[Congressional Record Volume 142, Number 130 (Thursday, September 19, 1996)]
[Senate]
[Pages S10902-S10905]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               THE DOLE ECONOMIC PLAN--IT DOESN'T ADD UP

  Mr. CONRAD. Madam President, we are now about 7 weeks away from 
critically important decisions about our country's future. We are 7 
weeks away from the Presidential election--7 weeks away from decisions 
on who will represent the United States in the Halls of Congress.
  This election is becoming a debate on the economic policy that will 
guide this country's future. There can be no more important debate. For 
a long time the conduct of economic policy in this country has been 
central to the question of who will guide our country in terms of 
political leadership.
  Madam President, once before we had a Presidential candidate who told 
the American people that we could cut taxes dramatically, we could 
increase defense spending while holding large parts of the Federal 
budget harmless, and that somehow it would all add up. We took that 
gamble once before. It didn't work. It didn't add up.
  We can just go back to 1981, and administration of Ronald Reagan, 
when he told the American people we could have massive tax cuts, we 
could increase defense spending, large parts of the Federal budget 
would not be touched, and it would all add up. We can see what 
happened.
  President Reagan inherited a deficit of about $80 billion, but it 
quickly exploded to $200 billion a year. Then we had years of some 
small improvement, and years when the deficit jumped back up. But the 
deficit was averaging over $200 billion. At the end of his term the 
deficit declined slightly.
  Then President Bush came into office. He inherited a deficit of $153 
billion, and it promptly skyrocketed to $290 billion in 1992. President 
Clinton came into office at that point, and every year since the 
unified budget deficit has declined. Four years in a row the unified 
deficit has gone down. It has now been reduced by 60 percent since 
1992.
  So that is the record of the last three administrations with respect 
to deficit reduction.
  Madam President, this chart shows that, even though we have made 
significant progress on reducing the budget deficit, if we do not keep 
pressure on Federal spending and if we do not keep our eye on the need 
for deficit reduction, very quickly we are going to see the deficit 
rise again. In fact, if no changes are made, the deficit from 1997 to 
2006 is going to start rising dramatically. This country faces a 
demographic time bomb. It is called the baby-boom generation. When 
those baby boomers start to retire in very short order they are going 
to double the number of people who are eligible for our basic Federal 
programs--Social Security, Medicare. And that is going to put enormous 
pressure on the Federal budget.
  That is why it is critically important that we continue to keep our 
eye on deficit reduction. That means we have to do more, even though 
without question much has been accomplished under the leadership of 
President Clinton. The deficit has come down dramatically. But even 
with all the progress that has been made, much more needs to be done or 
this problem once more will get away from us.

  This next chart shows in a very clear way the challenge that we face 
over the next 6 years. This chart shows what the spending will be under 
current law over the next 6 years--$11.3 trillion. That is what will 
happen if no changes are made. And on the revenue side, if no changes 
are made, over the next 6 years we will get $9.9 trillion in Federal 
revenue.
  So we can see very clearly that we are going to be adding more than 
$1.4 trillion to the national debt over the next 6 years if we do 
nothing.
  What does Senator Dole propose? Senator Dole suggests, looking at 
these numbers--$11.3 trillion of spending, $9.9 trillion of revenue--
that the first thing we ought to do is cut our revenue. He says the 
first thing we ought to do is, since we are going to have $9.9 trillion 
of revenue, let us cut that $550 billion. Let us dig the hole deeper 
before we start filling it in. Madam President, it does not take any 
great mathematician to figure out, if we are going to add more than 
$1.4 trillion to the debt, if we do not make any changes, and the first 
change Senator Dole wants to make is to cut our revenue $550 billion,

[[Page S10903]]

that instead of adding to the debt by more than $1.4 trillion we are 
going to add more than $2 trillion to the debt under the Dole plan.
  Madam President, this is important for people to understand. 
Obviously, under the Dole plan we would add dramatically to the debt if 
we didn't do something. Senator Dole has said that his plan is to 
balance the budget by the year 2002.
  Obviously, you would be adding to the debt held by the public until 
the point in 2002 when you finally reach unified balance. And so the 
debt would be increasing during this period, all the while we are 
moving toward unified balance in 2002, according to his statement about 
his plan.
  So the question arises, how much do you need to cut the deficit in 
order to balance the unified budget by the year 2002? And we know the 
answers to those questions. We know that under the 1997 budget 
resolution, Republicans needed to cut the deficit by $584 billion to 
balance in the year 2002 the unified budget of the United States.
  The unified budget is a big word. It is very simple what it means. It 
means all of the revenues and all of the expenditures of the Federal 
Government put into the same pot. That includes all of the Social 
Security surpluses that we will run over the next 6 years.
  We need $584 billion of spending cuts in order to balance the unified 
budget over the next 6 years. But Senator Dole digs the hole deeper 
before we start filling it in. He wants $550 billion of tax cuts that 
reduces our revenue. So instead of needing $584 billion of spending 
cuts, we now need $1.1 trillion of spending cuts. Of course, as I said 
before, that is to balance the so-called unified budget that counts all 
of the Social Security surpluses. And that is not really balancing the 
budget.
  If we were going to honestly balance the budget, we could not use 
those Social Security surpluses. So if one does the appropriate 
calculation, you can see we would need the $584 billion of spending 
cuts necessary to balance the unified budget, then we have to cover 
Senator Dole's $550 billion of tax cuts, and then we would need another 
$525 billion to stop using the Social Security surpluses, because under 
the Dole plan every penny of Social Security surplus between now and 
the year 2002 is going into the pot and is going to be used.
  I call this a major problem with the Dole plan. Remember what we said 
here. To balance, counting his tax cuts, we would need $1.1 trillion of 
spending cuts, and if we were going to honestly balance the budget, not 
use the Social Security surpluses, we would need another $525 billion 
of cuts for a total of $1.6 trillion. So if we want to balance without 
counting Social Security surpluses, counting Senator Dole's tax cuts, 
you would need $1.6 trillion of cuts.
  What has Senator Dole offered to us? What has he put on the table? 
Here are the numbers that Senator Dole has offered. He said he will 
start with the 1997 GOP budget, that cuts discretionary spending $300 
billion. By the way, that is education, that is law enforcement, that 
is highways, that is bridges. He is going to cut that $302 billion for 
starters. Medicare, $158 billion; Medicaid, $72 billion; other 
mandatory programs and interest, $174 billion, for a total of $706 
billion.
  But remember, we said if you are going to balance this thing without 
counting Social Security surpluses, you need $1.6 trillion--$1.6 
trillion. If you use the Social Security surpluses, you need $1.1 
trillion. So he is not even close here. So he has suggested another 
$217 billion of cuts. By the way, he has not told anybody the specifics 
of these cuts. He has not told us where they are coming from. He has 
not told us what program he is going to cut to achieve this additional 
$200 billion. That will be, I guess, a secret plan. Maybe he will tell 
us after the election where that money is coming. But even with that, 
he has got total cuts of $923 billion. Remember, if we are going to 
balance and not count Social Security surpluses, we need $1.6 trillion. 
He is nowhere close. To balance using Social Security surpluses you 
need $1.1 trillion. He is not even close to that.
  Madam President, this is what is wrong with the Dole economic plan. 
It does not add up. It does not add up. The spending cuts are not 
enough to balance this budget, even on a unified basis. They are not 
enough to balance it even if he uses all $525 billion of the Social 
Security surplus.
  Now, why hasn't Senator Dole told us more specifically where the 
money is coming? I think the reason is that when you start getting into 
the specifics, it does not make much sense to the American people.
  Senator Dole is looking at the spending. This chart shows the Federal 
spending for the next 6 years. We are going to spend $2 trillion on 
interest on the debt. We are going to spend $2.1 trillion on Social 
Security; $1.6 trillion on Medicare; defense, $1.7 trillion; $800 
billion on Medicaid; other entitlements, $1.4 trillion.
  What are those other entitlements? Well, those are veterans' 
benefits; those are Federal retirement benefits; those are food stamp 
programs. That is the kind of thing we are talking about--child 
nutrition--in this category of spending. Then there is what we call 
nondefense discretionary. Nondefense discretionary, that is education, 
environmental enforcement, parks, roads, bridges, law enforcement.
  However, Senator Dole has said we are not going to touch Social 
Security. So 19 percent of our spending is off the table. He has said 
we are not going to cut defense. That is 15 percent. In fact, he said 
we are going to increase defense spending. He says, of course, we 
cannot cut interest payments; that we legally owe. We cannot cut that.
  In just those three areas, he has taken half of the spending off the 
table, but he has not stopped there. He said, well, we are not going to 
cut veterans, not going to cut veterans. He said we are just going to 
cut Medicare by about 10 percent--$160 billion. And he says on 
nondefense discretionary, this is the one that is going to have to take 
the big hit--the big hit.
  Remember, he has about $900 billion of cuts. Almost $500 billion is 
going to have to come out of nondefense discretionary just on the cuts 
he has identified. Remember, the cuts he has identified do not do the 
job. But he is going to take $500 billion out of discretionary spending 
of $1.7 trillion over the next 6 years. So he is going to have to cut 
30 percent. Education is going to have to be cut 30 percent; 
environmental enforcement is going to have to be cut 30 percent; parks, 
roads, airports, bridges. All of it is going to have to be cut 30 
percent, and it still does not add up. It still does not balance. And 
you know what? Law enforcement is going to have to be cut 30 percent 
under the Dole plan. Those are the cuts he is going to have to make--
$500 billion out of this little chunk of Federal spending. This is the 
place he has targeted. This is the place he is going to take $500 
billion out of the $1.7 trillion we are scheduled to spend.
  So, this is the place that is really getting targeted. Because for 
all the rest of the budget he is just going to cut a little bit, or, he 
has said, he is not going to cut at all, or, he has said, he is going 
to increase. Madam President, there is no wonder this Dole plan does 
not add up. No wonder it does not add up. Because this is where the 
money is going and he said huge chunks of it are off the table.
  Here is where the money is going to come from, over the next 6 years: 
Individual income taxes, about half of our income, 46 percent; 
corporate taxes, 10 percent; Social Security, 26 percent; and other 
revenue, 18 percent.
  But let me just show kind of an interesting thing. Here is the 
revenue from Social Security. Here is the spending for Social Security. 
You notice something very interesting here--very interesting. They are 
not the same size. These are all on the same scale but there is a 
difference. Here is the revenue from Social Security: $2.6 trillion 
over the next 6 years. And here is the spending: $2.1 trillion over the 
next 6 years. We have way more revenue from Social Security than we 
have spending on Social Security. We have a difference of $500 billion 
over the next 6 years, $500 billion more in revenue for Social Security 
than we have expense for Social Security. Where is it going? Where is 
it going? Because I have already showed you that we have more 
expenditures planned over the next 6 years than we have revenue.
  Madam President, I think we can see the $500 billion of Social 
Security surpluses that Senator Dole is going to use in his plan. 
Again, I remind everyone who is listening, even with using that $500 
billion of Social Security surplus, every penny of it, his plan still

[[Page S10904]]

does not balance, it still does not add up. But he is using it, $525 
billion. It is interesting, that $525 billion of Social Security 
surpluses that are going to be used over the next 6 years is very close 
to the $551 billion of tax cuts that he has proposed. What earthly 
sense does this make? What earthly sense does this make? To take $525 
billion of Social Security surpluses that we get from payroll taxes, 
that we ought to be saving for the time the baby boom generation 
retires, and turn around and give it out in tax cuts, when we are not 
balancing the budget in any true sense over the next 6 years with this 
economic plan?
  You talk about a plan that is spending the money today and borrowing 
from the future; that is the Dole economic plan. It does not add up. It 
does not make sense. It digs a very deep hole for the economic future 
of our country.
  Madam President, I think one reason Senator Dole has been reluctant 
to be more specific is because, when you start being specific, you see 
how clearly the Dole plan does not add up. Let us just look at the 
education cuts that would be necessary to finance the Dole tax cut. 
Remember, the GOP budget last year that was vetoed by the President and 
rejected by the American people had tax cuts of $245 billion. On 
education, they cut $42 billion. I think that begs the question: What 
happens when you have the Dole plan that has, instead of $245 billion 
of tax cuts, $550 billion of tax cuts? How much are you going to have 
to cut education then? How much is education going to have to be cut to 
accommodate a $550 billion tax cut?
  The same can be asked of Medicare. Medicare--remember, the GOP budget 
last year had tax cuts of $245 billion; the Medicare cuts were $270 
billion. Now Dole says he is going to have a $550 billion tax cut. How 
much would he have to cut Medicare in order to accommodate this plan?
  This is where Dole has not been specific. Because, when you get into 
the specifics, very quickly anybody who has been involved in these 
budgets knows it does not add up.
  Medicaid cuts necessary to finance the Dole tax cut? Last year, 
again, GOP budget vetoed by the President, rejected by the American 
people: $245 billion in tax cuts, Medicaid cuts were $163 billion. Now 
he says we are going to have a $550 billion tax cut. How big would the 
Medicaid cuts be? How big would they have to be in order to finance 
this plan?
  Domestic discretionary spending: education, law enforcement, roads, 
highways, bridges. Last year, the GOP plan, $245 billion of tax cuts, 
domestic discretionary cuts $440 billion. With a $550 billion tax cut, 
how big would the domestic discretionary cuts have to be in order to 
finance the Dole plan? It does not add up.
  Madam President, I hope I have been able to communicate that the Dole 
plan does not add up. There is no way there are enough spending cuts in 
order to balance the budget, even on a unified basis counting the 
Social Security surpluses, and certainly nowhere near enough to balance 
it without using every penny of the Social Security surplus.
  In addition to that, we have to look at the Dole tax cut and who 
benefits. This chart shows the various income categories, who the big 
beneficiaries are. For example, for those who earn less than $10,000 a 
year, they get a $5 tax cut, on average; for those who are in the 
$10,000 to $20,000 category, they get $120, on average. For those who 
are in the $20,000 to $30,000 category, they get $400, on average. If 
you start adding these up, zero to $10,000, that is 18 percent of the 
American people; $10,000 to $20,000 is 21 percent; $20,000 to $30,000 
is another 16 percent of the American people. If you add that up, it is 
55 percent of the American people get less than $400 a year, on 
average, from this plan.
  Look at what happens to those earning over $200,000 a year, the top 1 
percent of people in this country. They would get an average benefit of 
$25,000. Does this strike you as fair? Does that strike you as a 
balanced plan? I do not think so. I do not think it is fair when the 
top 1 percent get a $25,000 reduction on average and the 55 percent of 
the American people who are below $30,000 a year in income get from $5 
to $400 a year. That is not a fair plan.
  One of the things that is perhaps most shocking, as you start to 
really look into the details of this Dole plan that has $500 tax credit 
for children, what you find out is 40 percent of the children in 
America do not qualify, they do not get anything. They do not get a 
$500 credit, they do not get a $400 credit, they do not get anything. 
The reason is that their families do not have enough income to be 
eligible. Because of other parts of the Dole plan, his reductions in 
the earned-income tax credit, many families with child-care costs are 
not going to get a cut; they are going to get an increase in their 
taxes.
  Thousands, millions of people in this country are not going to get a 
tax reduction under the Dole plan, they are going to get a tax increase 
under the Dole plan, because a child care credit doesn't work for you 
unless you reached a certain income level, and he is cutting the earned 
income tax credit.
  Let's look at two examples. A two-parent family, four people in the 
family with an income of $21,500 and $400 a month in child care costs, 
under current law they pay $172 in taxes. Under the Dole plan, they get 
a whopping increase. They pay $609 in taxes. No tax cut under the Dole 
plan for these folks. They are getting a big tax increase. Interesting, 
isn't it?
  If you are at the top, you are going to get the gravy under the Dole 
plan. If you are one of the fortunate few in America, the top 1 percent 
that earns over $200,000 a year, you are going to get a $25,000 
reduction on average. But if you are one of these folks earning $21,000 
a year, have children, have child care costs, under the Dole plan you 
are not going to get a tax cut, you are going to get a tax increase.
  Under another example, a two-parent family with two children with 
income of $25,000 and $400 a month in child care costs, under current 
law, they pay $1,176. Under the Dole plan, they would pay $1,734. Not a 
reduction, not a cut, but a big tax increase.
  Madam President, this Dole plan doesn't add up any way you cut it. It 
doesn't balance the budget. It doesn't have enough cuts to balance, 
even if he uses all the Social Security surpluses, and goodness knows, 
we ought not to use Social Security surpluses to balance the budget. 
That is just mortgaging the future.
  Interestingly enough, Bob Dole has always himself rejected the so-
called supply-side economic theory. The supply-side theory is the one 
that was in vogue in the 1980's. It is the one that led us into this 
swamp of debt and deficits in the first place.
  Senator Dole, just last year, said this about supply-side economics. 
This is Senator Dole. He said:

       What I could never understand is why, if you just cut 
     taxes, you'd have this big, big revenue increase. You know, 
     more jobs, more opportunity. And you didn't have to make hard 
     choices about spending. That was the philosophy back in the 
     eighties, particularly with Newt and the House Republicans. 
     Don't make any painful decisions. Just cut taxes. In the 
     eighties, we said, ``Everything's going to be fine.'' Well, 
     it wasn't.

  That is Senator Bob Dole 1 year ago. Bob Dole was right a year ago 
when he said this. Bob Dole was exactly right. And I return to where I 
started. This demonstrates how right he was last year and how wrong he 
is this year. Because now Bob Dole, finding himself 20 points behind in 
the polls, all of a sudden is a born-again supply-side economist, 
believing in the tooth fairy, that somehow, somewhere the money will 
emerge.
  Madam President, we tried that once before. We tried it back in 1981, 
and we know what the results were: the deficit skyrocketed--
skyrocketed. It wasn't until President Clinton put in place an economic 
plan in 1993--an economic plan, by the way, that Senator Dole said 
would crater the economy--that we saw 4 years in a row of declining 
deficits, that we saw the country headed in the direction of a stronger 
economy, that we finally saw America getting back on the right course 
with dramatic deficit reduction, renewed economic growth, the creation 
of over 10 million jobs.
  Madam President, we ought not to take the riverboat gamble of supply-
side economics. That way lies a future of debt, deficits and decline.
  I thank the Chair and yield the floor.
  Mr. BURNS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Montana.

[[Page S10905]]

  Mr. BURNS. Madam President, I understand that Senator Heflin has the 
floor for the next 10 minutes. I ask unanimous consent that I be able 
to speak as in morning business just for 1 minute.
  Mr. HEFLIN. I have no objection.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BURNS. Madam President, we have seen a lot of charts and 
everything. Here, again, we are scaring people. We are absolutely 
scaring people about things that, No. 1, President Clinton inherited a 
trend that was already started; that we know that tax cuts put a spur 
in the economy and more revenues come into the Treasury.
  I want to put everybody on notice about these scare things--what is 
going to happen, what might happen--that Americans don't back up very 
quickly; we don't scare very easy. We know we have a problem, and it 
will take America to solve it. And this last illustration is absolutely 
bogus.
  So I just want the American people to put them on notice that we 
don't scare too easy. We didn't build this country to the pinnacle we 
have today by backing up, going in reverse in this country. We are not 
prepared to do that.
  I yield the floor.
  Mr. HEFLIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Alabama.

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