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Senator McCain’s Comments on Jobs Act

Senator John McCain, Rand Paul (R-KY) and Rob Portman (R-OH) engaged in a colloquy to discuss the Republican alternative jobs bill — S. 1720, the Jobs Through Growth Act on the Senate floor.  Below is a transcript.  

 

SEN. McCAIN: I thank you, Mr. President. I feel it’s very important that we spend some time on this issue.

 

I think that all Americans realize that we are in almost unprecedented difficult economic times. That despite efforts that have been made over the now nearly three years that our economy has not grown, it has not provided the kind of job growth and opportunity that many of us had anticipated.

 

When you look at previous recessions — and this is a near depression, and by some calculations, the recovery has been amazing and agonizingly slow as compared to recovery from other recessionary periods. And in the view of this Senator, the remedies have in many respects made the problem worse rather than better.

 

If you look at some of objective criteria, I would argue that the situation in America today is worse than it was on January 2009 when this administration came to office. We’ve had the stimulus package. We’ve had the health care reform act. We’ve had increases in spending in numerous other areas.

 

We’ve had the Dodd-Frank bill which was going to fix the regulatory system in this country to prevent any financial institution in America from ever again being too big to fail. In other words, no financial institution would ever need taxpayers’ dollars to, to the degree that America’s economy would be impacted adversely in case that institution failed.

 

Well, here we are nearly three years later and unemployment is at 9 percent, even though after the stimulus package was passed, the predictions were all that maximum unemployment would be 8 percent, and headed down. The recovery has been anemic. In my home state of Arizona, still nearly half the homes are under water. In other words, they are worth less than the mortgage payments that the homeowners are required to make.

 

So, working together with my colleague from Kentucky, Senator Paul and Senator Portman from Ohio, we have put together a series of proposals and ideas that have been generated both within this body and outside of this body. We believe with the utmost sincerity, that there should be areas in this proposal that perhaps we and our colleagues on the other side of the aisle could come to agreement on.

 

We’d like to see this entire package. We think it’s important in its entirety and there is no doubt in our minds — and when you look at the 9 percent approval rating that members of Congress have with the American people that they’d like to see us do something constructive as well.

 

So I guess I’d ask my colleague from Kentucky how he thinks that we should have put this package together, what we should have included, what we haven’t, and what the situation is in his home state as far as need for this kind of legislation.

 

And let me add again, one of the — before I ask my friend from Kentucky, I talk to business people large and small all over this country. And they all tell me the same thing. They tell me the same thing, and that is, they have certainty to what the future lies for them, which then causes them not to invest and create jobs.

 

Overseas is $1 trillion. Here in the United States they’re sitting on $1.5 trillion, which they’re signature on and not investing — which they’re sitting on and not investing because they don’t know what the next regulatory act is going to come down. They don’t know when the next tax increase is going to be.

 

The founder of Home Depot, I saw on television the other day, Mr. Langone. And he wrote a piece in the Wall Street Journal. He said he couldn’t start Home Depot today. He couldn’t start it today because of the environment that exists which is intended or not.

 

And I say that my colleagues on the other side of the aisle have the most honorable intentions, but the result has been a climate which has restrained investment, which then has restrained and killed job creation and caused this economy to be mired in the doldrums, which obviously is of terrible effect on everyday Americans.

 

I’d like to ask my friend from Kentucky how — first I’d like to thank him for the key role that he’s played in putting this package together. And I hope that this is the beginning of our fight for passage of this legislation.

 

SEN. PAUL: I hope this is the beginning of a conversation with the other side and with the president. I’ve told the President personally that I want to help the problem we have in our country. 14 million people are out of work. 2 million additional people are out of work since this Administration began, and we are serious about putting forward a Republican jobs plan.

 

There can be some areas of common interest. There’s currently a Supercommittee talking about some of these tax reform ideas. Our side is putting forth a message. We are putting forth a plan. We are willing to work with the other side.

 

The problem is that my understanding is the other side has walked away from the table. The other side is unwilling to talk with us and engage us. I’ve asked the President personally, come to Capitol Hill, come and talk us to. I’ve talked to members of the Supercommittee. We are willing to talk you to. We have some ideas to create jobs.

 

Some of these the other side has agreed to before. Lowering the corporate income tax. There are members of the other party who understand we need to be competitive with the rest of the world. Lowering the overall rate, simplifying the codes, getting rid of the loopholes. These are things the President talks about as he campaigns around the country. But if he were serious he would come and talk to us.

 

Instead, what I’ve heard at his campaign stops, Republicans are too stupid to understand his plan, so he is going to break it up. Well that may get laughs at his campaign rally, but that isn’t getting anything done. The American people need to know that our jobs plan will create jobs and we are willing to talk with the President and the other side. I think we’re willing to get things done. I think we have important things in this the bill that will do that.

 

SEN. McCAIN: And maybe my friend from Kentucky and I can talk about many of the various provisions in this legislation, and it is a lot of provisions. It was based on the input from outside and inside this body. And it also, by the way, is closely mirrored by legislation which has already passed the House of Representatives as well.

 

But we lead off with the requirement for a Balanced Budget Amendment to the Constitution. I was here many years ago when the Balanced Budget Amendment failed by one vote. When you ask the American people if the government should not — and the Congress shouldn’t live under the same constraints that they have, they are in total support. I’ve — I’ve seen polls, and I wonder if my friend from Kentucky has, that shows 80 percent-90 percent of the American people support when informed about what a Balanced Budget Amendment is to the Constitution. At least we ought to put that up for a vote of this body.

 

SEN. PAUL: Routinely, decade after decade, polls show that 75- percent 80 percent or more of Americans support a balanced budget amendment. We need it, we’ve shown ourselves to be fiscally irresponsible.

 

We’ve had Gramm-Rudman-Hollings, all of these different restraints but then we disobey our own rules. We say it’s an emergency, but then all of a sudden all the routine spend becomes emergencies. And we evade the rules and the debt gets bigger and bigger.

 

Those on the debt commission have said that the most predictable crisis in our history is the coming debt crisis in this country. They’re seeing it in Europe. But we need to be serious in our country and fix these problems before we get to a crisis situation.

That’s what our Republican jobs plan does. It addresses it. A Balanced Budget Amendment, tax reform, regulatory moratorium. We can’t keep on with new regulatory regulations that put us at a competitive disadvantage with the world.

 

SEN. McCAIN: And I could I go back a second to a point the Senator from Kentucky made. Congress cannot bind future Congresses. I was here at the time of Gramm-Rudman-Hollings.

 

Gramm-Rudman-Hollings was one of the most strict budgetary requirements ever passed by this body. It required automatic spending cuts in the event that budgets were exceeded and that excess spending was obviously taking place. But Congresses cannot bind future Congresses.

 

So over time, over a very short period of time, the restraints imposed on spending by Gramm-Rudman went into the mist and we went back to business as usual. I will be very candid with my colleague. There are people who have legitimate concerns about a Balanced Budget Amendment and what it would take to get there. And the draconian measures that may be entailed.

 

But what’s the alternative? What is the alternative? Mortgaging our children and our grandchildren’s future? I believe its $44,000 debt for every man, woman, and child in America.

 

So why don’t — why don’t we, in this body have, a discussion and a debate over a Balanced Budget Amendment to the Constitution and find out — and find out exactly where people are but, at the same time, we have learned over the years that Congresses cannot bind future Congresses. And that is the problem with just enacting automatic spending cuts, whatever spending cuts or whatever that we achieve here. We cannot bind future Congresses appropriately.

 

So the only way to really address this issue is by amending the Constitution of the United States, which I know the Senator from Kentucky and I do not view as a measure taken lightly. I’ve been opposed to most changes in the Constitution I think our Founding Fathers did it pretty well right. But this is an issue I think that has to be addressed.

 

SEN. PAUL: And those who say balancing the budget would be extreme, I think what’s extreme is a $1.5 trillion deficit. We’re on route now at the rate we are spending money that within a decade the budget will be consumed by entitlements and interest. There will be nothing left for national defense, nothing left for anything else if we keep on the same spending pattern.

 

So we do have to do something and what we’ve shown so far is it’s been an utter failure up here. I think we had pay-as-you-go. That one was broken 700 times in first five years we were supposedly paying-as-you-go. Simply by saying it’s an emergency. Every routine expenditure was called an emergency and we went around it.

 

So I think that’s a good context for our Republican jobs plan that everything will be in the context for balancing our budget. Then there’s some other important things we do.

 

Tax reform — historically the one thing government can do to create jobs or to lessen unemployment is to lower the upper rate. Kennedy did it in the 1960’s. Unemployment was cut in half. Reagan lowered it 70 percent to 50 percent. Unemployment was cut in half.

 

But interestingly as you cut the top rate, you really didn’t cut revenue. Revenue stayed at 18 percent of GDP through all the lowering of the top rate. What lowering the top rate does is it unleashes economic growth.

 

The other side has this vision that they’ll hire people in government and somehow fix unemployment. You can hire hundreds of thousands of people and you don’t put a dent in it. To cure unemployment and lessen unemployment, you need to have millions of people hired.

 

That can only be done in the private sector, and I think that is the difference in the vision between our side and their side is our vision is let’s unleash the private sector. Theirs is they’re going to hire a few more people to dig ditches and fill them n and really senior Senator a different vision.

 

SEN. McCAIN: Isn’t it a fact that Americans are very unhappy because of the economic conditions that we find ourselves. But they’re also very unhappy because they perceive an inequity and inequality in our economy today.

 

In other words, they see financial institutions on Wall Street making record profits and paying record bonuses. They see corporations that are large, that pay no income taxes — none; zero — and they see that and they see themselves paying their taxes the least of which may be withholding taxes or sales taxes or whatever taxes that they’re still paying.

 

So it seems to me that tax reform would address these inequities because over the years — and I note the Senator from Ohio knows this better than anybody in his previous incarnation as the head of the office of management and budget — over the years we have carved out loophole after loophole, a better special deal, and it is a damning indictment to Congress of the United States that we let it happen. But it is what it is.

 

So we now have major corporations — General Electric paid no taxes last year. And average citizens who don’t have a lobbyist here in Washington, who can’t carve out a special loophole for their small business, they are paying these taxes. How do you resolve that inequity? It seems to me that tax reform — give people a tax code that’s that big — the Senator from Ohio has some much better ideas than I have — three tax brackets, eliminate all but charitable deductions, but even put ceiling on that.

 

And then the American people would believe they’re being treated fairly. And today they do not believe that they are being treated fairly. And I’m talking about middle-income Americans. And I think statistics confirm that belief because there seems to be a larger disparity between the wealthiest and the less wealthy in America. I would ask my colleague from Ohio, who knows more about that than I do.

 

SEN. PORTMAN: The Senator from Arizona is absolutely right. He’s gotten it right bringing their income from overseas. On the individual side we’ve got an incredibly complex tax code with thousands and thousands of pages. By lowering the rates and broadening the base, getting rid of some of this underbrush we will create economic growth. It is a necessary shot in the arm right now with over 9 percent unemployment.

 

And on the corporate side, right now we have a corporate rate that’s the second highest in the world you among all the developed countries. Japan wants to lower theirs. That means all the jobs go overseas and not over here. By lowering the rate down to the average these other countries we will be able to bring more investment back to this country. Again, you can do it by reducing.

 

SEN. McCAIN: Could I say, what’s the response — you say, bring the corporate tax rate down to 25 percent, say, and yet at the same time – Corporations are taxed too much in America, but at the same time we find corporations paying no taxes.

 

SEN. PORTMAN: Companies will have to pay taxes. Exactly By bringing the rate down to 25 percent on a revenue neutral basis, what you do you get rid a lot of that the preferences, the exclusions, the credits, the tax deductions that enable companies right now to pay little or no taxes.

 

We think everybody should be paying taxes. We think everybody should be subject to a fair tax system. We also think you shouldn’t have to spend billions of dollars a year in complying with the tax code that is so complex. And so instead of hiring more tax lawyers, we want people to hire more Americans to do the work, productive work to get our economy moving.

 

So tax reform is a way to give this economy a shot in the arm right now. It’s one of many structural reforms in this legislation that the Senator from Kentucky and the Senator from Arizona put together with me. It is very consistent with this idea that America’s best days are ahead her if we restructure some of the basic parts of our economy.

 

Tax reform if necessary. Lowering health care costs, absolutely critical. Allowing us to explore for energy here on our shores and economic opportunity. Being sure we’re reducing — reducing regulations that are strangling America’s businesses. These are all structural reforms that can and should do.

 

And by the way there is bi-partisan support for every single one of those elements. So I commend the Senator from Arizona for raising these issues, for his passion for him. The Senator from Kentucky and I hope the Senate will give us the opportunity to vote on this. And it should be a bipartisan vote, because so many of these issues are issues that transcend partisanship. And in each case there are Democrats and Republicans who understand the need to move our economy forward by making these structural changes.

 

SEN. McCAIN: I’d like to discuss just for a minute with the Senator from Kentucky and the Senator from Ohio that enhanced rescission or what used to be known as line-item veto. The Senator from Ohio once had the misfortune of being the head of the office of management and budget.

 

You saw these appropriations bills come over. Many of them were that thick. And going through line by line, you find there special interests, special deals, we call pork barrel projects which have no justification, which were never debated, never discussed, which were never brought to the light of day except maybe occasionally. But certainly it contributed enormously to our debt and deficit.

 

So you had to, the option of going to the President of the United States and saying veto the whole bill and send it back, and it may be overridden. Or accept this pork-laden, big, thick appropriations bills. Isn’t that a dilemma that we should not force the President of the United States to have?

 

SEN. PORTMAN: Absolutely. That’s one of the elements of this jobs bill. It was particularly tough, I will tell you, on defense bills. Here you have our national defense at stake, and you have our soldiers and marines and sailors out there. And the bill comes to the President of the United States. Is he going to sign it or not? Well If he doesn’t sign it there is a risk there will be at least a gap in funding or if not be overturned.

 

There’s a lot of pressure to sign it. What happens is the President signs these pieces of legislation with the earmarks in them and we have more spending than we should have, and the spending is not going to the national priorities.

 

This legislation’s really simple it says back in the late 1990’s — 1996, President Clinton signed a line-item veto bill, constitutionally it was questionable and the Supreme Court overturned it. Now we’ve come back with another way to do this that’s called enhanced rescission.

 

It’s basically a legislative line-item veto where Congress would have the right to be able to review what the President rescinded. If they didn’t act within a short period of time it would be rescinded. But Congress could act to overturn the President.

 

We believe it’s Constitutional. It beats all the obligations that were set out in that Supreme Court case that overturned the first line-item veto. And yet puts the pressure on the Congress not to put this pork barrel spending in and if they do, you’d have the light of day shown on it and Congress would have to individually take up these line items, these pork barrel projects.

 

We think this is a constructive way forward that it is Constitutional, that meets all the concerns that have been raise — concerns that have been raised and would help get spending down and prioritize spending at a time we have record deficits and debt.

 

SEN. McCAIN: I would say to the Senator from Kentucky, the President probably would veto some items we wouldn’t like. There are some difference in philosophy between us and the President of the United States. But I’m willing to take not only that risk, but that penalty associated with trying to get the elimination of the pork-barrel spending.

 

We’ve made some progress, I will admit, in the elimination of some of the — quote — “earmarks.” We have a long, long, long way to go. And frankly, it’s a disease that I’ve watched recede over a period of time and then it pops back up again. And again. It’s something like the Balanced Budget Amendment. It needs to have a permanent fix.

 

SEN. PAUL: You know the line-item veto interestingly that you have proposed and gotten to floor in a form of the bill separate from this has cosponsors from both parties. It does have bipartisan support. Many on the other side of the aisle see some of the waste. There’s no reason why we couldn’t begin to work together on some of these things.

 

Once again I get back to if the President is going to go on the road and call us too stupid to understand his jobs plan. It has to be broken up, that’s not a good way to get to a consensus. The President needs to come to Capitol Hill and he needs to talk with the other side and needs to work on these things.

 

Now do we need a line-item veto or do we need Balanced Budget Amendment? Do we need to do something different or just do the same? The problem with just doing the same is we haven’t had a budget in two or three years around here.

 

The appropriations bills are supposed to agree with the budget but they can’t because there is no budget. There is a rumor that appropriations bill will go to the conference committee between 2 houses, and they will actual — between 2002 houses and they will airdrop in whole other appropriations bills. Do we need more scrutiny? Do we need a line-item veto? Absolutely because what we’re doing around here is not working and adding up to trillions of dollars of annual deficits.

 

SEN. McCAIN: If the scenario takes place, as the Senator from Kentucky just pointed out, that all of a sudden everything is decided by members of the Appropriations Committee, then it really does deprive the other members of this body of their input into the entire process.

 

It takes — and takes authority and responsibility from 100 and puts it in the hands of a few. That seems to me a disservice to the people of Arizona that I represent.

 

SEN. PAUL: I think the overriding message here — and I appreciate the comments from the Senator from Ohio on this — is that we have a jobs plan. We have our ideas. There is overlap in our ideas with some of the ideas from the other side. The message here today is we are willing to talk to the other side. We are willing to say these are proposals and let’s try to find areas of agreement.

 

We think it is more important than a campaign right now. We think it’s more important, the joblessness and the economy that we try to do something about it. We are willing to come to the table. We are willing to bring our ideas. We’re willing to have a debate with the other side. And we want to get solutions. We’re not doing this just to be partisan. We want to figure out a way to make our economy better.

 

SEN. PORTMAN: Let me give you an example on where we can come together on something really simple. It’s something the Senator from Arizona and the Senator from Kentucky have included in their legislation. Everybody knows the federal regulators are putting more and more pressure on small businesses all around the country. We hear it every time we go home.

 

I can’t think of a time I have been home at a plant where somebody hasn’t raised with me a federal regulation that is causing them more difficulty because it is increasing the cost of hiring somebody. At a time over 9 percent of unemployment, we got to everything we can to get this economy moving and one is to lessen that regulatory burden, make sure it’s smart.

 

One of the pieces of legislation we’re promoting is to say to the federal agencies go through a cost-benefit analysis including looking at what the impact is going to be on jobs.

 

Now who can be against that? That needs to be done not just in the so-called executive branch agencies but also the independent agencies which are not subject to these current cost-benefit rules. So it’s more cost-benefit rules, looking at jobs but also making sure everybody has to comply with it.

 

Then when they come up with an idea for regulation, make sure it’s consistent with the policy of the elected representatives. Too often you’ll see the regulators go off on their own and come up with ideas that they think might be good for the economy.

That’s one reason you have, according to some statistics now, as much of a cost on the economy from regulations as from taxes. Finally, it says when you come up with something; it has to be the least burdensome alternative.

 

Now if the EPA had done this, for instance, in some of the legislation you’re concerned about, the Senator from Kentucky, they would not be able to come up with huge new costs on business, because they would have to come up with a cost-effective way to meet the policies set out by Congress. They don’t have to do that now.

 

Who could be against that? So these are specific items that are within this bigger project here of getting America back on track, increasing our jobs, dealing with the fact that America’s competitiveness is at risk, that our commonsense, bipartisan ideas, everyone should be able to agree with.

 

So I again encourage the Senate to allow us to have a vote on this. Let’s encourage a full debate on both sides of the aisle. Let’s have a bipartisan vote on it. Let’s show people who, after all, were elected here to represent, that we can come together as republicans and democrats and deal with the real problems facing our economy.

 

SEN. McCAIN: I see the Senator from Washington is here and I don’t want to encroach on her time. I’d just like to say we’re going to spend a lot more time today on this issue and this proposal.

 

The American people want change in Washington. They want us to address the concerns and problems that they face. And we believe that we have a great blueprint for moving forward in that direction. and as my friend from Ohio and Kentucky have said, we are eager to sit down with our colleagues on the other side of the aisle and discuss at least some of these which we think we could come to agreement on. Maybe our approval rating, if we did so, could climb back up into double digits.

 

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