relief package. And taxpayers in the lower
to middle income brackets get the biggest break. For example, taxpayers with incomes between
$10,000 and $20,000 will see their taxes reduced by almost 14 percent when the tax cut takes full
effect. Taxpayers with over $200,000 will see their taxes reduced by barely six percent.
And as for the budget, the bipartisan tax cut was a minimal factor in the federal government’s
surplus-to-deficit situation. In its first year, the tax cut accounted for just eight percent of the
shortfall. Indeed, increased spending outpaced the tax cut by $6 billion. Over the long-term, the 10-
year surplus declines from $5.6 trillion to $300 billion. Of that drop, the tax cut represents 33 percent
of the decline, or about $1.7 trillion.
Those who are looking to lay blame need to point their fingers at Congress’ appetite for
spending. Folks who decry the tax cut should instead weep with hard-working taxpayers about
Uncle Sam’s bite out of their paychecks. The Bush tax cut saved Iowa households $752 on average
in its first year.
Even with the tax cut, the federal government takes 19 cents out of every dollar earned.
That’s a record tax burden higher than any decade since World War II.
Thanks in part to the bipartisan tax cut enacted last summer, things are starting to turn back
around. Weaknesses persist in the manufacturing and employment sectors, but the U.S. economy is
as resilient as the spirit of the American people. Lowering the tax burden in America triggers growth,
creates jobs and spreads economic opportunity. Plus, tax cut opponents need to be reminded that a
bigger economic pie will dish up a bigger slice of revenue to fulfill the government’s priorities,
including homeland security.
As the top Republican on the Senate tax-writing committee, I will continue championing progrowth
economic policies. That includes making last year’s tax cuts a permanent part of the tax code.
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