[Congressional Record Volume 145, Number 27 (Monday, February 22, 1999)]
[Senate]
[Pages S1679-S1682]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            THE SENATE PROCESS AND FEDERAL BUDGET SURPLUSES

  Mr. DORGAN. Mr. President, I think you can hear a collective sigh of 
relief around the Capitol Building now that the impeachment trial--only 
the second in the history of our country--is complete and we can turn 
our thoughts to other issues, turn our energies to other enterprises.
  Most of us seek election to the U.S. Senate--whether it be from West 
Virginia or North Dakota or Arizona--because we feel passionately about 
public issues. And there are many, many public issues--both here at 
home and around the world--that should and will command our attention.
  Recently I told my colleagues a short story about Teddy Roosevelt. I 
want to talk today about a couple of issues, and it is probably 
appropriate to start with Teddy Roosevelt. Teddy Roosevelt lost both 
his wife and his mother on the same day in different rooms of his home. 
And he was so stricken with grief that he decided to do something 
different with his life. He decided to go west for some while and see 
if he could find himself again.
  Teddy Roosevelt had some resources, so when he made his decision to 
go west, he decided to go to the Badlands of North Dakota. He knew that 
in the Badlands there were cowboys, and so, I am told, he went to 
Brooks Brothers and ordered a cowboy suit to be made for him. And 
Brooks Brothers made a cowboy suit for Teddy Roosevelt. He got a bowie 
knife, a sterling silver bowie knife with an ivory handle, I 
understand, that had his name on it, and it said ``Tiffany's.'' He 
bought it at Tiffany's. And he got silver spurs, and on the rowel of 
each spur were engraved his initials.
  So when the train stopped in North Dakota for Teddy Roosevelt to 
disembark, to go to live in the Badlands and raise horses and cattle, 
this fellow stepped off the train wearing his Brooks Brothers cowboy 
suit and a pair of rimless glasses, with his bowie knife from 
``Tiffany's,'' and his sterling silver engraved spurs.
  The cowboys in the Badlands thought, ``What on Earth has landed here 
in Medora, ND''--this man they called four-eyes, with his rimless 
glasses and his funny Brooks Brothers cowboy suit and his sterling 
silver spurs. They made fun of him, poked fun at the way he looked. And 
then, as the story goes, in the Badlands saloon in Medora, ND, one 
unlucky cowboy goaded him too far and wanted to pick a fight with him.
  It took only a matter of minutes, apparently, for this rather unusual 
looking character from the East, with his Brooks Brothers cowboy suit, 
to knock this local cowboy senseless in the Badlands saloon. Then the 
rest of the cowboys had a different impression of this fellow. Yes, he 
looked a little different, but he had some real mettle. They knew a 
little something about him. And Teddy Roosevelt, of course, went on to 
carve a rather rich chapter of his life ranching in the Badlands of 
North Dakota.
  I told my colleagues that story some while ago because we are all 
kind of different. We gather here in the U.S. Senate, 100 of us, coming 
from different parts of the country with different philosophies. We 
even dress differently from time to time. And so we come to this place, 
this place of debate in our democracy, from all kinds of different 
perspectives. But we respect each other. We do not make fun of each 
other. We know that each arrives here with a passion and a mission on 
behalf of those who sent us here to do the best we can for this 
country.
  We do not settle our disputes with saloon fights. We do it through 
debate.

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 We respect the other person's view. We might disagree with it in a 
very aggressive way, but we respect each other. And through the process 
of public debate, the give and take, the process of democracy works.
  Now we turn our attention from an impeachment trial, which I think 
was difficult for every single Member of this Senate and for the 
country, to other issues--health care, a Patients' Bill of Rights; 
education and how we improve our schools; what we do to strengthen 
Social Security and Medicare; and more.

  There are two enduring truths about the last quarter century for 
everyone who serves in the Senate. One is that we have experienced a 
cold war that consumed a substantial amount of our energy, time, and 
resources; the second is that we have had crippling Federal budget 
deficits. Both of those enduring truths have now changed. The cold war 
is over and the Federal deficits are no more. The Soviet Union is gone, 
the cold war is over. That changes a great deal of our international 
issues and attention. The crippling Federal budget deficits that used 
to grow year after year are gone and we now see predictions and 
projections that year after year we will experience Federal budget 
surpluses.
  Since those two enduring truths have changed, I want to focus on one 
aspect of them today, and that is the reason I came to the Senate 
floor. We have people who now say that because the Federal budget 
deficits are going to turn into Federal budget surpluses, let us very 
quickly propose returning $500 or $600 billion in tax cuts to the 
American people over the next 10 years.
  I want to talk about the merit of that. It would be a tragic mistake, 
in my judgment, for this Congress to decide that--at the first sight of 
budget surpluses, after a long, dark period of mushrooming Federal 
budget deficits that have accumulated to a $5.5 trillion Federal debt--
we should try to outbid each other on who can return more tax money to 
the American taxpayer.
  I think the greatest gift that we could give to America's children 
would be to decide that when we turn the corner and experience real 
budget surpluses, we begin during good times to reduce the Federal 
debt. There can be no greater gift to America's children than for us, 
during good economic times, to begin reducing the crushing Federal 
debt. That debt, as I said, stands at $5.5 trillion.
  I have a chart that shows what kind of surpluses we are expected to 
experience over the next 10 years, recognizing of course that none of 
us can know with certainty what will happen next week, next month, or 
next year. The budget surplus, which is the top line of this chart--and 
these figures came from the Congressional Budget Office--amounts to 
more than $2.5 trillion over 10 years. That doesn't mean very much to 
me because that is not a real surplus. It is a surplus that is made 
possible by the use of the Social Security trust funds which, in my 
judgment, cannot be used to calculate a budget surplus. The second line 
of the chart calculates what happens to our surplus if you take the 
Social Security trust funds and set it aside--which ought to be done--
for the purpose of saving it for the time when it is needed as the baby 
boomers will retire. The real surplus, then, begins in the year 2001.
  In 1993, when President Clinton took office, he inherited a budget 
deficit that year of about $300 billion. That has turned around 
dramatically. We have in this country experienced wonderful news with 
an improving economic outlook in this country. So we have gone from 
about a $300 billion deficit to a $7 billion deficit in the upcoming 
fiscal year--almost a balanced budget. The next year the budget will be 
in balance, even without counting Social Security trust funds, and that 
is the prediction for every year thereafter for the following eight 
years.
  The question is, What do we do as a result of that? We have people 
rushing through the door saying, let me propose a $650 billion income 
tax cut. Some say a 10-percent across-the-board income tax cut. Aside 
from the merits on that issue, I happen to think that the crushing tax 
burden is not the income tax, but the increasing payroll taxes that 
American workers have had to pay. Most working families in this country 
pay more in payroll taxes than they pay in Federal income taxes.
  My point is this: As we begin to construct a new fiscal policy rooted 
with the understanding that we no longer face crippling budget 
deficits, let us start to think about our priorities. The easy politics 
would be to say, let's just give a lot of tax cuts, let's talk about 
across-the-board tax cuts. But a much more responsible approach, in my 
judgment, would be to say during good economic times it is required for 
us to begin the long process of reducing the Federal debt. Now, if that 
is a priority--and I hope it will be for the majority of the Members of 
the Senate, reducing America's debt during good economic times--that 
should be, in my judgment, complemented by our understanding that the 
Social Security system also needs shoring up. We must reserve some of 
our projected surplus to make that system whole and well and solvent 
for the long term.

  I want to make a point about Social Security because some people 
wring their hands and gnash their teeth because of the problems we have 
with Social Security. These are not big problems. The Social Security 
problem--to the extent there is one--is born of success. One hundred 
years ago, you were expected to live to age 48 in this country; today, 
the life expectancy is almost 78. We have increased life expectancy by 
30 years. People live longer and better lives for a lot of reasons. 
That is success. Does that cause some strain to the Social Security 
system? Of course it does, but it is born of success. And let us not 
wring our hands about that. We can easily resolve these issues.
  Third, in addition to reducing the Federal debt during good economic 
times with this budget surplus and making certain that we are 
responsible for making Social Security solvent for the long term, the 
proposal that the President and some others have offered, to use any 
additional tax cuts outside of that for the purpose of providing 
incentive for savings, makes a lot of sense to me. Encouraging personal 
private savings in this country, which the President proposed through 
USA accounts--and there are other approaches--seems to me to make a lot 
of sense in terms of creating the foundation for long-term, solid 
economic growth for the next two, three and four decades.
  Having said all that, let me make this point: We in this country have 
the strongest economy in the world right now. I studied economics in 
college and then I taught economics in college very briefly. That 
experience hasn't hindered me, but nonetheless I taught some economics. 
One of the things you teach in economics is that there are two 
principles you strive to achieve in an economy--stable prices and full 
employment.
  In our country's current economy, we have virtually no inflation and 
we have nearly full employment. And we--at a time when the Asian 
economy is weak, when the Russian economy has collapsed, when the 
Brazilian economy is weak--have the strongest economy in the world. Is 
it by accident? I don't think so. I don't happen to think that 
Republicans or Democrats have the answer either. It is not as if, 
somewhere down in the engine room of this ship of state, there is an 
engine with dials and knobs and a lever, and if we can just find the 
right dials and knobs and levers to pull and push, the right amount of 
tax cuts, the right amount of spending, the right amount of M1, that 
somehow the ship of state will do fine. I don't happen to think the 
engine room works that way.
  Economies have everything to do with the confidence of the people. 
When people are confident about the future, they make individual 
decisions such as: I will buy a car; I will buy a house; I will make 
this investment because I am confident about the future. They make 
those kinds of decisions based on their confidence. That creates the 
foundation for an economy.
  When people are not confident about the future, they say, I will not 
make that purchase; I will defer buying an automobile; I will defer 
buying this home because I am not so confident about the future.
  So it is the confidence of the people upon which this economy rests. 
All of the indices show the American people are confident about the 
future because the President and the Congress together--I am talking 
about all Members of the Congress coming together--

[[Page S1681]]

have made some good decisions in recent years, decisions that say 
deficits matter, and we are going to tame them.
  That isn't to say that we shouldn't continue to invest--even as we 
tame the Federal budget deficits. We are going to invest in the kinds 
of things that will make this a bigger, better, stronger country. We 
had, as the Senator from West Virginia will recall, a vigorous debate 
in the last Congress about a highway bill. Some around here were just 
wringing their hands about the amount of money we were going to spend 
on highways.
  The money that we are going to spend on highways, coming from the 
gasoline tax collected at the gas pump when people fill up their cars 
with gasoline, is going to go into improving America's infrastructure--
building roads, repairing bridges, and generally making us a better 
country. It is an investment in our country, just as it is an 
investment in young people to improve schools. It is an investment in 
our future. Ben Franklin once said, ``Anyone who puts their purse in 
their head will never lose their purse.'' That is what education is 
about. Education is an investment in our children.
  We have made a lot of thoughtful decisions in the last 6 or 8 years; 
frankly, it can go well beyond that. We can go back to the 1950s when 
we talk about roads and think of the decision that President Eisenhower 
and the Republicans and Democrats in Congress made about an interstate 
highway system. You could ask yourself, could anybody in this country 
justify building a four-lane interstate between Fargo, ND, and Beach, 
ND, all those hundreds of miles where there aren't a great deal of 
people? You could have had one of the watchdog organizations pull that 
apart in the fifties and say, ``Look what they are spending where not 
many people are living.'' But President Eisenhower and Congress said 
that we are going to link this country together with the interstate 
highway system. Transportation is universal.
  We have done a lot of good things, and a lot is left to be done. As 
we deal with fiscal policy and especially with the question of tax cuts 
and budget surpluses, I hope we can make thoughtful and good decisions 
for the long-term future of this country. I think very strongly that 
the first priority is for us, during good economic times, to reduce the 
Federal debt. The second priority is to say we owe it to the Social 
Security system to make it whole. The third priority says let's 
encourage private savings through tax cuts because that strengthens 
America in the future as well.
  Mr. BYRD. Will the distinguished Senator yield?
  Mr. DORGAN. Of course.
  Mr. BYRD. Mr. President, I thank the distinguished Senator for his 
comments. They are timely and they are very persuasive to me. I join 
with him in expressing hope that we will apply these surpluses to 
reducing the national debt--after, of course, shoring up Social 
Security. And we have to think of Medicare, also.
  I have been in politics now 53 years. The easiest vote that I ever 
cast was a vote to cut taxes. It didn't require any courage on my part. 
And likewise, one of the most difficult votes is a vote to increase 
taxes. We have to do that from time to time.
  Now, if Congress passes legislation to provide for tax cuts --and 
there may be some areas of tax cuts that I can very well support--but 
generally speaking, if we do, of course, the legislation that Congress 
enacts to do that would be permanent legislation, will it not, until 
changed? So if after a while--not 10 years hence, as the distinguished 
Senator has shown on his graph, but 5 years hence, or 4 years hence, 3 
years hence--we hit upon hard times, then what? Would the reduced taxes 
continue, unless Congress legislated to increase them again? Would 
they, may I ask the Senator?
  Mr. DORGAN. The answer, I say, to that is once you change the Tax 
Code, that change is generally permanent unless altered. We have had 
the experience before of a very aggressive appetite to reduce taxes, 
only to discover that we run into a recession, experience very 
significant Federal budget deficits, and then the confidence of the 
people about the future tends to erode and you have a further economic 
contraction.

  I say to the Senator from West Virginia, one of the things that I 
think is very important is to the extent that there would be tax cuts 
following a reduction in Federal debt and shoring up Social Security, I 
hope that it will be triggered by the actual experience of the surplus. 
If you don't have a mechanism to trigger the tax cuts, what will happen 
ultimately will be an economic slowdown--nobody has repealed the 
business cycle--and experience significant budget deficits.
  Mr. BYRD. Then it would be incumbent upon us to make difficult 
decisions and act to increase the revenue again.
  Well, I join with the Senator. I think he performs a great service in 
calling to our attention and to the attention of the American people 
the options we face. I hope that Congress will think long and carefully 
about what we do. We are in a happy situation, but who knows how long 
the situation will remain happy. I see Alan Greenspan down in that 
engine room, and he is entitled to a good many compliments from all of 
us for the good work that he has done, the vision that he has 
displayed. But I join with the Senator and I hope he will help to lead 
us as we move forward in the coming days and use his good economics. I 
think I had about one semester of economics when I was in high school, 
and that is about it. But the Senator from North Dakota has had 
excellent training, a fine education in that field. I am going to 
continue to listen to him and look to him for leadership as we go 
forward. I thank him very much.
  Mr. DORGAN. Mr. President, I thank the Senator from West Virginia. I 
raise this issue today only because it will be one of perhaps five or 
six significant issues we will debate in the coming months. I do not 
think that my idea is exclusively good and that there are no other good 
ideas out there. I have great respect for others here who might 
disagree strongly with my view on these issues. I want to, as we begin 
this debate, at least stake out the ground that some of us would feel 
strongly about--debt reduction and other responsible actions in fiscal 
policy.
  I look forward to this. This has been a tough 6 or 7 weeks as we have 
started this session because of the impeachment trial. Most of us come 
here relishing the idea and fostering the appetite for debate about the 
public issues that really matter to this country in economics, health 
care, and education. So I look forward to it in the coming days and 
weeks.
  Mr. BYRD. Mr. President, will the Senator yield?
  Mr. DORGAN. Yes.
  Mr. BYRD. I don't want to prolong this, but would he respond to this 
question: How do our massive trade deficits play into this whole 
equation?
  Mr. DORGAN. Well, as the Senator knows, I have felt very strongly 
about our trade deficits. The one area of our economic performance that 
is very troubling is the area of trade indebtedness that continues now 
to mushroom. In fact, just in the last week, we saw an announcement 
that we have experienced the largest trade deficit in the country's 
history. I am particularly concerned about our merchandise deficits, 
because that reflects the deficits in terms of the goods that you 
produce, not services and because it is an indicator of the health of 
the manufacturing economy.
  I don't think you can remain a world economic power unless you have a 
vibrant, strong manufacturing sector. I am very concerned about the 
trade deficits, and I have spent a great deal of time talking to our 
Trade Ambassador and this administration.
  I think our trade policies need adjustment. It is not that I don't 
believe we shouldn't have expanded trade around the world; of course we 
should. But this country needs to stand up for its own economic 
interests in a thoughtful and useful way. We need to stand up for our 
interests with respect to the Chinese, the Japanese, the Europeans, and 
others to say that our market is open to your goods, it is wide open, 
but only on the condition that trade between our country and yours is 
fair.
  During the first 25 years after the Second World War, we could have 
foreign policy masquerading as trade policy, or the reverse, and we 
could beat anybody on the globe in international trade with one hand 
tied behind our

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back. But that has changed. We face formidable competitors in 
international trade. And the corporations who do the business around 
this world now separate themselves from nationalist interests, and they 
are simply interested in finding out where they can produce the 
cheapest and where they can sell for the best price. Often that 
mismatch means you can produce more cheaply if you find a Third World 
country in which you can produce and dump chemicals into the streams, 
pollutants into the air, and pay kids 14 cents an hour. You don't have 
all of the encumbrances you have producing in an industrialized 
country. You can produce whatever it is you are producing and ship it 
to Chicago, Pittsburgh, Charleston or Fargo.
  The dilemma of all of that is the bifurcation of production and the 
means to purchase, which creates this trade deficit between countries. 
The trade deficit is a very serious economic problem. It is one of the 
few blemishes that exists on this complexion of good economic news. And 
we must begin to address it. I know that most people want to ignore it. 
They don't want to talk about it.
  Interestingly enough, some of the economists in this town have always 
said that NAFTA and free trade are good. They said, ``You know, our 
trade deficit is just a function of fiscal policy deficits. You won't 
have a trade deficit if you ever get the budget balanced.'' Guess what 
has happened? We have gotten the deficit under control and our trade 
deficits are still mushrooming. I really should, as a public service, 
rewrite the textbook, because the answers are now apparently wrong. In 
fact, we should get their names--some of the best economists in time 
who have said that--and I should get their quotes and bring them to the 
floor.
  So those are the things that we need to have a thoughtful discussion 
about.
  I appreciate the Senator from West Virginia raising the issue. He and 
I coauthored a piece of legislation, which is now law, that created a 
trade deficit review commission. It is my hope that the commission will 
soon begin meeting and sift through all of these policy areas and 
hopefully make recommendations to Congress in an expeditious way to 
allow us to get some new ideas and some new energy and new perspectives 
on this very critical issue. The commitment of the Senator from West 
Virginia, Senator Byrd, to passing that trade deficit review commission 
legislation--which is, as I said, now law--is very important and very 
helpful to this country.
  Mr. President, I yield the floor. I suggest the absence of a quorum.
  Mr. BYRD. Mr. President, I thank the able Senator for responding to 
my questions.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. KYL. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Voinovich). Without objection, it is so 
ordered.

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