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The Economy

Sen. Jon Kyl

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Mr. President, I come to the floor today to respond to some arguments made in a recent opinion article by the chairman and ranking member of the Senate and House Budget Committees, respectively. It is entitled ``GOP Budget Attacks Misguided.'' The crux of the piece is that President Obama has made great progress in improving the economic outlook, and it would improve even more if only Republicans would embrace his policies.

The first set of claims I want to respond to relates to the strength of the economic recovery. The authors write that ``we've come a long way'' since the peak of the recession thanks to ``actions taken by the Obama administration'' and have had ``23 consecutive months of private-sector job growth.''

To start, I don't think the 12.8 million unemployed Americans would agree we have come a long way. Indeed, it has been 2\1/2\ years since the recession technically ended, and we are still experiencing the weakest recovery since the Great Depression. Growth is anemic, and there are 700,000 fewer employed Americans today than when President Obama took office.

Although it has been 3 years since passage of the stimulus bill, unemployment has been above 8 percent for the last 35 months. Remember, this legislation was sold as a way to keep unemployment below 8 percent. These are some of the signs that ``actions taken by the administration'' are not working to get Americans back to work or improving the economy.

Regarding the claim that America has had 23 consecutive months of private sector job growth, the President has been citing this number on the campaign trail, averring that 3.7 million jobs were created during that time. But the claim doesn't stand up to scrutiny. Those who cite it don't account for the role new workforce entrants play in employment statistics.

Economists generally agree that for employment to hold even, about 150,000 jobs must be created each month to employ new entrants into the workforce. These people include those who recently concluded military service or family obligations and recent graduates. If we multiply 150,000 by 23 months, we get about 3.45 million jobs. That means even by the administration's own figures, only about 250,000 new jobs have been created in roughly 2 years.

Moreover, according to the Bureau of Labor Statistics, the net positive increase in payrolls was above 150,000 during just 9 of the 23 months to which the set referred. So, yes, it would have been nice to have 23 consecutive months of private sector job growth, but that is not what happened. Again, we need 150,000 just to stay even with the new people entering the workforce, and in only 9 of these 23 months did the economy produce that many jobs.

The second set of claims I want to discuss relates to supposed blame on Republicans for the debt and the hampering of a stronger recovery. The authors of this op-ed claim that ``while the deficit has remained high over the past 3 years, that is largely a result of the policies of the previous Republican administration.''

Let's take a look at the actual deficit numbers. Labeling the last three deficits as ``high'' is quite an understatement. According to President Obama's own budget numbers, in 2009 the deficit was $1.4 trillion. In 2010 the deficit was $1.3 trillion. In 2011 it was, again, $1.3 trillion. The deficit this year is expected to top $1.3 trillion.

At the end of the budget window, in 2022, the deficit is projected to be $704 billion. The highest deficit under President Bush was $458 billion, in 2008. Every deficit under President Obama has been almost three times that figure--more than double. But President Obama should not be accountable for the debt problem? How does that work?

The President and his supporters like to point out that the budget contains $4 trillion in deficit reduction over the next 10 years. But most of this reduction is based on new taxes and gimmicks, such as alleged ``savings'' from actions that Congress has already taken or from ending operations in Iraq and Afghanistan.

As a USA Today editorial quoted today:

[The budget] relies on gimmicks and avoids some problems instead of tackling them. . . . Most glaringly, Obama takes credit for about $850 billion in savings from winding down the wars in Iraq and Afghanistan, which were paid for with borrowed money in the first place.

These were not actual savings. The Committee for a Responsible Budget put it this way:

When you finish college, you don't suddenly have thousands of dollars a year to spend elsewhere. In fact, you have to find a way to pay back your loans.

Regarding the supposed problem of Republican resistance to demand-based policies, there is a major misconception that consumption fueled by government spending actually creates jobs. This is the stimulus myth. It does not. It just inefficiently moves money around from one pocket to another or one taxpayer to another. That helps explain why the stimulus failed.

If Americans cannot spend enough money to stimulate more demand, how can the Government accomplish that for us? It is our money that is being spent. Simply put, demand policies do not work. There have been ample opportunities to prove otherwise in recent years. Let's remember the President got everything he wanted from Congress during his first 2 years in office. He has been in office a little over 3 years. The first 2 years there was a Democratic House and a Democratic Senate. The 111th Congress passed all of the demand-based policies he asked for: spending, temporary tax credits, tax holidays, the stimulus. Yet here we are.

A better idea is to encourage economic activity and greater opportunity through the supply side of the economy. That means reducing government consumption of taxpayer dollars and not raising taxes on anyone, especially job creators.

That brings me to the third set of claims involving the notion of ``balance.'' The authors claim the budget ``calls for a balanced approach . . . with everyone sharing responsibility for deficit reduction.'' They also note that balance is ``missing from the GOP approach.''

Balance in the Obama budget, of course, means higher taxes. I ask how is it balanced to tax job-creating small businesses even more than they are being taxed today?

According to the Joint Committee on Taxation, nearly 750,000 flow-through businesses--these are the small businesses, the businesses that pay their taxes as individuals--nearly 750,000 would be subject to the President's proposed tax rate hikes that would take effect on January 1 of next year. One-quarter of our Nation's workforce depends on these employers for a paycheck.

According to the National Federation of Independent Businesses, up to 25 percent of the workforce is employed by businesses that will be affected by the President's proposed tax hikes. Perhaps job growth is so slow because these job creators are skittish because they do not have certainty, and they certainly have not for a long time. In fact, the only thing they can see is the President's attempts to impose more taxes on them.

The specter of tax hikes has loomed for years and has inhibited job growth. If the tax increases actually occur, we can be sure any economic growth we might be perceiving will be killed.

Finally, the authors claim the President ``has demonstrated that he was willing to go the extra mile to reach a bipartisan deficit reduction agreement.'' I will note that the debt talks fell apart last summer because the President dug in his heels and insisted on harmful tax increases that Republicans, of course, opposed, for the reasons I just noted. When we had another opportunity to do something about the debt this fall, the President was not particularly helpful or encouraging. Often missing in action, he never participated in the process. The plan put forward by the Republican Senator from Pennsylvania at the time was the only balanced approach that put significant revenue on the table in the context of progrowth tax reform.

The majority whip called it a ``breakthrough,'' but it was never enough for the other side. So here we are, still debating this subject. So much for the President going the extra mile.

In conclusion, I would like to say the President's budget is more of the same spending, taxes, and debt we have seen for the last 3 years. Last year the budget was so unpopular with the American people that the Senate voted it down 97 to 0. Not a single member of the President's party voted for his budget. The massive amounts of spending, taxing, and borrowing in his budget will hinder an economic recovery. In times like these we have to focus on growing our economy, not our Government and debt.

Mr. President, I suggest the absence of a quorum.

The clerk will call the roll.

The bill clerk proceeded to call the roll.

Sen. Harry Reid

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

Without objection, it is so ordered.

The Senator from Arizona.

Sen. Jon Kyl

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Mr. President, I ask unanimous consent to speak as in morning business.

Without objection, it is so ordered.