[Congressional Record Volume 145, Number 36 (Monday, March 8, 1999)]
[Senate]
[Pages S2385-S2388]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
WE OWE IT TO OUR CHILDREN
Mr. VOINOVICH. Mr. President, I have devoted more than 30 years of my
life to public service. I have held elected office as mayor of the city
of Cleveland, and I served as Governor of the State of Ohio. Now I am
privileged to serve the citizens of Ohio as one of their U.S. Senators.
I am deeply honored by the confidence they have bestowed upon me.
They have placed their faith in my ability and my judgment to
consider and vote upon and bring to the forefront issues of national
significance. It is for this reason that I have come to the Senate
floor to discuss what I consider to be the most serious financial and
economic threat facing our Nation today.
Through the tough choices made by Congress in passing the 1997
Balanced Budget Act, and through our continued strong economy, the days
of escalating, crushing budget deficits appear to be coming to an end.
In Washington, politicians are saying we have turned the corner, and
for the first time in 30 years, we have a budget that shows a surplus.
If it is true, it would be brand new territory for many Americans.
Tens of millions were not even born yet when we had our last surplus.
However, it is my contention that we do not yet have honest budget
surpluses, and unless we take bold steps, our actions will continue to
leave our younger citizens and future generations liable for three
decades of massive deficits and a national debt that has made us the
greatest debtor nation in the world.
Prior to 1968, surpluses were not uncommon. But through President
Lyndon Johnson's expansion of the Vietnam war and the implementation of
the Great Society, we started to lose fiscal restraint.
A budget trick was implemented by the Johnson administration. It took
the off-budget Social Security trust funds, which were in true surplus,
and commingled them with the regular budget which at that time was
showing a deficit. In this manner, Congress and subsequent Presidents
were able to mask annual budget deficits that contributed to a rising
national debt.
I would just like to point out, however, the years Social Security
has masked the true budget deficit that we have had and how it has
improved our budget situation.
If you go back to 1995, we reported that we had a budget deficit of
$164 billion. The fact of the matter is we had a budget deficit of $226
billion. And what we did was we reduced it by using the Social Security
surplus of $62 billion.
In 1996, we reported that we had a deficit of $107 billion. The fact
is our budget deficit was $174 billion, and again we used Social
Security to reduce that deficit.
Then, in 1997, we reported, oh, it is wonderful news, we had just a
minus $22 billion deficit. The fact of the matter is we had a $103
billion deficit, and we plastered it over with $81 billion of Social
Security money.
Then, in 1998, we had the great celebration, the great surplus that
we talked about. The fact of the matter is that even in 1998, when we
reported the first unified budget surplus, we still had a real deficit
of $30 billion. Again, we used the $99 billion Social Security budget
surplus to hide the fact that we had a $30 billion deficit.
Again, this year, we are reporting we will have a $111 billion
surplus. The fact of the matter is, even this year, we will have a $16
billion deficit; and again that has been covered over by the using of
Social Security.
And for the year 2000--the budget we are working on right now--we are
reporting we will have a $133 billion surplus. The fact of the matter
is, even this year, we are going to have a $5 billion deficit on
budget. We have covered that $5 billion up with $138 billion of surplus
in the Social Security trust fund.
And next year we are celebrating the idea that maybe we are going to
have our first real honest to goodness on-budget surplus of $11
billion. The fact of the matter is--and we will report a unified budget
surplus of $156 billion--but the truth is that we only have a real--
real--surplus of $11 billion.
Rather than attempting to enact policies that would bring us back to
surpluses, 30 years of financial gimmicks have ensued, so much that we
ran up a debt of $5.6 trillion in those intervening years from the time
of Lyndon Johnson. Since the time my wife and I got married in 1962,
interest payments on the debt have gone from 6 cents on the dollar to
14 cents on the dollar this past year. If we had had the same 6-percent
interest payment when we got married in 1962, Americans would have
saved $140 billion this year.
As the debt grew during the 1970s and 1980s, attempts were made to
bring it under control. In 1985, Congress passed the Gramm-Rudman-
Hollings Act which required the unified budget to be split and the
Social Security trust funds kept separate. When Gramm-Rudman passed, I
was encouraged that finally we were going to get some truth in
budgeting.
At that time, I was mayor of Cleveland and I was serving as president
of the National League of Cities. In 1985, the debt was $1.8 trillion.
We mayors felt the need to do our part to help reduce the debt. We did
our share when we lost the CETA program, revenue sharing, one half of
our community development block grant, and a complete loss of the Urban
Development Action Grant Program. When I left office after 10 years as
mayor of the City of Cleveland, we had $79 million less a year from the
Federal Government than we had when I came into office in 1979.
In order to make up that difference, first of all we did everything
we could to reduce costs. In many instances, cities across this country
had to increase their local income taxes or local taxes by over 50
percent to compensate for the loss of these Federal dollars. Much to
our chagrin, our sacrifice did little to help reduce our annual
deficits or shrink our national debt. Indeed, the debt was $1.8
trillion in 1985; today it is $5.6 trillion. If you go back to when I
became mayor in 1979, the national debt was $780 billion; today, 20
years later, it is $5.6 trillion. Listen to this: A 700-percent
increase in the country's national debt in a 20-year period.
We have a law that says Social Security trust funds are supposed to
be off budget, and we have the Budget Enforcement Act of 1990 that
removes Social Security from deficit targets and other enforcement
calculations. But it was another law, the Balanced Budget Act of 1997,
that forced tough spending choices on Congress and on the
administration, making them live within their means for the first time
in decades.
I congratulate the Members of Congress, those who supported the
balanced budget agreement of 1997. It is this law more than any other
that has given us the tools to help us now put our financial house in
order. As a result, we are seeing a decrease in the on-budget deficit,
we are cutting down on spending, people are projecting surpluses, and
the Social Security trust funds are growing. There is a light at the
end of the tunnel. But to get there, we must maintain our discipline
and continue doing those things that will bring down our debt and honor
our commitments to our citizens.
As this chart shows, if we stick to our guns, if we honor the caps in
the 1997 budget agreement, we might have an on-budget surplus starting
in the year 2001 and a growing surplus thereafter. Here is what it
looks like: In 1999, if we stick to the balanced budget agreement, if
we don't invade the budget caps we have for the first time in 30
[[Page S2386]]
years, we can begin the new century by having a true, real budget
surplus that will continue to grow.
But along comes the President with his fiscal year 2000 budget and
projections for 15 years into the future. In one fell swoop, he
proposes a continuation of the ill-conceived policies that got us in
trouble in the first place. Under his budget, we still have unified
budget totals and the President has proposed to continue to use Social
Security to pay for other government programs for at least the next 15
years. We can't even show the 5 years beyond 2009 because there are no
hard numbers from the administration so the Congressional Budget Office
can make projections. This is not truth in budgeting that the American
people expect or deserve, and I think it will lead to disastrous
consequences.
This chart shows what will happen if we follow the President's
proposal to deal with the unified budget. In 1999, we will start
developing annual budget deficits that will take us down this crimson
path to where we have been for the last 5 or 6 years.
Let me point out where we are going: The red line on the chart is the
deficit; this is the real deficit. Because we have had self-discipline,
because we are honoring the budget agreement, we are seeing these red
deficit numbers get smaller. If the President's proposal goes into
effect, we are going to go back to the old days. Instead of having this
scenario at the beginning of the next decade, this scenario will be had
under the President's program.
Why is this important? First, the President says we have a budget
surplus in fiscal year 2000. This is simply not true. If you look at
the chart titled ``Real Budget Surplus,'' you will see again that
fiscal year 2000 shows a real budget deficit of $5 billion. In fact, if
you look at the chart, we don't have a surplus this year--rather, a $16
billion deficit.
What the President does is take the off-budget Social Security trust
funds and continue to use them to mask the deficit while saying he is
saving Social Security. It is a fraud. The President's surplus for this
fiscal year, the next fiscal year, in fact, and for 14 fiscal years
after that, continues the gimmick of using the unified budget. It is
disingenuous. It continues to use billions of dollars of the Social
Security trust fund to mask the true size of the budget and allows the
President to put off making those tough budget decisions that we must
make. If we allow this to happen--the tough budget choices we have to
make today--we are in deep trouble.
We have a growing economy and we have the lowest unemployment we have
seen at any time. If we can't as a nation make the tough decisions that
we need to make to turn things around and to have an on-budget surplus,
if we can't do it now, we will never do it.
Second, the President not only busts the spending caps agreed upon in
the 1997 budget deal, he destroys them. These targeted caps are meant
to keep our spending in check. But even before we debate a budget
resolution for the coming fiscal year, we learn from Congressional
Budget Office Director Dan Crippen that the President proposes to
increase, or ``blast,'' the caps by $30 billion--$30 billion. In fiscal
year 2000, we are supposed to face budget caps that will force us to
cut $28 billion. It will take tough choices to meet these caps, but we
must show restraint if we are ever to bring our finances in order.
This is why I am pleased that the Republican leadership has given
their assurance to maintain the caps so that we may demonstrate to the
American people that we are serious about the commitment. The
Republicans have also--this is really important, folks--committed to
restoring truth in budgeting by ensuring that 100 percent of Social
Security trust funds are protected and not used for additional spending
or tax cuts. In other words, the Social Security trust fund is off, it
is off. We are locking it up. There will not be any tax reductions or
new spending with Social Security surpluses.
Third, the President is skirting a moral obligation that has been
made to our seniors and all future generations to fully preserve the
sanctity of the Social Security system. Social Security is a sacred
trust between the Federal Government and every American.
That is why I firmly believe we need to get away from treating Social
Security funds as part of the budget and wall it off from any
temptation to use it for purposes other than Social Security. As I say,
we need to ``put it in a lockbox.''
The President, on the other hand, wants to use the Social Security
trust funds to show that he has a budget surplus. As I said, there are
billions and billions of dollars meant for the Social Security trust
fund that are supposed to be off budget. But he can't resist trying to
make those funds a part of the budget so he can mask the size of the
deficit and use any so-called surplus to pay for his agenda.
We have been playing games with Social Security for far too long. Do
you know what? It is time to stop.
Under the President's plan, only 62 percent of the unified surplus
would be devoted to Social Security. In fact, recently, the head of the
Senate Budget Committee said only 58 percent of the unified surplus is
going to be used to protect Social Security. This represents an actual
decrease from what we would allocate to Social Security if we were to
treat it as an off-budget item.
This is budgetary sleight of hand, and the President knows it. It is
unconscionable for him to say that he is ``protecting and preserving''
Social Security, when in reality he is taking money away from it and
using it to pay for other programs. No matter how well intentioned
those programs are, it is not the right thing to do.
Fourth, the President hinges his plan on budget surpluses that are
calculated far into the future.
As our Nation's premier economist, Federal Reserve Chairman Alan
Greenspan, testified before the Senate Budget Committee:
We cannot confidently project large surpluses in our
unified budget over the next 15 years, given the inherent
uncertainties of budget forecasting.
Greenspan goes on to say:
How can we ignore the fact that virtually all forecasts of
the budget balance have been wide of the mark in recent
years?
In a January 1999 report to Congress, the Congressional Budget Office
wrote that an error on the projection of the budget surplus in 2009,
and based on previous averages, could be ``equal to 13 percent of
projected outlays [and] would produce a swing of $300 billion.''
The Cincinnati Post, in an editorial on February 10, said: ``There's
one thing wrong with budget forecasts: they are inevitably wrong.''
Is it prudent to take that kind of risk with our children's future? I
don't think so. If we go along with these four points, we will have no
credibility with the American people. And to regain credibility, we
must put an end to the game playing and restore truth in budgeting.
When we--the Congress and the administration--are forced to make the
hard choices that we were sent here to make, we often try to do what we
believe our constituents want us to do. However, what they want, I
think, is quite simple; they want us to tell the truth. They want us to
stop using smoke and mirrors to say that the Nation's financial house
is in order. They want us to give them enough credit to know the
distinction between what we do and what we say. The American people
want us to make the tough choices.
Two weeks ago, I was faced with one of those tough choices. The
Senate debated legislation that would expand the pay and retirement
benefits of our men and women in uniform. I want you to know that there
is nobody who supports our Armed Forces more than I, and no one
believes more than I that we should provide as many incentives as
possible to retain these quality troops in our military.
However, we cannot continue to pass legislation without first dealing
with its consequences. That bill would have authorized an increase in
our country's financial liabilities by approximately $55 billion over
the next 10 years. Because we had no idea how to pay for it or if it
would fall within the budget caps, I felt it necessary to vote ``no.''
It was a tough choice, but I felt it was necessary.
When I became mayor of Cleveland, the city was in default. It was the
first city in America to go into default since the depression. To get
the city out of its financial abyss, I had to make tough choices. As a
result of our actions, we were able to turn the city's default into a
surplus, and Cleveland
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now enjoys an economic renaissance it has not seen in generations.
As Governor, I again had to make hard choices in each and every
budget in order to meet our constitutional obligation to balance our
budget. When I became Governor of Ohio in 1991, our State faced an over
$1 billion budget deficit. In order to balance the budget, I had to
make four cuts over 2 years totaling $711 million. I was picketed by
college students--5,000 of them outside the State House, who were told
by the university people that I was cutting higher education and their
tuition costs were going to go up. And I was picketed, at the same
time, by welfare recipients who marched on the capitol because we cut
out general assistance for able-bodied people. But we had to get our
financial house in order. Somebody had to make the tough decisions.
As a result, today Ohio is spending a record amount of money on
programs to help children. In addition, we have been able to cut State
income taxes for 3 straight years, including an almost 10-percent
across-the-board tax cut this year. In other words, when the taxpayers
of Ohio, this year, file their 1998 returns, their income tax will be
almost 10 percent less than it would have been without our good
management.
Ohio has a general revenue rainy day fund of over $935 million and a
Medicaid rainy day fund of $100 million, so in the future we can avoid
deep cuts in vital services or tax increases just in case there is a
downturn in the economy. Ohio is in better shape today because we were
able to make the hard choices.
Every day, millions of Americans have to make hard spending choices,
too. They have to pay their bills, pay their mortgages, put food on the
table, and buy clothes for their children. They have budgets and they
know they have to live within their means. Unlike the administration,
when most people have extra money, they don't go out and start to spend
it wildly. They tend to their finances, they save, they pay off their
credit cards and loans, and they invest in homes and businesses.
That brings us back to what we would do with whatever on-budget
surplus we achieve. What are we going to do with it if we get it? The
first thing is, I will believe it when I see it. I am a ``doubting
Thomas'' about whether we really will see it. But if we do get an on-
budget surplus, what we need to do is be wise and leave it alone. Why
the rush to spend it? Why the rush to lower taxes? We don't even know
if we have it. If we do get it, we should leave it alone and give it a
chance to accumulate.
If we cannot guarantee--and we cannot--that we are going to have an
on-budget surplus, then we have no right to start committing dollars
that we don't have.
If and when we get an on-budget, or ``real,'' surplus, it is our
moral obligation to our children to pay them back by using any such
surplus to pay down our current debt. We have stuck these pages who are
standing in front of me with a big bill. We have an obligation to pay
that debt down so part of the income taxes they pay in the future
aren't to pay off the interest on debts they had nothing to do with
during their time of growing up.
I want you to know that this isn't just my opinion about paying down
the debt. It is the opinion of experts like Federal Reserve Chairman
Alan Greenspan, CBO Director Dan Crippen, and GAO Comptroller David
Walker. They agree that it is the best use of these funds--pay down the
national debt.
Not only is it a moral obligation, but this course of action makes
great economic sense for four reasons. I think this is really important
because a lot of people say: ``Reduce the taxes'' and ``This is really
going to be the thing that is going to make a big difference.'' I say:
Reduce the deficit, bring it down, and here are the reasons why.
First of all, it will decrease the overall interest paid on the debt,
and that is important because paying off the debt lowers the interest.
When you lower the interest, what do you do? You lower the cost of
Government, and that makes more money available for other purposes.
No. 2, Alan Greenspan will tell you that it helps allow the economy
to expand.
No. 3, it lowers the interest rate for individual citizens, which is
a big deal. According to Alan Greenspan, it lets people afford to buy
homes or refinance their mortgages, and it puts real money into the
pockets of tens of millions of Americans.
Just think about it. As we got our house in order and interest rates
came down, think of the millions of Americans who have refinanced their
homes, and those who are able to buy automobiles today because interest
rates are down. If we bring the national debt down and don't follow
what the President wants to do, to use the unified surplus, we will
keep those interest rates down. That is real money in your pocket.
Last but not least, paying down the debt lowers the amount of taxes
the Government would need from the American people, according to the
Business Roundtable.
Using only on-budget surplus funds for debt reduction prevents us
from making false promises to the American people. One of the biggest
assumptions associated with the treatment of surplus funds is an
indefinite continuation of our current period of economic growth.
Blending that assumption with the use of a unified budget surplus is
a volatile mix since no one can predict how long this period of growth
will last. Optimistic surplus estimates could fluctuate wildly over the
next few years, with unknown consequences.
As most of my colleagues know, within ten years, the ``baby-boomers''
will start to become eligible for Social Security and the sheer size of
their numbers will present a challenge to maintain the viability of the
Social Security system. In order to honor the contract we entered into
with these individuals, it is our obligation to ensure that we have the
necessary funds.
A unified budget surplus raids the ``offbudget'' Social Security
funds and replaces them with hundreds of billions of dollars worth of
IOU's for our children and grandchildren. This is not the legacy we
should leave.
We are bankrupting the futures of generations yet unborn because we
have a hard time saying no. Well, it is time to start owning-up to our
obligations and meeting our responsibilities, because ladies and
gentlemen, Social Security is a sacred trust.
Unfortunately, too many people have become cynical that we don't have
a commitment to Social Security. For example, citizens like my son,
George--people in their 20's, their 30's and even their 40's--don't
ever expect to see a dime of Social Security in their lifetime.
What they know is that Uncle Sam has been taking money out of one
pocket via payroll taxes, and taking money out of the other pocket via
income taxes and the Government just puts it all together and uses it
for what it wants.
They've been told that their money is ``in there'' for them when they
retire, but when Congress and the Administration play shell games with
the trust funds, no one believes it.
It is a sad commentary that there is such little faith in the
promises made by our government. However, this cynicism is given
credence when we continue to use Social Security trust funds to hide
our excesses.
I firmly believe that it is our moral obligation to honor the
commitments we have made to our citizens on Social Security, instill
truth-in-budgeting, clean up the financial messes we have made and
provide for all of the generations that follow, a nation that is better
than we received.
Behind my desk on my computer, I have a screen-saver picture of my 2-
year-old granddaughter, Mary Faith. She is the joy of our lives. She is
a wonderful little girl. We have lots of hope and promise for her. But
she has no idea the decisions we are making now are going to affect her
financial future. And those decisions are being made by her
grandfather, other Members of the Senate and Congress and the
administration.
She has no idea that on the day she was born--Mary Faith was born on
December 29, 1996--she immediately became responsible for a whopping
$187,000 bill from the Federal Government on interest that she is going
to have to pay over her lifetime. And that is on a debt her
grandfather's generation ran up for our own benefit.
I prefer the picture of Mary Faith on my screen saver, this picture
right here, which says ``Sentenced to
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Repay.'' That is the next generation of Americans--``Sentence to
Repay'' the debt we didn't have the guts to pay for during our
lifetime.
Any day this week Mary Faith is going to have a new brother or
sister. And, Mr. President, we are actually expecting her brother or
sister on Friday of this week, and I want to let you know that for sure
I will not be here if we have any rollcall votes on Friday.
While nothing can surpass the joy our family will feel on this
special day, I can't help but think that like my granddaughter, Mary
Faith, he or she is going to receive a bill from this Government for
the interest on the debt that he or she had nothing to do with. And
that bill is going to be even larger than the one we gave to Mary Faith
2 years ago.
We have been reaping all the benefits and putting the future of all
our children and grandchildren in jeopardy through a ``we buy now, you
pay later'' philosophy. I cannot convey how wrong I think it is to
saddle them with such an excessive financial burden that we now, this
Congress, have the ability to correct.
That is why I feel debt repayment is the wisest use of any on-budget
surplus. It is plain common sense, and it would be the greatest gift we
could ever give to our future generations.
Mr. President, each year, on the anniversary of President George
Washington's birthday, a U.S. Senator is given the privilege of reading
Washington's Farewell Address on the floor of this Senate. It is a
tradition that dates back nearly 100 years. This year, I had the
distinct honor to read this wonderful document, the first Ohioan who
has had the privilege of reading that farewell address since Bob Taft
gave it back in 1939, 60 years ago.
As I prepared for the speech and I read through his words,
Washington's words, I was particularly taken by the relevance today of
one of President Washington's admonitions to a young United States of
America. Here is what he said 200 years ago.
[avoid] the accumulation of debt, not only by shunning
occasions of expense, but by vigorous exertions in time of
peace to discharge the debts which unavoidable wars may have
occasioned, not ungenerously throwing upon posterity the
burden which we ourselves ought to bear.
Those were very, very wise words of President Washington, and they
ring true today as well as they rang true during his day. I believe it
is our duty to heed them. We owe that to all our Nation's children and
our grandchildren.
Thank you, Mr. President.
Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER (Mr. Kyl). The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. GRASSLEY. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GRASSLEY. I ask unanimous consent to speak for about 5 minutes.
The PRESIDING OFFICER. The Senator is recognized.
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