Carl Levin: Senate Floor Statement on Final Passage of The Economic Stimulus Act of 2008

February 8, 2008 -- "Madam President, for too long the federal government has stood idle as Michigan’s unemployment rate has soared, three million manufacturing jobs have been lost, and working families have felt the squeeze of the rising costs of energy, health care and food. I am glad that we are moving today on these short-term measures to stimulate our lagging economy - heaven knows we can’t afford not to. But there is more we must do to fight for American jobs, and I am disappointed that the Republican Leadership blocked our attempt to significantly improve this package. I look forward to addressing the shortcomings of this bill with additional legislation in the near future.

At a minimum, we need to pass the provisions that were in the amendment offered yesterday that was based on the work done by the Senate Finance Committee. Unfortunately, that amendment with bipartisan support fell only one vote shy of the 60 it needed to overcome the Republican filibuster. I am hopeful that under new circumstances we can get those provisions done. The Finance Committee amendment would have made this a much better package for stimulating the economy. Extending unemployment insurance, raising the cap on Mortgage Revenue Bonds to help keep people in their homes, and funding the LIHEAP program to help people heat their homes are all timely provisions that offer temporary assistance that precisely targets the people who need this help the most. Putting money into their hands is the most effective way to kick-start our economy in the shortest time possible.

Unemployment Insurance

There are a number of reasons it is important that we ultimately approve the extension of much-needed unemployment insurance, which most economists agree is one of the most effective ways to stimulate the economy, dollar for dollar. Workers who receive these unemployment benefits – which could reach them in as few as 2 weeks from enactment of the stimulus – are likely to spend them quickly, making this one of the fastest ways to infuse money into our economy in the short-term. In my own state of Michigan, about 145,000 residents have exhausted their unemployment benefits and can’t find jobs. Between now and June, 72,000 more people will face the same difficult situation. Extending unemployment insurance during times of recession is nothing new. In the past 30 years, the Congress has acted three times to establish temporary extended unemployment benefits, each time during a recession. Studies indicate that extending unemployment insurance during tough times provides the best return of economic benefits compared to other stimulus options, and this money can be distributed within weeks. Extending unemployment insurance is essential to provide much-needed support to those who have lost their jobs and are struggling to re-enter the job market.

Foreclosure Assistance

To achieve success, the second economic stimulus package now being formulated must also help families stand up against the intensifying wave of housing foreclosures. More than 89,000 Michigan home loans are currently in foreclosure and over 40,000 subprime loans have scheduled rate increases this year. Across the nation, too many families are at risk of losing their homes, with devastating consequences. Beyond the personal impact, rampant foreclosures can decimate communities. Home ownership is a central tenet of the American dream, but with the number of home foreclosures increasing at an alarming rate, that dream is slipping away from Americans across the country. I am pleased that the bill we will pass today will increase the loan limits for the Federal Housing Administration, Freddie Mac and Fannie Mae. These are modest moves in the midst of a full-blown crisis, but it is better than nothing.

I am hopeful that soon we can also pass the measure included in the Finance Committee amendment that would have raised the volume cap on state-issued tax-exempt mortgage-revenue bonds by $10 billion. The proceeds from these bonds would allow state and local agencies to provide additional mortgage refinancing options to homeowners so that they could keep their homes. It is critical that we help prevent the further deepening of the foreclosure crisis, keep families in their homes, and protect neighborhoods from the blight which results from large numbers of vacant houses.

Tax Rebates

On a positive note, I am glad that we’ve adopted the Senate’s improvements to what we are calling a “tax rebate” program. This bill will give a tax credit to be sent out as quickly as possible to provide fast cash for many struggling families, thereby ameliorating their hardship at the same time as giving a boost to spending. Today’s bill is a package of inclusion, one that recognizes the importance of giving our nation’s aging citizens and disabled veterans their share of stimulus support. These tax rebates will give $600 to individual taxpayers with at least $3000 of qualifying income, or $1200 for married couples filing jointly, and an additional $300 for each qualifying child. A prudent stimulus package should not neglect the elderly and disabled veterans, and the tax rebate program we have adopted includes social security and disabled veterans’ benefits as qualifying income for the purpose of determining eligibility for the rebate, thereby putting money directly into the hands of some of our nation’s neediest – some 20 million seniors and 250,000 veterans. Not only will this help these folks attend to their families’ most basic needs, but it will further stimulate the economy for the betterment of the whole nation.

Business Incentives

I am also pleased this package includes tax provisions to stimulate small businesses, which are the heart of America’s economic strength. It allows small businesses to double the amount they can expense, meaning immediately write off, their taxes for certain capital investments made in 2008 from $125,000 to $250,000. It also provides immediate tax relief for all businesses to invest in new machinery and equipment by speeding up depreciation provisions, so that firms can write off an additional 50% depreciation in the first year. However, given the importance of small businesses’ contribution to the economy and to job creation, much more needs to be done to help small businesses find access to credit in this slowing economy. For instance, as a member of the Senate Small Business Committee, I have joined some of my colleagues in calling for a temporary reduction of fees on small business loans to help reverse the recent decline in SBA guaranteed lending to small businesses. I think a temporary reduction in the fees charged to borrowers will put more money in the pockets of small businesses by lowering their monthly loan payments. Equally important is reducing the fees SBA charges lenders because we need to take steps to make lending to small businesses more profitable and thus more appealing so that banks will continue to be willing to make these important loans.

We should also make a one-time enhancement of $10 million to the SBA microloan program’s revolving fund to increase credit availability for very small business concerns, especially those who face additional barriers to economic opportunity. The SBA’s microloan program provides funding for small-scale business loans, which banks are typically reluctant to service. When the economy is slowing, the Federal government should be doing all it can to keep America’s small businesses viable so that they can continue to be the economic engine of our economy that they have been in the past. I hope some of these ideas will be included in the longer term stimulus package.

Renewable Energy Production Tax Credits

I am also disappointed that this stimulus package does not include the one-year extension of the production tax credit for renewable energy, which was included in the Senate Finance package. Current law provides a 1.8 cent per kilowatt tax credit for electricity produced from renewable sources including wind, solar, and biomass, but this provision will expire at the end of 2008. An effort was made to extend it for two years in the energy bill last year, but that effort also failed. This tax credit is critical to many developers of renewable energy projects – without an extension, many projects will be put on hold because they will be less financially viable. With the tax credit, these projects can go forward, and provide both investment in the economy and creation of new jobs.

Low-Income Home Energy Assistance Program

Failure to approve yesterday’s amendment also means that the stimulus package will not include an additional $1 billion for the LIHEAP program, which provides energy assistance to many low-income families. This program has been seriously underfunded for the current fiscal year, and this additional infusion of LIHEAP funding would have put money quickly and directly into the hands of individuals who need it. LIHEAP funds would be spent quickly and immediately, thus stimulating the economy and providing a vital safety net to families and seniors so they do not need to choose between eating and paying their energy bill. In addition to being targeted to those most in need, LIHEAP funding would provide benefits to the economy. Studies have shown that every LIHEAP dollar distributed generates up to five dollars of economic activity. By helping to offset home heating costs, these low-income households will be able to spend money on other vital essentials that will in turn help to stimulate the economy.

Infrastructure and Technology

Beyond needing to ultimately pass the provisions in the Finance Committee package, it is also important that we take up legislation in the near future to target federal spending on infrastructure, advanced technology and redevelopment projects that will create jobs. Our long-term economic growth requires investments by the federal government to create jobs and help our businesses grow and compete. Infrastructure and advanced technology should be our top priorities. Businesses that are successful are more inclined to hire new workers and expand. In Michigan, we know that success for many of our industries requires good roads, safe bridges, and harbors that are dredged to promote dependable shipping. Immediate federal spending on infrastructure and dredging projects can put people to work and lay the foundation for future economic growth.

Investments in advanced technology can have similar long-term benefits. For example, developing the next-generation advanced batteries for hybrid cars could lead to enormous growth of our auto industry. I have proposed public-private partnerships for research and development of a host of technologies that offer much potential for job-creation.

Conclusion

No state is struggling more than Michigan in this tough economy, and, unfortunately, evidence is growing by the day to indicate that families and workers all across the nation are facing tougher economic challenges. I will support this short-term stimulus package as a start, but I will also continue to push for further, stronger efforts to address the problems on a broader level."

Source: Senator Carl Levin

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