[Congressional Record Volume 141, Number 65 (Friday, April 7, 1995)]
[Senate]
[Pages S5528-S5530]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                REPUBLICAN ACTION TO BALANCE THE BUDGET

  Mr. CONRAD. Mr. President, this week does mark the final action in 
the House of Representatives on the so-called Contract With America. 
This week, there will be all kinds of analysis of what the Contract 
With America has meant, and I wanted the chance to take stock and share 
my view as people comment on the first 100 days of the so-called 
Contract With America.
  Let me say, as I said in a speech in January, there are some parts of 
the contract that are good, some parts of the contract that I strongly 
support. In fact, we already have two parts of it that have become 
law--the Congressional Accountability Act that will apply to Members of 
Congress the laws that apply to everyone else. I support it. We tried 
to get it passed last year. It is now the law of the land. That is 
positive; and the unfunded mandates bill, which will make it more 
difficult for the Federal Government to send orders out to the States 
to fund something that we deem necessary and appropriate. That had gone 
too far. We have reined it in through legislation that is now also the 
law of the land. Those are both positive things, in my view.
  When we turn to the fiscal side of the House, when we look at how the 
Contract With America impacts the long-term economic health of America, 
quite a different picture emerges. Very frankly, the numbers just do 
not add up.
  The proponents of the contract have said they are going to balance 
the budget; they are going to cut taxes; they are going to increase 
defense spending, and it is all going to work.
  Mr. President, we heard that same old song back in the 1980's, when 
the Republicans captured control of the Senate, they had the White 
House, and they told us they could cut taxes dramatically, increase 
defense spending, and balance the budget.
  What happened? Well, they cut taxes. They increased defense spending, 
but the deficit and the debt of this country exploded. And now, Mr. 
President, we are seeing a repeat of that tragic, tragic economic 
policy for this country. Now we are seeing a repeat, deja voodoo. We 
saw the economic policy of the 1980's referred to as voodoo economics, 
and indeed it was because it told the American people, when we already 
had a deficit, that we could cut taxes, raise defense spending and 
somehow it would all add up. It did not add up then, it is not going to 
add up now, and we ought not to repeat that experience.
   [[Page S5529]] That dug a deep hole for America--quadrupled the 
national debt in this country. Now we are faced with a circumstance in 
which we see the same sold economic nostrums peddled to us once again.
  Mr. President, I think it helps if we look at what is our current 
circumstance. This chart shows what it would take to balance the budget 
over the next 7 years. What are the cuts necessary to balance the 
budget if we do nothing to make the problem worse before we begin to 
solve it? This chart shows it would take $1.2 trillion of cuts over the 
next 7 years to balance the budget.
  Mr. President, unfortunately, our friends in the Contract With 
America, before beginning to solve this problem, have taken the first 
steps which are to make it worse. It makes no sense. Just this week, 
they passed in the House tax cuts of $345 over the next 7 years. So 
instead of starting by reducing the deficit, they have started by 
digging the hole deeper instead of starting by filling in the hole.
  Mr. President, this chart shows on top of the $1.2 trillion of cuts 
necessary to balance the budget over the next 7 years, our colleagues 
in the House have added $345 billion of tax cuts over that period, so 
now we have a hole that is $1.555 billion.
  Mr. President, one might ask: Where are the spending cuts from our 
friends in the House of Representatives, from those who are advocates 
of the Contract With America, where are the spending cuts to match the 
problem that we have of balancing the budget over the next 7 years?
  Mr. President, here is what they have come up with so far, $485 
billion--$485 billion of cuts matched up against the need of $1.54 
trillion necessary to balance the budget over the next 7 years.
  Unfortunately, the full picture is even more serious. Let us just go 
to the next chart because the charts I have shown before this one 
assume we are going to take Social Security trust fund surpluses to 
reduce the size of the deficit over this next 7 years.
  If instead we were to balance the budget honestly and not be raiding 
Social Security trust funds to balance the budget, what we find is 
instead of a $1.5 trillion hole to fill, we have a $2.2 trillion hole 
to fill. We have the $1.2 trillion of spending cuts necessary to 
balance the budget over the next 7 years, we have $636 billion of 
Social Security trust fund surpluses that will be generated over that 
period, and now because of House action we have the $345 billion of tax 
cuts that they have passed. To balance the budget honestly over the 
next 7 years we would need a whopping total of $2.191 trillion.
  Mr. President, again, let us see what they have done with the 
Contract With America in terms of meeting that need. We need nearly 
$2.2 trillion of cuts. They have come up with $485 billion so far. That 
looks to me like a $1.6 trillion gap.
  Our friends with the Contract With America have a $1.6 trillion--not 
million, not billion--$1.6 trillion credibility gap with the people of 
America, because if we are going to honestly balance the budget, we are 
going to close the gap between spending and revenue over the next 7 
years, that takes $1.2 trillion. If we are not going to use Social 
Security surpluses, that is another $636 billion, and now they have 
stacked on top of that $345 billion in additional tax cuts--nearly $2.2 
trillion necessary to balance the budget over the next 7 years and they 
have come up with a measly $485 billion of cuts.
  Mr. President, they are not getting the job done.
  Now, if we look at the spending over the next 7 years, the projection 
is that we will spend $13.2 trillion over the next 7 years.
  Remember, we need now, based on the action they have taken over in 
the House, to save $2.2 trillion. We are intending to spend $13.2 
trillion over that period of time.
  Well, that looks like a manageable thing to do. Look at where the 
money is going. Interest on the debt, over $2 trillion. In fact, we are 
going to spend more on interest on the debt over the next 7 years than 
we are going to spend on the national defense. We are going to spend 
$2.072 trillion on defense. We are going to spend $2.082 trillion on 
the interest on the debt.
  What are the other big areas of spending? Well, Social Security is 
the biggest--$2.894 trillion on Social Security. We have Medicare, 
$1.847 trillion over the next 7 years; Medicaid, $962 billion. So those 
are real, the big pots of money. And domestic discretionary spending, 
just over $2 trillion. Those are the big pots--Social Security, 
interest on the debt, defense, Medicaid, Medicare, and domestic 
discretionary spending.
  In fact, one of the interesting things you find is in just five areas 
on the budget, we are spending 75 percent of the money--Social 
Security, interest on the debt, defense, Medicare, and Medicaid.
  But our friends have said, well, there are parts of this that we 
cannot touch. Obviously, you cannot cut interest on the debt. That is 
owed. We have to pay that. That is $2 trillion over the next 7 years. 
So that is off the table.
  In addition, our friends have said Social Security is off the table. 
We are not going to touch that, because that is the most fundamental 
contract with America. We have taken taxes from people in order to 
assure that they receive the benefits they have been promised. That is 
$2.9 trillion over the next 7 years. That is off the table.
  In addition, in the Contract With America, they have said we are not 
going to touch defense. It is off the table. That is over $2 trillion 
over the next 7 years. In fact, they say we ought to increase defense 
spending.
  Well, when you take Social Security, interest on the debt, and 
defense off the table, you have to achieve those $2 trillion of savings 
out of about $6.2 trillion of spending, because we have taken half of 
the budget off the table.
  Mr. President, that means we would have to cut everything that is 
left by a third in order to achieve the savings. Everything else would 
have to be cut by a third.
  I do not think that makes much sense--cut the highway program in this 
country by a third; cut veterans benefits by a third, after we made a 
solemn promise and pledge to them; cut education by a third; cut every 
nutrition program; every program to make this country a better place, 
cut them all by a third.
  Mr. President, there has to be a better way of going about this. The 
Contract With America so far is certainly not delivering on its promise 
to make the economic lives of Americans better. One of the most 
disturbing aspects of what has been done is to look at how they have 
targeted the tax benefits.
  Because, let us be frank, they have targeted the tax benefits right 
at the richest, wealthiest people in this country. They have said to 
those who are at the top, ``You get the lion's share of benefits.'' And 
they have said to everybody else, ``You get the scraps.''
  Mr. President, let me just make this clear. We have had 100 days of 
the Contract With America, and the tax plan that they have passed gives 
100 times the benefits to somebody earning over $200,000 as it gives to 
a family earning $30,000. If you are earning over $200,000 in America 
today, you get an $11,200 tax cut under what they have done in the 
other House under the Contract With America.
  If you earn over $200,000, you get an $11,200 tax cut. If you are a 
family earning $30,000, you get a $124 tax cut. That is nearly 100 
times as much going to those earning $200,000 as to those earning 
$30,000.
  This is their idea of tax equity. This is their idea of fairness. 
This is their idea of somehow making America better.
  Mr. President, this is the same old trickle-down economics that we 
have seen before. It is great if you make a lot of money, but it does 
not do much for you if you are in the middle income in this country.
  Frankly, the middle-income taxpayer will really pick up the tab, 
because we know what happened in the 1980's with this economic theory. 
The debt exploded, the deficits exploded, and interest rates exploded 
and, as a result, the things that cost middle Americans money--home 
mortgage, college tuition--all of those things skyrocketed. So they get 
a $124 tax reduction. They will get many times that in increased 
expenses because of increased interest rates.
  Mr. President, this shows the Republican contract. Fifty-two percent 
of the proposed tax cuts go to the top 12 percent of our population. 
Taxpayers with incomes of less than $100,000, 48 percent 
 [[Page S5530]] of the proposed Republican tax cut goes to taxpayers 
with incomes of less than $100,000. The 12 percent at the top, those 
earning more than $100,000, they get 52 percent of the benefits.
  Again, I think a lot of people wonder: Gee, how is it? I read that in 
this Contract With America, they had a $500 tax credit for children. 
How could it be that a family earning $30,000 a year only gets $124 of 
benefit?
  Well, you know why that is true, Mr. President? Because they have 
played a little trick. They played a little trick in this tax plan. 
They did not make that credit refundable. And so if you look at what 
people are paying now and the tax relief they will get, you find that 
it is a big hoax; it is a big trick.
  A family earning $30,000 gets $124 of benefits. Those with $200,000 
of income get $11,000 of benefit. That is fair? I do not think so. I do 
not think that is what the American people had in mind when they were 
told there was this Contract With America. I do not think they had in 
mind, when they talk about a 50-percent cut in the capital gains tax, 
that 75 percent of the benefit goes to the top 12 percent in this 
country; and that the other 88 percent of the people in this country 
get 25 percent of the benefit. I do not think that is what they had in 
mind.
  Mr. President, this last chart shows what is happening to the 
deficit. I thought under the Contract With America, they were going to 
balance the budget. But let us look at, after the enactment of the 
Contract With America, what is happening with the deficit.
  Do you know what one finds? The deficit is going up. The deficit is 
not going down. The deficit is going up.
  I thought with this Contract With America, they were going to be 
reducing the deficit. I thought they were going to be moving toward a 
balanced budget.
  They have now passed the whole Contract With America and the deficit 
is going up. What happened? What happened? They said in this Contract 
With America that they were going to reduce the deficits, reduce the 
debt, and balance the budget.
  But after the Contract With America is passed, the deficit is not 
going down, the deficit is going up. It is because the same old voodoo 
economics does not add up. It does not add up.
  Mr. President, this is going to be pretty sobering for the American 
people to find out that they put their trust in something and, once 
again, they are disappointed. It is time for us to honor the most basic 
Contract With America, the pledge we took to uphold and defend the 
Constitution of the United States.
  That is the real Contract With America that every Member of the House 
and the Senate have. And we have a duty and an obligation to secure the 
economic future of this country--a duty and an obligation. We ought to 
move immediately upon our return to balance the budget of this country, 
to do it in an honest way without raiding Social Security trust funds 
and to secure a future for our children that is as full of promise and 
hope as what was turned over to us by previous generations.
  Mr. President, I think the Contract With America has some good 
points--congressional accountability, the notion that we are no longer 
going to put off responsibilities on States that are beyond their 
ability to pay for. But this economic game plan is bankrupt. It does 
not add up. It is not fair, and it must be rejected. Then we must turn 
in a bipartisan way to doing what we all know must be done: to get our 
fiscal house in order, to get America back on track and to create 
economic opportunity for the people that we all represent.
  I thank the Chair and yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mrs. Hutchison). The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. COVERDELL. Madam President, I ask unanimous consent that the 
order for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. COVERDELL. Madam President, it is my understanding that, under a 
previous order, each Senator is allowed to speak up to 5 minutes.
  The PRESIDING OFFICER. The Senator is correct.

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