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The Economy

Sen. Richard J. Durbin

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Mr. President, the January jobs report shows that President Obama and many others have joined to help put our economy on the path to recovery. The economy added 257,000 private sector jobs in January. That is the 23rd month in a row that the economy has added private sector jobs, for a total of 3.7 million payroll jobs over that same period.

In January, the unemployment rate fell again from 8.5 to 8.3 percent. The unemployment rate has fallen .8 percent since August. That is the first time in almost 17 years that the unemployment rate has fallen for 5 consecutive months.

Job growth is occurring across many sectors of our economy. In Illinois, we are seeing manufacturing jobs return, some from overseas, and across the country last month the manufacturing sector added 50,000 new good-paying jobs.

Don't get me wrong, we still have a long way to go. We have to quickly agree on the extension of the payroll tax cut, which will expire in just a few days. We have to ensure that unemployment benefits for those looking for work are continued. We are on the right track, but we shouldn't rest in our efforts to foster an economy that is built to last.

I am not a deficit and debt denier. I understand the gravity of our fiscal challenge, and we need to work to resolve these problems. I hope my work on the President's fiscal commission and as part of the Gang of 6 shows a commitment to this issue. However, as Ben Bernanke, Chairman of the Federal Reserve, said last week:

Even as fiscal policymakers address the urgent issue of fiscal sustainability, they should take care not to necessarily impede the current economic recovery. Fortunately, the two goals of achieving long-term fiscal sustainability and avoiding additional fiscal headwinds for the current recovery are fully compatible--indeed, they are mutually reinforcing. On the one hand, a more robust recovery will lead to lower deficits and debt in coming years. On the other hand, a plan that clearly and credibly puts fiscal policy on a path to sustainability could help keep longer-term interest rates low and improve household and business confidence, thereby supporting improved economic performance today.

We can grow our economy and reduce the deficit. In fact, it is arguable that we can't balance our books or the budget with 14 million people out of work. We have to work to put this economy back on its feet, to put Americans back to work earning good incomes, paying their fair share of taxes, and sustaining a growing economy.

A credible deficit reduction plan will include investments that look to the future. Not only can we be fiscally responsible and still invest in infrastructure, education, and innovation, we can only be fiscally responsible if we do make those investments. Failing to invest in the future is a recipe for more intractable fiscal problems in the years to come.

Those who say just cut spending and ignore the consequences ignore the reality. There are those who say that government spending is holding our economy back. They say that if we cut government spending, somehow we are going to enliven and rejuvenate this economy. History tells us quite a different story. President Clinton presided over the strongest period of private sector growth in recent memory, and he did so while government spending grew every year from 1995 to 2000. In 3 of those years, President Clinton generated a balanced budget--the last balanced budget we have seen in Washington.

It is clear to me that we should be heartened by the recent positive economic data, but we can't mistake it for a signal to retreat. We have to continue working to build a strong and fiscally sound economy for the 21st century. A critical element in that is unemployment insurance. The January report, as I mentioned, says we are on the road to recovery, adding 257,000 private sector jobs, with the unemployment rate dipping from 8.5 to 8.3 percent. Even with these gains, more than 12\1/2\ million people are still unemployed and actively looking for work. Even more concerning is the number of longer term unemployed, which remains at about 5.5 million. The trouble finding work isn't due to lack of initiative. We need more jobs. And until there are more jobs available, we should maintain unemployment insurance benefits at current levels.

Maintaining the current level of Federal unemployment insurance has proven to be one of the best things Congress can do to breathe life into this economy. The Congressional Budget Office--respected and bipartisan--estimates that every dollar we put into unemployment insurance not only goes into the economy but is respent and is worth $1.90 in economic activity. Late last year, the Economic Policy Institute estimated that extending Federal unemployment benefits for 1 additional year generates $72 billion in economic growth, creating over 560,000 jobs over the course of the year.

An estimated 3.2 million people were kept out of poverty simply because of unemployment insurance checks. As of the end of last year, 200,000 individuals were collecting unemployment in Illinois, with 43 percent of those unemployed people having children in their homes.

I came to the floor today to reinforce for my colleagues and the conferees working on the payroll tax-unemployment insurance bill that this isn't just about numbers, it is about real lives.

I received a letter from Laurel in December, who does a far better job of illustrating the role of unemployment benefits than anything I can say. Here is what Laurel wrote:

Thank you for working late nights. I am from Evanston, IL. I graduated from Evanston Township High School. My position as Ethics and Compliance Manager in a large multi-national conglomerate was eliminated last December 2010. I am trained as a lawyer, and have worked in international law, economics and policy. In addition to a law degree, I have a Master of Science in International Relations from the London School of Economics. I wrote my thesis about US trade policy, the now expired Agreement on Textiles and Clothing, and international economics and labor at LSE. After working for a think tank in London on democracy and participation, I went to law school. During law school, I interned at the United Nations and later for the legal and regulatory group of a Wall Street research service. I was working in the legal department of Smiths Group on international compliance issues when I was laid off. While working for Smiths Group, I studied for an LLM in international comparative law in the evenings. After being laid off, I received severance from my previous employer and was able to get a short-term contract with the World Bank after only a few weeks of unemployment. However, since the end of that contract in July, I have not been able to find a job or get a contract. My first phase of unemployment ended in November. I have now been receiving unemployment insurance payments for 7 months, just beginning Phase II. If unemployment insurance extensions are not renewed, I understand I will no longer receive payments. I am a 38-year-old single female living alone. My parents are elderly, and my mother was just diagnosed with breast cancer. My dad has had two strokes in the last 6 years. I am paying $402 a month in COBRA payments to keep my health insurance. I rent an apartment and unemployment just barely covers my rent. I have been living on savings since July. Without the help of unemployment, I will not be able to pay my rent, and I am terrified. I have had over 20 informational interviews and applied to 42 jobs since I first heard my job might be eliminated last November. The extension of unemployment insurance means something to me personally. I need more time. I believe at least with some of the applications I have submitted in both the private sector and government agencies, the companies have not hired anyone despite posting a job. I believe many companies are waiting to see what will happen with government contracts, and agencies are stalled due to the hiring freeze or funding. I know something has to come through soon . . . I support the

Is this an example of someone who is not trying, someone who is not trained and educated? Just the opposite. Here is a person who clearly has been driven her entire life to develop skills, to challenge herself, to improve her ability to earn and learn, and here she is out of work and desperate. She doesn't know which way to turn. She is single. She may not be able to pay her rent. Are unemployment benefits important for her to keep her on the track of finding a job? Of course they are. The money we give her will be spent back into the economy to create a better economic climate.

I have received thousands of letters along these lines in the last 2 years. If Congress doesn't move quickly to maintain unemployment insurance benefits, millions of workers relying on this program will be left without a lifeline. The Joint Economic Committee estimates that 3.3 million workers will exhaust benefits by June if we fail to act--nearly 170,000 in Illinois. I am concerned about what this will do to our country and especially what it will do to these people--our neighbors, members of our families, friends, folks who just need a helping hand.

Prematurely ending unemployment insurance or the payroll tax cut would make our economic recovery more difficult. There may be some political strategists who would applaud that, saying: Well, a little bit of pain for a few months here and we can change that President into another person. Let someone else take the job.

I think that is very shortsighted. Of course, I support the President, make no mistake about it, but to sacrifice the well-being of this country and the growth of our economy for the sake of an election is just plain wrong.

Conferees in the Congress must act soon to maintain a robust unemployment insurance system for those still struggling to find work. Now is not the time to roll back unemployment insurance.

Mr. President, there is one other issue I would like to raise at this point, and it is one I have worked on for some period of time with Senator Mike Enzi. It relates to a phenomena all of us are aware of--Internet sales. There is hardly an American with access to a computer who doesn't buy something on the computer. I do, and lots of families do--some of the basics, in addition to some other things that may be just aspirational purchasing. But the interesting thing that has happened over the years is we have allowed the Internet retailer to have a different position when it comes to their tax liability.

I talked to a lot of local businesses in Illinois, small businesses, businesses on Main Street. Some of them think things are getting better and I do too. They sense the worst may be behind us and the future is looking brighter. But at the same time, they share with me the frustration they have currently now with customers coming into their shops and businesses looking for everything from running shoes to sporting equipment--you name it--and then, just about the time when they have tried on the second or third pair of shoes, looked in the mirror, got everything squared away as to what they are going to buy, they sometimes pull out their phones, turn on an app, and take a picture of the barcode on the product.

You see, there is an app which allows a person to find out where they can buy that very same product cheapest on the Internet. So here is the local retailer doing their part to make a sale, and it turns out they get nothing from the experience.

What is the advantage that Internet sellers have over those who have businesses on streets and highways across America? One advantage relates to sales tax. In my home State of Illinois, the payment of sales tax on Internet purchases is voluntary and personal. If one does not declare it and pay it, it is not collected. We are supposed to pay it, but many people do not. So those selling on the Internet, subject to local sales tax, in fact are not collecting that sales tax. I think that can change and should.

Becky Anderson owns Anderson Bookstores in Naperville, IL--a great little town. She described to me how she loses sales every day because consumers walk in, ask her questions, and then buy an item online from remote retailers because they do not collect sales tax.

Becky understands most customers do not realize they do owe the sales tax to the State of Illinois and local units of the government. They say:

This runaway train may undermine more than our bottom lines. It's not a stretch to say entire Main Street districts could disappear.

That is Becky's conclusion after having watched what happens with these Internet sales not collecting sales tax.

She talks about how a local shoestore in downtown Naperville was forced to close and lay off employees, strictly because of Internet sales. The local business owner, Michael Abt, president of Electronics, in Glenview, IL, described in detail how our current system results in a built-in price advantage for Internet retailers. Mike said:

Oftentimes with consumer electronics, the profit margin is 10 percent or less. Abt collects 9.25 percent sales tax. When an online competitor does not collect it and then offers free shipping, it is a huge advantage for [his] competition.

Local businesses will never be able to compete if we continue to provide a built-in price advantage for online retailers by exempting them from sales and use tax collection. There was a time, I guess--and I heard the argument here--that we did not consider the sales tax for online sales because, the argument was made, they may not survive; it is a fledgling industry.

That day is long gone. They are certainly not fledgling; they are in full flight.

Over the past decade, online retail has become an important part of American commerce. Online retail allows customers to compare prices, shop around right in the comfort of their living room. At the same time, local businesses such as Anderson Bookstores in Naperville compete with online retailers by trying to provide good service at the lowest prices they can. These local businesses also invest in our communities. They hire local workers. They pay local property taxes. They are involved in communities supporting baseball teams and charity efforts in their community. They are our neighbors and they deserve a fair shake.

Last year, Senator Enzi, Lamar Alexander of Tennessee, and I joined in introducing the Marketplace Fairness Act, with seven additional cosponsors--Senators Tim Johnson, Boozman, Jack Reed, Blunt of Missouri, Whitehouse, Corker and Pryor. We recently added Senators Bennet and Cardin. This bipartisan group of Senators understands we have to do more to ensure a fair marketplace for American businesses. The bill will level the playing field for Main Street businesses and limit the current built-in price advantage given to online retailers. It allows States to treat brick and mortar retailers the same as online retailers by providing two streamlined approaches for States to require collection of both sales and use taxes.

The bill also includes a small seller exemption that will ensure small online retailers are exempt from the requirement to collect sales and use taxes. The notion is that if Grandma Franken has an apple butter recipe and makes a few cases each year to the delight of all her neighbors, she will not be burdened with this responsibility of selling it online and collecting sales tax.

Let me be clear. This bill does not impose any new taxes. This bill does not raise taxes, period. It does not amend the Internal Revenue Code at all. It simply is a collection issue that for too long has put local businesses at a disadvantage. The real job creators in America, many of them, are the small businesses in our communities that struggle to get by every day, and when they get better and they get well, America gets well. Now is the time to help these retailers.

It also is going to help State and local budgets, those that are trying to make ends meet in a tough economy. I hope we can get this done and done quickly.

One thing I would like to add. The largest online retailer in America, amazon.com, supports our legislation. We are not at war with online retailers. They have concluded it is best to have a uniform, streamlined system that uses available software for collection from a retailer and distribution through the State departments of revenue. It is voluntary. We do not impose a mandate on any State to adopt this, although I think every one of them will, and this moves us finally in the direction of fairness--fairness not only for those who are doing the bricks and mortar sales but fairness for all customers and all retailers across America.

I commend this bill to all colleagues. If we truly believe, as many of us have spoken time and again, in the value of small business to economic recovery, most small businesspeople will tell you this is a critical element in their competitive edge and their ability to hire more people and be able to be profitable all across the Nation.

I yield the floor and suggest the absence of a quorum.

The clerk will call the roll.

The assistant legislative clerk proceeded to call the roll.

Sen. Daniel Coats

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Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Without objection, it is so ordered.