[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

[[Page S8885]]

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.

[[Page S8886]]

  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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