[Congressional Record Volume 147, Number 2 (Thursday, January 4, 2001)]
[Senate]
[Pages S19-S22]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THERE IS NO SURPLUS
Mr. HOLLINGS. Mr. President, parroting Patrick Henry: Peace, peace,
everywhere man cried peace, but there is no peace. Surplus, surplus,
everywhere men cry surplus, but there is no surplus. That is the point
of my comments this afternoon. I have to embellish it or flesh it out
so you will understand the reality, that ``it is not the economy,
stupid,'' rather it is the real economy.
During Christmas week, I picked up USA Today. A headline read
``Surplus soars despite the slump.'' That is dangerous. People think we
have a surplus and everybody is running around: Whoopee, cut all the
revenues; wait a minute, if you don't cut it, those Democrats are going
to spend it. Let's have tax cuts, tax cuts.
This morning, I picked up Roll Call. It had a very interesting
article by Stuart Rothenberg, one of the best of the best. Not quoting
the entire article, he had a little squib about our new colleague and
my friend, Senator Tom Carper of Delaware. I quote part of the article
as of this morning:
Delaware Senator Tom Carper's record in the House is not
easy to pigeonhole. During a six-year period, from 1983
through 1988, his U.S. Chamber of Commerce ratings ranged
from 38 to 64, his liberal Americans for Democratic Action
ratings ranged from 55 to 80 and his AFL-CIO ratings ranged
from 59 to 86.
The Delaware Democrat tended to be more moderate on
economic issues, but that generally reflected his aggressive
efforts to cut the budget deficit. Since that's no longer a
problem, he will face a different set of legislative
priorities on the economy, possibly altering his image.
I will repeat that: ``Since that's no longer a problem . . .'' The
deficit has been solved, according to this morning's Roll Call. Not at
all. We had that
[[Page S20]]
balanced budget agreement in 1997, so you would think that the budget
would have been balanced in 1998. To the contrary.
In 1998, according to the Congressional Budget Office, we had a
deficit of $109 billion, not a surplus. In 1999, we had a deficit of
$127 billion, not a surplus.
For the year 2000, just 3 months ago, fiscal year ending September
30, 2000, I quote from page 20, table 6 of the final monthly Treasury
statement by the U.S. Department of the Treasury. It shows that the
agency securities issued under special financing authorities at the
beginning of fiscal year 2000 was 5 trillion 606 some-odd billion
dollars, whereas on September 30, it was 5 trillion 629 some-odd
billion dollars. That is a deficit, not a surplus, of $23 billion.
If there is any doubt, the distinguished Presiding Officer and I were
here when we worked out the last surplus under President Lyndon Baines
Johnson. That was in 1968-1969. That was before we changed the old
fiscal year to October 1. It used to begin July 1. In December, early
that first week, if I remember correctly, George Mahon, who was then
chairman of the Appropriations Committee, and all of us called over to
Marvin Watson and said: Ask the chief if we can cut another $5 billion,
and we did. We got permission.
Does my colleague know what the budget was for fiscal year 1968-1969
for Social Security, Medicare--go right on down the list--guns and
butter, the war in Vietnam? The civil economy was $178 billion. The
interest now is $365 billion, $1 billion a day; just the interest
carrying charges, not for Government, just for past profligacy.
I have a list of the Presidents from Truman through Clinton and their
corresponding budget information; these are Congressional Budget Office
figures. I ask unanimous consent this table be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
HOLLINGS' BUDGET REALITIES
[In billions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual
Borrowed trust Unified Actual deficit increases in
President and year U.S. budget funds deficit with without trust National debt spending for
trust funds funds interest
--------------------------------------------------------------------------------------------------------------------------------------------------------
Truman:
1946................................................ 55.2 -5.0 -15.9 -10.9 271.0 ..............
1947................................................ 34.5 -9.9 4.0 +13.9 257.1 ..............
1948................................................ 29.8 6.7 11.8 +5.1 252.0 ..............
1949................................................ 38.8 1.2 0.6 -0.6 252.6 ..............
1950................................................ 42.6 1.2 -3.1 -4.3 256.9 ..............
1951................................................ 45.5 4.5 6.1 +1.6 255.3 ..............
1952................................................ 67.7 2.3 -1.5 -3.8 259.1 ..............
1953................................................ 76.1 0.4 -6.5 -6.9 266.0 ..............
1954................................................ 70.9 3.6 -1.2 -4.8 270.8 ..............
Eisenhower:
1955................................................ 68.4 0.6 -3.0 -3.6 274.4 ..............
1956................................................ 70.6 2.2 3.9 +1.7 272.7 ..............
1957................................................ 76.7 3.0 3.4 +0.4 272.3 ..............
1958................................................ 82.4 4.6 -2.8 -7.4 279.7 ..............
1959................................................ 92.1 -5.0 -12.8 -7.8 287.5 ..............
1960................................................ 92.2 3.3 0.3 -3.0 290.5 ..............
1961................................................ 97.7 -1.2 -3.3 -2.1 292.6 ..............
1962................................................ 106.8 3.2 -7.1 -10.3 302.9 9.1
Kennedy:
1963................................................ 111.3 2.6 -4.8 -7.4 310.3 9.9
1964................................................ 118.5 -0.1 -5.9 -5.8 316.1 10.7
Johnson:
1965................................................ 118.2 4.8 -1.4 -6.2 322.3 11.3
1966................................................ 134.5 2.5 -3.7 -6.2 328.5 12.0
1967................................................ 157.5 3.3 -8.6 -11.9 340.4 13.4
1968................................................ 178.1 3.1 -25.2 -28.3 368.7 14.6
1969................................................ 183.6 0.3 3.2 +2.9 365.8 16.6
1970................................................ 195.6 12.3 -2.8 -15.1 380.9 19.3
Nixon:
1971................................................ 210.2 4.3 -23.0 -27.3 408.2 21.0
1972................................................ 230.7 4.3 -23.4 -27.7 435.9 21.8
1973................................................ 245.7 15.5 -14.9 -30.4 466.3 24.2
1974................................................ 269.4 11.5 -6.1 -17.6 483.9 29.3
1975................................................ 332.3 4.8 -53.2 -58.0 541.9 32.7
Ford:
1976................................................ 371.8 13.4 -73.7 -87.1 629.0 37.1
1977................................................ 409.2 23.7 -53.7 -77.4 706.4 41.9
Carter:
1978................................................ 458.7 11.0 -59.2 -70.2 776.6 48.7
1979................................................ 504.0 12.2 -40.7 -52.9 829.5 59.9
1980................................................ 590.9 5.8 -73.8 -79.6 909.1 74.8
1981................................................ 678.2 6.7 -79.0 -85.7 994.8 95.5
Reagan:
1982................................................ 745.8 14.5 -128.0 -142.5 1,137.3 117.2
1983................................................ 808.4 26.6 -207.8 -234.4 1,371.7 128.7
1984................................................ 851.9 7.6 -185.4 -193.0 1,564.7 153.9
1985................................................ 946.4 40.5 -212.3 -252.8 1,817.5 178.9
1986................................................ 990.5 81.9 -221.2 -303.1 2,120.6 190.3
1987................................................ 1,004.1 75.7 -149.8 -225.5 2,346.1 195.3
1988................................................ 1,064.5 100.0 -155.2 -255.2 2,601.3 214.1
1989................................................ 1,143.7 114.2 -152.5 -266.7 2,868.3 240.9
Bush:
1990................................................ 1,253.2 117.4 -221.2 -338.6 3,206.6 264.7
1991................................................ 1,324.4 122.5 -269.4 -391.9 3,598.5 285.5
1992................................................ 1,381.7 113.2 -290.4 -403.6 4,002.1 292.3
1993................................................ 1,409.5 94.2 -255.1 -349.3 4,351.4 292.5
Clinton:
1994................................................ 1,461.9 89.0 -203.3 -292.3 4,643.7 296.3
1995................................................ 1,515.8 113.3 -164.0 -277.3 4,921.0 332.4
1996................................................ 1,560.6 153.4 -107.5 -260.9 5,181.9 344.0
1997................................................ 1,601.3 165.8 -22.0 -187.8 5,369.7 355.8
1998................................................ 1,652.6 178.2 69.2 -109.0 5,478.7 363.8
1999................................................ 1,703.0 251.8 124.4 -127.4 5,606.1 353.5
2000................................................ 1,769.0 234.9 176.0 -58.9 5,665.0 362.0
2001................................................ 1,839.0 262.0 177.0 -85.0 5,750.0 371.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Historical Tables, Budget of the U.S. Government FY 1998; Beginning in 1962 CBO's 2001 Economic and Budget Outlook.
Mr. HOLLINGS. Mr. President, this shows how when President Clinton
came to office in January of 1993, in fiscal year 1992, the last year
of President George Herbert Walker Bush's term, according to the
Congressional Budget Office, there was a deficit of $403,600,000. We
were spending $400 billion more than we were taking in that year.
Since Clinton has taken office, we have reduced that deficit from
$403 billion to $23 billion. We were headed in the right direction.
I hope Mr. Rothenberg, Roll Call, USA Today, and the free press will
finally get the truth to the American people. That is all we want. We
have to
[[Page S21]]
be talking and singing from the same hymnal. Everybody is running
around saying: Yes, I am for a tax cut, but not quite as big; I am for
this; I am for that. We don't have any taxes to cut. To put it another
way, the best tax cut is to reduce the deficit.
If one reads the Internet site of the U.S. Treasury--
publicdebt.treas.gov--the public debt to the penny, as of 11 o'clock--
which is when they changed it--is 5 trillion 728 some-odd billion
dollars. At the close of fiscal year 2000 on September 30, it was
$5.674 trillion, and it has gone up to $5.728-some-odd trillion.
So you can see, not only did we end fiscal year 2000 with a deficit--
not a surplus--of $23 billion--but in 3 months of this fiscal year,
President Bush is going to be submitting his budget, talking about tax
cuts, loss of revenues; and the deficit is already $54 billion. And
that is without factoring in the $30 billion we appropriated before we
went home for Christmas.
So don't give me all of this talk about fiscal responsibility and
everything else. The only responsible thing we had, of course, was
President Clinton's and the Democrats' 1993 economic program that cut
spending, that increased taxes, and cut the size of Government.
Yes, I stand on the floor and publicly acknowledge I voted for an
increase in taxes on Social Security. We were told by my distinguished
colleague from Texas, Senator Gramm, that they would be hunting us down
in the street, us Democrats, and shooting us like dogs if we increased
the Social Security tax.
We increased the tax on gasoline. We cut, as I say, the size of
Government. But they want to keep talking, particularly the media. We
politicians do a little liberality, and, well, they call it spin. They
even have a program called ``Spin'' now on national TV. But we are
entitled to a little spin. We run for public office, and we have to
explain a lot of things we do--but not the media; they are supposed to
give us the exact truth.
There is a recent book called ``Maestro'' by Bob Woodward about Alan
Greenspan. I refer to page 95. I am not going to read the whole thing,
obviously, but I quote at the bottom of page 95, about our Chairman of
the Federal Reserve Board, Mr. Alan Greenspan. I am quoting from the
Woodward book:
The long-term rates--the 10-year and longer rates--were an
unusual 3 to 4 percent higher than the short-term Fed funds
rate, at about 7 percent. The gap between the short-term rate
and the long-term rate, Greenspan lectured, was an inflation
premium being paid for one simple reason. The lenders of
long-term money expected the federal deficit to continue to
grow and explode. They had good reason, given the double-
digit inflation of the late 1970s and the expanding budget
deficits under Reagan. They demanded the premium because of
the expectation of new inflation. The dollars they had
invested would, in the near and distant future, be worth less
and less.
Perhaps no single overall economic event could do more to
help the economy, businesses and society as a whole than a
drop in the long-term interest rates, Greenspan said. The Fed
didn't control them. But credible action to reduce the
federal deficit would force long-term interest rates to drop,
as the markets slowly moved away from the expectation of
inevitable inflation. Business borrowing costs, mortgages and
consumer credit costs would go down. Clinton was so sincere
and attentive, and full of questions and ideas, that
Greenspan continued. Establishing credibility about deficit
reduction with the markets would lower rates and could
trigger a series of payoffs for the economy, he said.
Greenspan outlined a blueprint for economic recovery. Lower
long-term rates would galvanize demand for new mortgages,
refinancing at more favorable rates and more consumer loans.
This would in turn result in increased consumer spending,
which would expand the economy.
As inflation expectations and long-term rates dropped,
investors would get less return on bonds, driving investors
to the stock market. The stock market would climb, an
additional payoff.
That is the end of the quote. You can read on.
I am for a tax cut, too, but how do you get it? Not estate taxes.
Giving millionaires' heirs millions of dollars, tax free, is not going
to recover the economy and have a good effect.
Interestingly, the one thing that really is being spent on Social
Security--the payroll tax--nobody wants to cut. That is the crowd that
is really getting ripped off. Otherwise, you do not hear anything about
the Social Security taxes, that they were going to hunt us down in the
street like dogs and shoot us for increasing. They do not say, cut
Social Security taxes. But they come with things like the estate tax,
marriage penalty, and everything else of that kind. They talk of a $1.3
trillion tax cut that would return us back to where we were in 1993.
Yes, the Federal Reserve, Greenspan, they reduced the Fed rate a half
a percent yesterday. That was fine business. That is the short-term
rates, but that does not affect the overall economy.
The long-term, we cannot tinker with that except to set generally
fiscally sound policy, put the Government on a pay-as-you-go basis.
I have been up here 34 years, and we did it in 1968, 1969. We had a
balanced budget. I got the first AAA credit rating for the State of
South Carolina from Standard & Poor's and Moody's back in 1959, 1960--
40 years ago. But it is a tremendous frustration to this particular
Senator to hear everyone crying surplus.
What is the monkeyshine? The monkeyshine is, you can look right at
the front page of the same Treasury report. And you ought to read that.
As of the final monthly Treasury statement--highlighted--I quote: This
issue includes the final budget results and details, a surplus of $237
billion for fiscal year 2000.
And then, as old John Mitchell would say, don't watch what we say,
watch what we do. You turn to page 20, table 6, and there is no surplus
at all. On the contrary, there is a deficit of $23 billion.
How do they do that saving face? I will tell you how they do it. They
do it, No. 1, by taking from the trust funds, Social Security.
Mr. President, I ask unanimous consent to have printed in the Record
this document entitled ``Trust Funds Looted to Balance Budget.''
There being no objection, the material was ordered to be printed in
the Record, as follows:
TRUST FUNDS LOOTED TO BALANCE BUDGET
[By fiscal year, in billions]
------------------------------------------------------------------------
1999 2000 2001
------------------------------------------------------------------------
Social Security................................. 855 1,009 1,175
Medicare:
HI............................................ 154 176 198
SMI........................................... 27 34 35
Military Retirement............................. 141 149 157
Civilian Retirement............................. 492 522 553
Unemployment.................................... 77 85 94
Highway......................................... 28 31 34
Airport......................................... 12 13 14
Railroad Retirement............................. 24 25 26
Other........................................... 59 62 64
-----------------------
Total..................................... 1,869 2,106 2,350
------------------------------------------------------------------------
Mr. HOLLINGS. Mr. President, at the end of fiscal year 2000--last
September--we owed Social Security some $1.009 trillion. We owed
military retirement $149 billion, and civilian retirement $522 billion.
You can go right on down.
Now, as projected by the Congressional Budget Office, we are going to
borrow $244 billion more this fiscal year 2001 from these trust funds.
When the day of reckoning comes, who is going to raise the taxes? Who
is going to issue the bond and raise the taxes at that particular time
to pay for the benefits?
All we need to do to make Social Security fiscally sound is quit
spending it. I have a lockbox, a true lockbox written by Ken Apfel of
the Social Security Administration. I couldn't get a vote on it all
last year or the year before. I will put it up again this year.
If you want to have truth in budgeting, please see my staffer, Mr.
Barry Strumpf, and join with me in a bipartisan fashion to get at least
truth in budgeting. We are going to offer an amendment calling for a
budget freeze because we still play this game here of surplus, surplus.
We put in an amendment to the budget resolution year before last in
that last session of Congress, and we got 24 votes for the Greenspan
stay the course. Alan Greenspan, at that time, said: Stay the course
and just take this year's budget for next year. If you did that, you
could save some $50 billion.
As a Governor, I had to do that. Many a mayor this year will do just
that. He will go before his council and say: We don't want to fire the
firemen. We don't want to fire the policemen. We are getting along
well. Let's just take this year for next year. If we did that at the
Federal level, we would save $50 billion.
The other way in which they play this game of public debt and
Government debt is not only to borrow from
[[Page S22]]
all these trust funds--like borrowing from yourself, like taking your
MasterCard and paying off your Visa card--but they are also projecting
no new spending. The CBO will adjust their economic assumptions to
accommodate the $1.3 trillion tax cut. You can see what is going on.
I don't think the economy can stand it. I think the best tax cut and
the way to get on top of long-term interest rates is to do exactly what
was done back in 1993.
I will make one more reference. Two weeks ago, in an issue of
Newsweek they had an article on page 58: ``Boy Did We Know Ye,''
comments by members of the Clinton administration, by Stephanopoulos,
Leon Panetta, and several others. I will read just this one little
paragraph by Bob Rubin.
The moment that most sticks in my mind was the meeting we
had with Clinton on Jan. 7, 1993 in Little Rock.
I read that because this is just about January 7 in the year 2001.
Reading further:
We met with him for six and a half hours on what the budget
strategy ought to be. From the beginning what we [the
economic team] recommended was that there ought to be a
dramatic change in policy, with the view that deficit
reduction should create lower interest rates and spur higher
confidence. Before the meeting, George Stephanopoulos told me
that was going to be hard, [that Clinton] would have to make
that decision over time, but after about a half hour at the
meeting, Clinton turned to us in the dining room of the
governor's mansion in Little Rock. He said, ``Look, I
understand what deficit reduction means [in terms of public
criticism for program cuts], but that's the threshold issue
if we're going to get the economy back on track. Let's do
it.''
And we did it, and that is why we have had the good economy. We are
about to go the other direction on this tax cut, returning to the
increased deficits of the Reagan years. We had less than a trillion-
dollar debt when President Reagan took office in 1981. For 200 years--
including all the wars, the Revolution, Spanish American, World War I,
II, Korea, Vietnam--we accumulated less than a trillion-dollar debt. We
now have a debt without the cost of a war--the Saudis took care of
Desert Storm--of 5 trillion 700-some-odd billion. We can't stand that
any longer.
I thank the distinguished Chair for indulging me, but the truth has
to come out. I hope Members on both sides of the aisle will work with
us to reduce the deficit and reduce the debt. Let us get to work on it
and quit playing games with the American public.
I yield the floor.
The PRESIDING OFFICER (Mr. Reid). The Senator from Nevada.
Mr. REID. Before the Senator from South Carolina leaves the floor, I
will reflect with him a minute on some of the struggles we have had the
last several years.
Remember, there was an effort by the Republican majority to pass a
constitutional amendment to balance the budget. The Senator from South
Carolina remembers that battle, where he and this Senator and a number
of others started out as a very small group opposing it. We said, if
you want a constitutional amendment to balance the budget, you should
have one that excludes the surpluses of Social Security. Remember the
battle there. We were able to stop them from getting enough votes to
pass that.
What would that have done to this country if that foolish
constitutional amendment had passed?
Mr. HOLLINGS. It would constitutionalize the profligacy and the waste
and the reckless fiscal conduct that we engage in here, and you
wouldn't have any control over it because everybody would say: There is
the Constitution. And you would read the first page of the Treasury
report, how we have a surplus of $237 billion, when the truth of the
matter is, if you look in the report, we have a $23 billion deficit.
When you constitutionalize, you dignify the blooming thing. That was
the ultimate. I couldn't go along with that game.
Mr. REID. Mr. President, I appreciate my friend's courage and
leadership on these fiscal issues. He has the ability, because of his
experience, to see what is going to happen in the future, to be a
little ahead of most everyone around here on these financial issues. I
appreciate the Senator recognizing the tough vote we took in 1993 on
the Clinton budget deficit reduction act. Members of the House of
Representatives lost their elections; they lost their political careers
for having voted for that. But they should know that they did the right
thing.
Mr. HOLLINGS. They did the right thing. There is no question.
Mr. REID. We have a new Member of the Senate today--she was sworn in
yesterday--Maria Cantwell from the State of Washington. She was a
freshman Member of the House of Representatives, and she, with courage,
walked up and voted for that Clinton deficit reduction plan. She lost
her election because of that. The people of the State of Washington now
know that she did the right thing and now she is a Senator from the
State of Washington. Again, I commend and applaud the Senator from
South Carolina for his statement today but mostly for his leadership on
these fiscal issues during the entire time I have been in the Senate.
Mr. HOLLINGS. I thank the distinguished leader. The truth will out,
is what the distinguished Senator from Nevada is saying. I am glad we
have Senator Cantwell here. It was another Representative from
Pennsylvania, I remember we had to finally get her vote and she lost.
She was a distinguished Member.
Mr. REID. Her name was Marjorie Margolies-Mezvinsky.
Mr. HOLLINGS. That is it. She had the courage to do it. But here we
are in January, seeing this binge that we are on and the only argument
is how are we going to spend a so-called surplus. How many tax cuts are
we going to get to buy the people's vote. That is the best thing,
running on TV, saying: I voted for tax cuts, I am for tax cuts. That is
the only thing that holds that crowd in office.
Mr. REID. The biggest tax cut this country could get is reducing the
$5 trillion debt we have. Will the Senator agree?
Mr. HOLLINGS. Very much so. That is the tax cut I favor. That is the
way to give to middle America so they get a lower mortgage rate and
lower financing rate on the refrigerator, the stove, et cetera. That is
what Greenspan told them, and I hope Greenspan will get back and say
the same thing here, some 7, 8 years later, that what we really need to
do is hold the line.
I had the privilege of sitting there with Don Evans, the new
Secretary of Commerce-designate, the best friend of President-elect
Bush. One sentence I got, over all the things he said with respect to
trade, competition, trade and technology, there is one sentence: tell
the President rather than, by gosh, all these tax cuts, just come in
and hold the line, stay the course as Greenspan recommended last year
and take this year's budget for next year.
Don't start us pell-mell down the road to loss of revenue and
increasing the deficit, increasing the debt, when we are telling the
people that this is going to lower the debt and lower the deficit. It
is pure folly.
Mr. REID. The people who met yesterday with the President-elect in
Texas, these rich people--and I have nothing against rich people; I am
happy he is meeting with them--I hope some of them realize the biggest
tax cut anyone will ever get in their entire professional career is if
we reduce the deficit.
We talk about across-the-board tax cuts; that will give an across-
the-board tax cut because everything they do, from buying a new piece
of land to paying their mortgages, will be cheaper.
Mr. HOLLINGS. I looked at that list and it looks to me like a bunch
of corporate heads who are interested in sales. They are not interested
in the economy and the market; they are corporate heads interested in
sales. It is like asking children if they want broccoli or spinach, or
do you want a dessert. They are in Austin saying whoopee, give me
dessert.
I know the advice that crowd will give. Tell them to start talking to
the Bob Rubins. This action yesterday by the Federal Reserve and
Greenspan will influence the short-term but not the long-term rates.
I thank the distinguished leader, and I thank the Presiding Officer.
____________________