Mr. President, I rise in support of the compromise economic stimulus package we are now considering.
The slowdown of our nation's economy has been a matter of increasing concern following the terrorist attacks on September 11th. Millions of Americans are dealing with the economic repercussions of the attacks on our nation. Hundreds of thousands of workers have lost their jobs, and consumer and business confidence has eroded during this time of uncertainty. The decrease in economic activity is affecting companies ranging from small businesses to corporations, not to mention entire industries such as the airlines and the travel and hospitality industry.
The slowdown in our nation's economy is reflected in the State of Hawaii, where as of January 26, 2002, 56,313 people have filed unemployment claims since September 11th. This is almost double the amount of claims filed for the same time period as last year. In the weeks after the terrorist attacks most of those filing unemployment claims worked in the visitor industry. However, state labor department officials have advised me that claims are coming in from workers laid off from a wide range of industries and small businesses in Hawaii. In 2001, our visitor industry experienced a $1 billion decline from the previous year. After September 11th, domestic travel to Hawaii fell 30 percent and international travel dropped by 50 percent. The number of visitors to Hawaii declined by 600,000. Our Governor and State Legislature are considering ways to deal with a $300 million budget shortfall.
The economic stimulus proposal that we are currently considering includes important provisions such as extending unemployment insurance benefits for an additional 13 weeks for those individuals who have exhausted their regular, state-funded benefits. With the Hawaii State Department of Business, Economic Development, and Tourism predicting that a full recovery will not occur until the last half of 2003, it is imperative that we pass responsible economic stimulus legislation. Hawaii's economy and working families cannot afford another long and disastrous recovery, especially since the State was just beginning to recover from a nine-year economic recession.
Mr. President, temporarily extending unemployment insurance benefits will help the American people and revitalize consumer confidence. As recent research has shown, the Unemployment Insurance system is eight times as effective as the entire tax system in mitigating the impact of a recession. In addition, the Unemployment Insurance system is able to target the very sector of society that needs the most economic stimulus. I would like to remind my colleagues that in every recession during the past 30 years, including the 1990-1991 recession, Unemployment Insurance benefits were extended.
There is no doubt that extended unemployment insurance benefits and the other elements that make up the core of this short-term economic stimulus package would help to boost Hawaii's and our nation's weak economy. There are faint signs of recovery and resilience nationwide which underscore that we may, I repeat may, have seen the worst from the current recession. A well-defined, short-term stimulus package that is limited and specifically targeted for maximum effectiveness can play an important role in promoting economic recovery.
Clearly, there are contrasting views among members of Congress as to what provisions should be included in a stimulus package to maximize the stimulative effect on the economy. I believe that the economic stimulus package should encourage increased spending as soon as possible to rejuvenate the economy, assist people who are most vulnerable during the economic slowdown, and restore business and consumer confidence. However, it is important that fiscal discipline over the long-term be maintained in order to ensure economic growth in the future.
I commend the Majority Leader for his efforts to fashion a bipartisan compromise and move this important legislation. In addition to extended unemployment benefits, the compromise package includes three components that both parties included in their stimulus bills last year, including tax rebates, bonus depreciation, and fiscal relief for states through a temporary increase in the Federal Medical Assistance Percentage(FMAP) rate.
Last month, I attended the opening of the Hawaii State Legislature and Governor Ben Cayetano's State of the State address. I am not exaggerating when I say that increased federal Medicaid assistance to the states is critical to my state and states across the nation that are facing tremendous revenue shortfalls because of the recession, the repercussions of September 11th, and federal tax changes enacted last year.
I strongly support the component of the stimulus package that would temporarily increase the FMAP rate for states. Medicaid matching rates for Fiscal Year 2002 are based on state per capita income data from 1997, 1998, and 1999 - years in which the national economy was strong. Consequently, matching rates are slated to be reduced for 29 states in 2002. The reduction in FMAP rates has worsened an already bleak fiscal outlook for many states. In August 2001, the Congressional Budget Office projected that Medicaid expenditures in 2002 would be nine percent higher in 2002 than in 2001, while states projected that their revenues would rise just 2.4 percent.
Rising Medicaid expenditures have long been a serious concern to states. The repercussions of the terrorist attacks on September 11 are leading most analysts to expect even higher state Medicaid costs because the economic downturn will make more people eligible for Medicaid and lower state revenues. It is during difficult financial times that the Medicaid program becomes a primary target of state budget cuts. Yet, people need Medicaid during these times more than ever.
The federal government matches between 50 to 83 percent of the cost of Medicaid in each state. On average, the federal government pays 57 percent. The FMAP formula is based on the state's per capita income in the three calendar years that are most recently available. For years, Hawaii received the lowest federal match -- 50 percent. Recognizing that increasing the FMAP rates would ease states' financial constraints, I have long worked to increase Hawaii's FMAP rate.
The temporary increase in the FMAP is an important component of our nation's economic stimulus policy. Medicaid is the largest federal grant-in-aid to states. Temporarily increasing the federal matching rate could have broad positive ramifications for state budgets, the impact of which would be rapid and would not require additional federal or state bureaucracy. These changes would provide much needed health care to people in need by providing states the resources to do so.
It is clear that an economic stimulus package is needed to support our economy during these uncertain times and to promote a rapid recovery. We saw the Federal Reserve Board cut interest rates eleven times in a row last year with limited economic effect. Congress has also taken actions to provide some of that stimulus through emergency spending for recovery efforts and to assist the airline industry. Mr. President, it is critical that Congress promptly pass an economic stimulus package that will rejuvenate our faltering economy while assisting households who have been especially hard hit by the downturn in the economy. I hope the Senate will complete action on this legislation this week so that the Congress can send a measure to the President by the Presidents' Day holiday.
Thank you, Mr. President.
