[Congressional Record Volume 147, Number 112 (Friday, August 3, 2001)]
[Senate]
[Pages S8884-S8887]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ECONOMIC SLOWDOWN AND BUDGET SURPLUS REVISIONS
Mr. BYRD. Madam President, the Commerce Department reported last
week, July 27, that the U.S. economy grew at an anemic 0.7 percent rate
in the second quarter of this year, April 1-June 30. This is the
slowest growth rate in 8 years, and considerably lower than the 8.3
percent growth rate seen just 18 months ago.
``If you applied logic to the [economic] news these days,'' wrote
Allan Sloan in the Washington Post on Tuesday, July 31, ``the logical
conclusion would be that the economy has fallen off a cliff and is
about to splatter all over the canyon floor and take us with it.''
This week, July 30, the Wall Street Journal reported, ``the economy
has been pushed to the edge of a recession by a breathtaking decline in
business investment.'' In the second quarter, nonresidential investment
tumbled at a 13.6 percent rate. Consumer spending, along with robust
state and local government spending, is the only thing that prevented
the economy from shrinking over the last three months.
In an effort to stem the tide, the Federal Reserve has dramatically
cut short-term interest rates by almost 3 percentage points over the
last 7 months. These are the most aggressive rate reductions since the
1982 recession under President Reagan.
Despite this negative economic news, the Administration remains
resolutely optimistic about the economy's future, pinning their hopes
on the recently enacted tax cut. Treasury Secretary Paul O'Neill said
last week, July 23, that the U.S. economy might grow by more than 3
percent next year. The President's chief economic advisor, Larry
Lindsey, in a speech before the Federal Reserve Bank of Philadelphia,
reaffirmed this optimistic outlook.
What concerns me is the effect that these tax cuts have had on the
economy so far.
Despite the Fed's efforts to cut short-term interest rates to
simulate the sluggish economy, long-term interest rates have remained
flat or have even risen since earlier this year. The interest rate on
the 10-year bond, for example, increased from 4.75 percent in mid-March
to just over 5.1 percent today, August 3. Long-term rates have limited
efforts by the Fed to stimulate the economy.
What's keeping those rates from falling is the expectation by Wall
Street that the recently enacted tax cut has seriously jeopardized our
debt retirement efforts. Fed Chairman Greenspan said last week, July
24, before the Senate Banking Committee that long-term rates are higher
than expected because of Wall Street's uncertainty about the size of
the surpluses and how much debt the federal government will be able to
retire.
Just 4 months ago, the President sent his budget to Congress and
projected a $125 billion non-Social Security surplus in the current
fiscal year. Today, that surplus may have virtually disappeared. Now
you see it. Now you don't see it. It did a Houdini on us. It virtually
disappeared.
The Treasury Department this week, July 30, announced its debt
retirement plans for the next 3 months. Instead of retiring $57 billion
in debt, as the Treasury had expected on April 30 before the tax cut
was passed, the Treasury now plans to borrow $51 billion. That's a
difference of $108 billion.
In part, this quarter's borrowing results from a bookkeeping gimmick
in the tax cut bill and will be paid back next quarter. But, the fact
remains
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that interest rates are higher than necessary because of Wall Street's
perception that our debt retirement efforts have been threatened in
recent months.
If the Federal Government fails to meet Wall Street's expectation
about debt retirement, and if surpluses do repeatedly come in below
forecasts, investors will continue to drive up long-term interest
rates, offsetting the limited stimulus that the tax cuts were supposed
to provide, and further stifling economic growth.
Madam President, in his ``Report on the Public Credit'' to the House
of Representatives in January 1790, Alexander Hamilton--our Nation's
first Secretary of the Treasury and arguably our Nation's most gifted
Secretary of the Treasury--wrote that ``states, like individuals, who
observe their engagements are respected and trusted, while the reverse
is the fate of those who pursue an opposite conduct.''
When the administration makes false promises about a budget that can
adequately provide for the operations of Government and allow for a
massive tax cut without disrupting debt retirement efforts, and then
does not deliver on those promises, that administration breaks faith
with the American people and undermines trust in their government.
That is the message that the financial markets are sending to the
American people. Fiscal responsibility is slipping.
After 10 years of belt tightening and two deficit reduction
packages--OBRA of 1990 and OBRA of 1993--signed into law by Republican
and Democratic Presidents, this administration's reliance on 10-year
projections and its dogged determination to force a massive tax cut
through the Congress has put this country in danger of falling back
into the deficit dungeon. Will we never learn?
The Senate Budget Committee--based on the administration's own
informal estimates--projects that $17 billion in Medicare surpluses
will be used in fiscal year 2001 to offset the loss of revenues from
the tax cut recently enacted into law. What is worse is that, in fiscal
year 2002, the Budget Committee estimates that the entire Medicare
surplus and $4 billion of the Social Security surplus will have to be
used to offset the loss in revenues from the tax cut.
Meanwhile, this administration is trying to divert attention from its
own complicity--divert attention from its own complicity, you see--in
creating our current budgetary morass. Despite a tax cut that cost $74
billion in the current fiscal year, White House officials have
routinely said that--aha--``the real threat''--they say down there at
the other end of the avenue--``the real threat''--this is the White
House now; the White House is talking--``the real threat to the
surpluses comes from spending (Fliescher, July 9).''
Well, Madam President, I just have to ask, whose spending? Whose
spending? The President, himself, requested the only appropriations
spending bill that this Congress has passed for the current fiscal
year. The Congress passed the supplemental appropriations bill at
exactly the same level--exactly the same level--that was requested by
the President--not one thin dime more did the Congress appropriate; not
one thin dime more than the President requested. So whose spending? The
only other spending that has occurred so far is the spending caused by
this year's colossal tax cut. Remember, tax cuts spend money--your
money--from the U.S. Treasury just like appropriation bills.
Well, I already have the notice for my check. Here it is: ``Notice of
status and amount of immediate tax relief.'' Here is what it says:
``Dear taxpayer: We are pleased to inform you that the U.S. Congress
passed, and President George W. Bush signed into law, the Economic
Growth and Tax Relief Reconciliation Act of 2001. As part of the
immediate tax relief, you''--me; ``you'' it says--``will be receiving a
check in the amount of $600 during the week of September 10, 2001.''
That is spending. That says the Treasury is going to send me and my
wife of 64 years $600. That is spending. Tax cuts have spent that
surplus that we were talking about a few months back, and we have
smashed the piggy bank to the tune of $74 billion in just 1 year. That
is just $74 for every minute since Jesus Christ was born.
Moreover, it costs an additional $116 million just to mail out the
checks. Here is part of it. Here is part of the $600 million it cost to
process and mail out the checks, and to tell taxpayers like Robert Byrd
that he is going to get $600. Half of it will be his and half will be
his wife's.
Now, as the fiscal outlook worsens, there are some who are running
for cover or spinning the old blame game wheel as fast as it will go.
In fact, I have noted media reports that some Senators are considering
raising the old specter of a constitutional amendment--aha, they are
going to amend this Constitution now, they say, the Constitution which
I hold in my hand--the old specter of a constitutional amendment that
would require a balanced budget. Talk about gimmicks. That one is the
mother of all gimmicks. Now because of this flashy tax cut--because of
this flashy tax cut--and a sluggish economy, we are poised to spend the
Medicare surpluses, disrupt our debt retirement efforts, and dive right
back into the deficit doldrums. The present course threatens to push
the economy and the American people off a cliff into that old familiar
sea of red ink.
Look out below.
The Congress had the opportunity earlier this year to pass a
responsible budget--to exercise some restraint, to show some caution--
before pressing ahead with a budget based on half-baked economic
projections and political promises that were made first in the New
Hampshire snows of a campaign year--last year, the year 2000. We could
have afforded a smaller tax cut, we could have lived within our means
while protecting Social Security and Medicare.
That is your money.
Madam President, in spite of the hand that was dealt to us, this
Senate is trying to craft 13 responsible appropriations bills. The
Senate Appropriations Committee, on which I have sat now for 44 years,
has successfully reported out 9 of the 13 appropriations bills--
Agriculture, Commerce-Justice-State, energy and water, foreign
operations, Interior, legislative branch, Transportation, Treasury-
General Government, and VA-HUD--and stayed within our 302(b)
allocations. There you are. We have stayed within our 302(b)
allocation. In other words, we have not bust the budget. So don't blame
it on us. These are balanced and responsible bills. We have done our
best.
Unfortunately, the full Senate has not been able to act as quickly.
To date, the President has not signed one--not one--of the 13 regular
appropriations bills for the coming fiscal year into law--not one.
The full Senate has passed only five appropriations bills so far,
energy and water, Interior, legislative branch, Transportation, and VA-
HUD--five of the nine that the Senate Appropriations Committee has
reported out. That means that when the Congress returns from its summer
recess, the Senate will have to pass eight appropriations bills and all
thirteen conference reports before the fiscal year ends on September
30.
Earlier this year I was optimistic about the appropriations and
budget process. Our new President was preaching bipartisanship. We were
being told that there would be a new spirit, a new spirit in
Washington, a new tone, a new era, a new era of cooperation between
Democrats and Republicans working together to address our nation's
challenges. What a pretty picture! Aha.
When the President missed the deadline for submitting his budget to
Congress, we gave him the benefit of the doubt. We knew it takes a new
administration time to get up and running. We all know that. The
details of that budget were not sent to the Congress before Congress
took up the budget resolution, although this Senator and others asked
for those details repeatedly. Yet, Congress passed the President's
plan. Cooperation ruled.
When the President delayed sending us his Defense budget amendment
until after his tax cut bill had been passed, Congress again gave him
the benefit of the doubt. Congress was doing its part to encourage the
new spirit, the new tone in Washington. A review of our national
defense needs was underway, and it seemed logical that the
administration would need time to complete that review before
requesting additional defense funds.
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When Congress learned that the administration's Office of Management
and Budget would miss the July 15 statutory deadline for submitting its
mid-session review to Congress, not much grumbling was heard in these
quarters. It is not unprecedented for an administration to miss these
budgetary deadlines, but it is also well to remember that these are
statutory deadlines, not recommendations that the administration may
choose to meet whenever it is convenient.
Now in the final days before the August recess, I have detected a
distinct slowdown in the appropriations process.
With only 17 legislative days left before the start of the new fiscal
year, we still have to pass eight appropriations bills, and we have not
conferenced one single bill with the House.
It is becoming clear that Congress is very likely to blow right by
the September 30 deadline for passing 13 appropriations bills. I do not
want to see the budgetary train wreck that we have sometimes witnessed
in recent years. Senator Ted Stevens and I, and the other members of
the Appropriations Committee--Republicans and Democrats--have been
working diligently to avoid just such an outcome. However, unless we
change track soon, this train is heading straight for a thirteen car
pile-up once again.
I can see the sign. Just read it with me: ``Danger, stop, look,
listen: Omnibus Bill Ahead!''
If that happens, much of the fiscal restraint that this Congress has
mustered is likely to be jettisoned. No matter how carefully Congress
tries to craft disciplined, balanced spending bills, when it comes to
the final hours before the end of the fiscal year, the pressure to
bundle these spending bills has a way of melting all fiscal restraint.
Both the Senate and the House need to redouble our efforts to pass
these appropriations bills, get them to conference and send them to the
White House before September 30.
Let us work diligently instead of playing the blame game and letting
the chips fall where they may.
I hope the American people will not be misled by the fancy rhetoric
that will certainly fill the political balloons over the coming weeks.
You are going to heat lots of it. The tax cut and spending plan that
were passed earlier this year were sheer madness. The political
balloons may fill the air--even though we are past the fourth of July,
the balloons are going up--but they cannot obscure the clear, plain
fact of what has happened here. It is not traditional Congressional
spending which has cut the surplus, headed us back towards deficits,
and threatened our efforts to pay back the debt.
Rather, a Republican-led Congress, at the prodding of the
administration, took a gamble and played the odds that the shortfalls
of a fiscally irresponsible tax cut could be held off for several
years. Maybe we would be lucky. Maybe the gamble would work. But the
chickens are coming home to roost much sooner, and lady luck seems to
have taken a hike.
In 1981, then-Senate Republican leader Howard Baker called the Reagan
tax-cut plan a ``river boat gamble.'' The country lost on that bet. Two
decades later, we are only just beginning to recoup our losses.
President Bush took another spin at the roulette wheel and he has
wagered our economic prosperity and retirement security that our budget
will land in the black. It seems like nothing ever changes in this
city. I have been here 49 years. Some things do change.
The Senate will soon recess for the month of August, and, before we
leave, it is important that the American people understand that the
wheel was rigged. The earnest claims of bipartisan cooperation have
vaporized like the smoke at the poker table. In this tax cut casino,
the budget can only land on red. But, some of us knew that before we
ever got into the game.
I yield the floor.
The PRESIDING OFFICER (Mr. CORZINE). The majority leader.
Mr. DASCHLE. Madam President, let me congratulate the distinguished
Senator from West Virginia, our chairman of the Appropriations
Committee, for his eloquence and for his wisdom.
I share his view on the propriety of the tax cut. I share his pride
in the actions taken by the Appropriations Committee in this body over
the last several weeks as we have attempted to make up for lost time on
the appropriations process.
We inherited a horrendous schedule. Slowly but surely we have been
catching up. Were it not for his leadership and his absolute
determination to get back on track, we could not have a full
appreciation of how far we have come in the last couple of weeks. As he
said, we have done it staying within the budget parameters outlined in
the budget resolution. We have not broken the caps, once again
demonstrating the fiscal discipline so critical when we began this
process several months ago.
We will continue our work when we return. I commend the Senator for
his comments today, as well as for his work throughout the last several
weeks in reaching this point.
Mr. BYRD. Mr. President, will the majority leader yield?
Mr. DASCHLE. I yield to the Senator from West Virginia.
Mr. BYRD. Mr. President, I thank the majority leader for his
tenacity, his determination, and his desire to pass all nine of the
appropriations bills which have been reported from the Appropriations
Committee before the August recess.
Our committee, Democrats and Republicans, have worked together to
report these bills. It is a committee sui generis, one of a kind. The
Democrats and the Republicans on that committee work together. There is
no hemming and hawing. We work until we get the work done.
The leader said he wanted those bills out of the committee. They are
out of the committee. They are on the calendar. He wanted to act on
them in the Senate before the August break.
The Senate appointed conferees on at least three of the
appropriations bills. I see three on the calendar. Three bills in
conference, three appropriations bills with the Senate conferees
appointed but there are no House conferees appointed, which concerns
me.
I hope when we return from the August recess the other body will
appoint its conferees, and we can join with our House counterparts on
these conference reports and report them back to the Senate at good
speed.
I have been in consultation with the chairman of the House
Appropriations Committee and with the subcommittee chairman on the
Appropriations Subcommittee on Interior, and others. They assure me
they will move rapidly when we do return, but in the meantime our
staffs can be doing some of the preliminary work which will make it
much easier for our conferees to do their work speedily upon our
return.
I thank the majority leader.
Mr. DASCHLE. Mr. President, I thank the chairman and share his
concern for the fact we have not yet named conferees on the House side.
We are ready to go to work, and we could have accomplished a good deal
in the last several weeks were it not for the fact we are unable to go
to conference until our House counterparts are prepared to work with
us.
I am hopeful when we come back we can make up for lost time because
there certainly has been a great deal of lost time today.
Nominations
Mr. President, I ask unanimous consent to proceed to executive
session.
I stand corrected. Mr. President, I understand our Republican
colleagues are not yet prepared to move to executive session. I will
simply say we are prepared to move 58 additional nominees today. That
is in addition to the 30 we have already done this week, making a total
of 88 nominations we will have done should our Republican colleagues
allow us to move forward with the unanimous consent request.
That means since July 9, which is the first business day following
the completion of the organizing resolution, we will have completed 168
nominations. That is some record.
As I said all along, we want to be fair. We want to be responsive. We
recognize many of these people need to know the outcome of their
nominating process. Unlike so many occasions over the last 6 years, we
are desirous of treating all nominees fairly and moving as quickly as
we can. Until our Republican colleagues are prepared to provide us with
the ability to move forward on this unanimous consent request, I will
withhold the request.
I yield the floor.
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