[Congressional Record Volume 147, Number 114 (Wednesday, September 5, 2001)]
[House]
[Pages H5380-H5386]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE STATE OF AMERICA'S BUDGET, THE FATE OF THE BUDGET SURPLUS, AND
DILEMMAS TO COME
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 3, 2001, the gentleman from Maine (Mr. Allen) is recognized for
60 minutes as the designee of the minority leader.
Mr. ALLEN. Mr. Speaker, I rise tonight to discuss the topic that is
foremost on the minds of many Americans, which is the state of our
budget, the question of what happened to the surplus that existed in
this country in the Federal budget only a few short months ago, and the
consequences of the change and the dilemmas that we face over the next
few years.
What has happened recently, of course, by now is well known. Both the
Office of Management and Budget and the Congressional Budget Office
have come up with revised projections of the surplus for this year and
for the next 10 years. Those surplus projections are, of course,
dramatically different from what the President was saying and what my
friends on the Republican side of the aisle were saying just a few
short months ago.
As an example of the kind of statement that the President was making
when he was traveling across the country pitching his tax cut, I
thought I would give this example of what he said in Portland, Maine,
in my district on March 23 of this year.
This was his basic argument. He said, ``Now I know these numbers
sound like a lot, but this is reality I'm talking about. We have
increased discretionary spending by 4 percent, we pay down $2 trillion
worth of debt, we set aside $1 trillion in the budget over a 10-year
period for contingencies, and guess what, there's still money left
over, and that's the debate. The fundamental question is, what to do
with it.''
Today we know there is no money left over. Apart from some small
surplus over the next 5 or 6 years in the Medicare and Social Security
accounts, a very small surplus, there is no surplus over the next 5
years. In fact, almost all of what remains of the surplus is in fact a
Social Security surplus that is primarily in the second 5 years of the
next decade and not in the next 5 years.
What I want to do tonight is to begin by focusing on some of these
statements. The first one worth calling attention to is the statement
of the President that ``We have increased discretionary spending by 4
percent.''
[[Page H5381]]
Let us look at the reality. At the time, March 23, when he made this
statement, the President had not submitted a budget for defense. As we
all know now, he asked for a major increase in defense spending, over
$30 billion.
Let us take a look for a moment at a chart which shows or which
compares this Administration's budget request to the last year of the
Clinton administration's budget request. The Clinton administration
asked for $38 billion in fiscal year 2001, the year in which we are in,
above budget outlays in fiscal year 2000; $38 billion more last year.
Of course, our current President has roundly criticized President
Clinton and the previous administration for being big spenders, for
spending out of control.
Members will note that that budget request is about a 6.7 percent
increase in budget authority over the previous year. That is what
President Clinton was asking for in his last year. Who is the big
spender here? President Bush's request is $44 billion, $6 billion more
than President Clinton requested in his last year in office.
This $44 billion represents the extent to which that is the increase
in budget outlays requested by this administration for fiscal year 2002
above the fiscal 2001 budget: a $44 billion increase. That works out to
almost around a 7.2 percent increase in budget authority.
When he was back in Portland in May, and in fact in speeches all
around the country, the President said over and over again, ``We are
only asking for a 4 percent increase in discretionary spending, only 4
percent, and that is a reasonable. That is far less than the Clinton
administration was asking.''
But when the defense request rolls in and is considered, the
President, this President, is actually asking for a bigger increase in
spending than the previous administration did in its last year in
office. That is part, but only part, of the problem.
Let us go back to another part of the statement that President Bush
made in Portland, Maine, on March 23. He said, ``We set aside $1
trillion in the budget over a 10-year period for contingencies, and
guess what? There is money left over.''
I have been reading the newspapers, as any other American in the last
month and a half, and I have not heard one word, not one word, either
in the press or from this administration, about the $1 trillion in
contingencies. Whatever happened to the $1 trillion contingency fund?
Surely a slight decline in economic productivity, a decline in economic
growth in this year, which should have been able to be handled by $1
trillion in contingencies.
{time} 2030
Well, as the ad says, not exactly. There was not exactly a $1
trillion fund for contingencies; and in fact, it was not there at all.
Those contingencies were, in fact, obligations, and not all of them
that we will have to meet in this Congress and with the administration
over the next 10 years. There was no trillion dollar fund, a true
contingency fund. It did not exist in March, and it clearly does not
exist today.
Let us talk about what the situation is today. The truth is that this
year, the fiscal year that ends on September 30, is very different from
what it was projected earlier in this year. This year, the Government
will tap $29 billion from Medicare surplus taxes and $9 billion from
Social Security revenues simply to fund government operations for
fiscal year 2002, for the coming fiscal year.
Over the next 5 years the President's tax cut and the decline in
economic growth together will force a $30 billion diversion from the
Social Security Trust Fund and a $170 billion diversion from the
Medicare Trust Fund. These are uses of Medicare revenues and of Social
Security revenues that virtually every Member of this House pledged not
to do. Virtually every Member of this House stood up and said we are
going to protect Social Security revenues, excess revenues, Social
Security surplus, and we are going to protect the Medicare surplus; but
today, it is very different.
These are, of course, CBO projections, the recent CBO projections;
and, in fact, they are too conservative themselves to actually be
realistic. Why? Because the way CBO does its projections, it assumes
that there will be no change in existing law, and we know there will be
changes in existing law.
Let me give a few examples. These baseline estimates do not assume
any of the additional spending included either in the budget that
President Bush has presented or the congressional budget resolution for
defense, for education, or for a prescription drug benefit under
Medicare. Those increases are simply not included in the CBO
projections.
In fact, some of that funding will occur; and so the problem we have
is one that was created by the fact that, as many of us said back in
March and April, the President's tax cut was too big to be responsible
budgeting. We also argued it was too weighted to the wealthiest
Americans, which it was and which it is.
Fundamentally, we argued at the time, we said over and over again,
this will use up all of the available on-budget, non-Social Security,
non-Medicare surplus; and as we said repeatedly, we have agreed not to
use surplus funds for Medicare and Social Security.
Today, we know that the President's tax cut has threatened that
possibility. I am not talking about the $300 or the $600 tax rebates
that about 60 percent of American taxpayers have received or will
receive. That is a relatively small factor in the problem that we face.
What I am talking about is what happens over the next few years. Over
the next few years, compared to the last eight, during the greatest
period of economic expansion in our Nation's history, what is happening
over the next few years is we will divert billions and billions and
billions of dollars to people in this country, the wealthiest 1 percent
who earn over $300,000 every single year.
Though we have enormous problems in this country, problems with
finding qualified teachers to teach our young people, problems with
ensuring that people who graduate from high school and want to go to
college can actually get there and get the education they need to be
productive citizens in this world, problems with those seniors in my
district and all around the country who look at people who are employed
who have health care, who get prescription drug coverage through their
health care plan, they say to me, why do we not have prescription drug
coverage through our health care plan, which is Medicare.
Those people need some help. They deserve some help. It is outrageous
that the wealthiest country in the world at the time, until just
recently, of its greatest prosperity, cannot somehow find the resources
to provide our seniors with a prescription drug benefit that is
comparable to the benefit that those Americans who are employed, who
are working, have for a prescription drug benefit through their own
insurance.
What is fair for our working people ought to be fair for our seniors.
But back for a moment to the CBO projections.
As I said, the CBO estimates do not assume any additional spending
included in the Bush budget or the congressional budget resolution for
defense, for education or for Medicare prescription drugs. The figures
also omit the cost of extending expiring tax credits, funding
anticipated emergencies for natural disasters, or paying for the $73.5
billion farm reauthorization bill for which the budget resolution
provided.
Let us look at what this means over the next few years. The
President's budget alone plus his tax policies and spending requests
invades the Social Security surplus for the next 6 years for a total of
$128 billion. It invades the Medicare surplus for the next 8 years for
a total of $304 billion. This year, fiscal year 2001 ending on
September 30, the Government must tap $29 billion from Medicare and $9
billion from Social Security to fund routine government operations.
Now, one of the reasons that that is true in fiscal year 2001 is this
administration, knowing that it faced a shortfall in next year, fiscal
year 2002, they delayed the date on which certain corporate income
taxes would have to be paid from September 30 to October 15. That is a
gimmick. We can only do this once. The effect of that was to move $33
billion in current revenues to the next fiscal year in revenues. When
we
[[Page H5382]]
move that $33 billion, we are very close to creating the deficit that
we have created in the current fiscal year. That kind of gimmick which
now it appears this administration has adopted in a number of areas is
irresponsible budgeting.
Let us go for a moment to a different chart. Let us go to a chart
which talks about the impact of the surplus over the next several
years. As this chart shows, the Bush budget wipes out the surplus.
There is going to be a lot of debate in these Chambers about what
happened to the surplus, not just what happened to that supposed $1
trillion contingency fund, but what happened to the surplus.
It was not so long ago that people were saying we can see surpluses
as far as the eye can see. Now they are gone. They are all gone. Here
is basically what happened: the CBO in May 2001 baseline showed a
surplus of $2.745 trillion. Now, what has happened to that? Well, $1.66
trillion of that is the total cost of the Bush tax cut. Then we have
had an economic slowdown. That is also a factor. The economic slowdown
and certain technical factors have caused us to lose another $639
billion or .639 trillion dollars.
Now you have additional funding requests from the President of .767
trillion or $767 billion, and it is the combination of these three
factors that drive us into deficit over a 10-year period. Let me say a
little bit about that surplus. This deficit and the surpluses are not
distributed evenly over the next 10 years. In fact, if you look at a
chart that shows year by year what happens to the surplus, in fact,
there is either a deficit or a minuscule surplus for the next 5 years,
and then you have a projected surplus over the second 5 years of the
decade with the largest surplus of all, over $200 billion in the final
year.
Well, why is the largest piece of surplus the tenth year out? Well,
another gimmick because basically what happened when the tax cut was
passed, the House passed a $1.6 trillion tax cut. The other body passed
a $1.35 trillion tax cut, both of them calculated over 10 years. But
when the conferees got together, they liked tax cuts so much, not just
the $300 and $600 rebate this year, but tax cuts for the wealthy
extending out over the 10-year period that really drained enormous
amounts of revenue from the Federal budget, making it extraordinarily
difficult to meet the educational, the health care, the environmental,
and the job-training needs of our population.
When you look at that last year, you will find that the tax cut
sunsets on December 31, 2010. So that the last year of this coming
decade is one where the estate tax is back just as it is today, where
the tax rates are back just as they are today. All of the tax code
changes that are passed in the President's tax cut bill are eliminated
and the tax code reverts to what it is today.
Why was that done? Well, it was done to keep all the tax breaks and
yet to stay within a $1.35 trillion number. That gimmick makes all of
these budget numbers look actually better than they are in the real
world.
In the real world this country faces some enormous challenges. This
is going to be a difficult fall. I think Members on both sides of the
aisle agree because we have gone from surpluses from the non-Social
Security, non-Medicare accounts to deficits; and we have done it within
just a few months of this administration's election to office. We have
done it primarily, not exclusively, but primarily because the size of
the Bush tax cut was so large as to be completely irresponsible.
That is why back in March, back in April, back in May so many of us
on the Democratic side of the aisle were saying we ought to have a tax
cut, we ought to have a large tax cut. It ought to be about $800
billion. If we had set aside a tax cut, if we had done a tax cut of
$800 billion, we would not be running into deficit projections now. We,
in fact, would have those funds to make sure that Social Security and
Medicare would be shored up over the next few years and not at the risk
of being weakened simply because of our irresponsible budgeting. We
would be looking at fully funding special education.
I do not know anyone, Republican or Democrat, who is not hearing from
people in his district about the need to live up to our commitment to
fully fund special education at the 40 percent that, frankly, was the
goal when the special education IDEA Act was enacted in 1974. But if
the money is not there, if the surplus is gone, it will not happen.
That is what we were saying.
We were saying that you cannot project over 10 years with any degree
of confidence. Boy, were we right about that one. We did not have to
wait 2 years or 4 years or 5 years or 8 years to test the accuracy of
these projections. In just 3 months, in just 3 months the numbers
change dramatically. As you can see right here, minus $639 billion
dollars over 10 years, a change in the projection in just 3 months. But
it is that kind of change that many of us were saying, you cannot
predict the future with any degree of confidence; and, therefore, what
we need to do is to be cautious, not have a tax cut so large that it
eats up all of the budget surplus and causes us to dipping into
revenues from Social Security and Medicare. We argued then it was
irresponsible, and it is more clear than ever today that that course of
action was, in fact, irresponsible.
I see that I am joined by a couple of my colleagues here tonight, and
I want to recognize them in a few moments. I think I would like to
close these brief remarks by saying this.
{time} 2045
When Members look at what is happening with the tax cut, so large
that it is jeopardizing our fiscal health, so large that it is making
Alan Greenspan's actions at the Fed not as effective as they might be
because people understand if we are moving straight to deficit as
projections of surplus, long-term interest rates are going to stay up;
and for businesses, for homeowners, for all of those people who borrow
over some extended period of time, if long-term interest rates are
going to stay up, we are not going to do as well. The Federal
Government is going to be paying higher interest. The businesses will
be paying higher long-term interest rates. Homeowners will be paying
higher long-term interest rates.
Remember, this economy took off in 1993. This Congress and the
administration said, we are going to cut spending and make sure that
the very wealthiest Americans pay their fair share of taxes. What
happened? Interest rates went down and the deficits turned into
surpluses, and the economy took off. It is the reversal of those
fundamental policies which is jeopardizing the economic health of this
country which is so serious.
We are going to be debating in the--next last few weeks and perhaps
months about the budget. It is really fundamentally a debate about the
future. Fundamentally it is a debate about whether we are going to
reduce the amount that we spend together on those things that we can
only do together.
What am I talking about is, Abraham Lincoln said in 1854, the role of
governments is to do those things that a community of individuals
cannot do or cannot do so well alone. We cannot create a public
education system one by one, and yet every business in this country
depends on having a well-educated, well-trained work force.
We cannot take care of our seniors one by one, individually. That is
why Medicare and Social Security were created.
We cannot do an interstate highway system, we cannot provide for the
common defense, we cannot lift up this country so that individuals in
this country can reach their full potentials unless we use our
government, as well as other voluntary associations, to do things
together that we cannot do as individuals.
The fundamental theory underlying the President's tax cut was that we
take every dollar out of Washington, and that is good. Even if that
dollar would educate a kid who cannot get Head Start now because there
is not enough money to serve every kid who qualifies for Head Start,
even if that dollar would help seniors pay for prescription drugs when
they are not taking their medicine now because they have to buy food
instead, even if that dollar represents a loan to someone who could
then go on and get the college education that they feel they need. That
is what this country ultimately is all about. We are here somehow to
help each other lift each other
[[Page H5383]]
up, to hang together on things that are of fundamental public
importance.
But this tax cut was about me and not about we. The health of this
country depends on getting back and moving from me to we, from doing
well, investing in ourselves, investing in this country, making sure
that the people of this country have a fighting chance to get ahead.
They cannot do that. They will not do that. They have no chance to do
that. If the Federal Government slides back into deficits, if we cannot
fund education, if we cannot fund health care and shore up the
infrastructure of this country and provide opportunity for all of the
people who live here and to our children.
The last thing we wanted to do was to shift expenses, shift costs
from this generation to our children, but the President's tax cut was
so large that is exactly what it is doing. Unless we make changes and
unless we figure out how to get out of this problem, we are right back
in deficits and we are jeopardizing the future of this country.
Mr. Speaker, I yield to the gentlewoman from Ohio (Mrs. Jones).
Mrs. JONES of Ohio. Mr. Speaker, first of all, I congratulate my
colleague for bringing to the Nation this Special Order with regard to
the budget and the dilemma that we find ourselves in this evening.
The gentleman from Maine (Mr. Allen) has been in the forefront of
working on these issues and making the public aware, and I am happy to
join him.
Mr. Speaker, our Nation is facing a serious shortfall in the budget.
This is because the Congress and the President have chosen short-term
reward over the long-term benefit of paying down the debt and
protecting Social Security and Medicare. There are colleagues of mine
in the Congress who have not joined in this and have fought against the
tax cut and against the proposed budget. But the majority of Congress
unfortunately went along with the President on that tax cut, and we are
all paying for that today.
Since February 7, 2001, I have been on record stressing the
importance of protecting retirement security and enacting a
prescription drug benefit. I want all Americans to see every penny they
earn working for them.
Social Security is our system to protect retirement benefits for
older people. Medicare provides seniors with health benefits. What
could be a better use of our surplus than long-term security? If
Americans could be guaranteed to pay $300 or even $600 and not have to
worry about their retirement savings or health benefits from now to
one's last years, Americans would do it. Many poorer Americans are told
they need that $300 check, but that money is nothing if Members think
about the benefits that could be accrued if we collectively joined our
money into a pool that would, in fact, fund a prescription drug benefit
for seniors.
Thanks to the administration, we are all getting our refund checks
now, and maybe some of us are able to put more money to our credit card
debt, buy a little something for our homes or a luxury like a new pair
of shoes. Then what? Can Americans take a prescription out of a bag of
shoes? Can Americans take a prescription out of a luxury car? I think
not.
Thanks to the President's refund and the state of our economy, the
government is facing financial shortfalls. Instead of operating in a
surplus and each party claiming credit, we are blaming one another for
a deficit. The other party's leaders choose to ignore the advice of
economists forecasting a shrinking surplus, and all indications are
that the economy has begun to slow.
The surplus was once expected to be about $125 billion. The
Congressional Budget Office is estimating the present surplus is nearly
zero. Things have changed over the last 3 months. The White House is
spinning blame to the Congress, but it is unwilling to accept the fact
that the President's tax cut has eaten up the surplus. Just like an
800-pound gorilla would go at a banana, it is all gone.
I join the gentleman from Missouri (Mr. Gephardt) and Senate
Democrats in urging the President to resubmit a budget. America needs a
budget reflecting the current downturn in the economy and the lack of a
surplus.
Yesterday I held a prescription drug forum in my district with my
colleague, the gentleman from Ohio (Mr. Brown) who serves on the
Committee on Energy and Commerce. Together we discussed the issues of
prescription drugs from their availability to the over-prescribing by
many physicians and ways to make them more affordable, as well as
potential legislation to correct the problem of exorbitantly high drug
prices.
The event was highly informative, and I encourage my colleagues
throughout the country to hold a similar event. I had more than 250
seniors gathered at the Jewish Community Center to talk about the issue
of prescription drugs. I will continue to hold events to allow seniors
in my district to air their grievances and help formulate answers on
this issue.
The money that the President's tax cut will take out of the budget
surplus affects these seniors. They are seeking a prescription drug
benefit, seeking help to make ends meet and still be able to afford
their medication. The Bush budget not only does not allot money for
Social Security, but takes their Social Security and Medicare money
away. They do not need $300 to spend. This will not buy more than one
prescription in many instances, because drugs for senior citizens are
very expensive, and they are not able to afford them once they are
placed on that prescription.
The tax cut is like a classic Trojan horse. The President is trying
to convince us that he has delivered a lovely gift to the American
people. But once inside the gate, this gift will prove to merely
camouflage far more sinister designs: windfalls for the wealthy and a
return to the bad days of deficits and inadequate funding.
How many employers of a business would award job bonuses to employees
for the next 10 years in a row in advance, based on projected business
income? We all know that is not good business sense. We tried this
before, this whole thing about trickle-down economics. Remember the
promise: If we give money back, the money will trickle-down to the most
in need. Remember what happened: We found out that the poor got poorer
and the rich got richer.
I just say to the American public that are listening this evening, we
are pushing this President to reconsider the budget which has been
submitted. The people who are most in need of help from a governmental
budget are our seniors who have paid their taxes, who have worked very
long and are being forced to spend their personal dollars down to
nothing in order to get a governmental benefit.
I call upon my colleagues and the rest of this Congress and the
Senate to do what is best and what is important, and I call upon this
President who kept talking about throughout his campaign that he was
going to help those most in need, to do what is right, resubmit this
budget, put in a prescription drug benefit and make our seniors know
that we love them, want to support them and encourage them.
Mr. Speaker, I thank my colleague, the gentleman from Maine (Mr.
Allen) for the opportunity to be heard.
Mr. ALLEN. Mr. Speaker, I appreciate the gentlewoman's comments. They
help shed light on what the gentlewoman's constituents and many others
are facing.
Mr. Speaker, the President's tax cut is the primary reason for the
elimination of the surplus within just a few months of his
administration. Now that we are in this predicament, it is up to him to
come forward and say, how do we deal with this.
During the campaign, the President said I will not touch $1 of the
Social Security revenue. A few weeks ago, on August 24, 2001, he
conceded that he might have to invade the Social Security surplus in
time of war or recession. We are certainly not in a recession now.
Yesterday he said that he would not do anything that would invade the
Social Security surpluses, but the Congressional Budget Office numbers
say we are and we are doing it now. We are doing it this year, and
there needs to be some leadership from the White House to explain how
we possibly get out of this predicament.
The gentleman from Wisconsin (Mr. Kind) is here today, and I yield to
the gentleman.
Mr. KIND. Mr. Speaker, I thank the gentleman from Maine (Mr. Allen)
for organizing this Special Order and commend the gentlewoman from Ohio
(Mrs.
[[Page H5384]]
Jones) for the leadership that she has shown on important issues
affecting Americans across the country, the Social Security and
Medicare programs which are vitally important, the passion that she has
for instituting a real prescription drug plan, which was on everyone's
agenda in last year's campaign.
Vice President Gore, virtually every Member of Congress, when we were
running for Congress last year, were talking about the need to deal
with the rising cost of prescription drugs, but no one has highlighted
this issue more than the gentleman from Maine (Mr. Allen), who
organized this Special Order.
He saw this problem quite awhile ago, and saw the impact that this
was having on seniors on fixed incomes. He has been providing
leadership in this Congress in trying to institute a bipartisan
prescription drug plan, as well as talking about the importance of
maintaining the solvency of Social Security and Medicare. That is
really what this discussion is about tonight. That is why I commend the
gentleman from Maine for talking about it.
Mr. Speaker, it is all about how do we, given the current situation,
the economic slowdown and the budget numbers that we are facing,
maintain fiscal discipline in this Congress so we can maintain the
solvency and protect the sanctity of the Social Security and Medicare
programs.
{time} 2100
The way I see it, the greatest fiscal challenge our country is facing
today is the fact that we have an aging population, a population that
is getting older, and a baby boom generation who will all start to
retire at basically the same time, 2015, 2020, thereabouts, and they
will all be bigger, these programs, Social Security and Medicare, at
about the same time. So what can we do today in order to deal with that
advent we know is going to come and is going to hit our country but
especially affect our children and our grandchildren that is going to
make sense?
One of the areas is maintaining fiscal discipline. That is why it
took so long in order to turn the corner and be able to start walling
off both the Social Security and Medicare trust funds. It is a pledge
that virtually every Member on this floor has made over the last few
years. It is a pledge that the current administration and the President
in the White House now made in last year's campaign, and it is a pledge
that is in serious jeopardy today in light of the new Congressional
Budget Office numbers. These numbers are important, because the issue
is one that is very simple, and that is being able to protect these
trust funds and keep its dedicated purpose for reducing the publicly
held national debt.
Why is this so important? The question before us is will it be easier
for us to deal with the advent of the baby boom generation going into
retirement if we also have to deal simultaneously with paying off all
the Federal IOUs that are in our Federal debt today? I submit that that
is an impossible proposition to meet, dealing with the aging
population, with the huge inflow of the population in Social Security
and Medicare, paying off those IOUs that are currently in the trust
fund while at the same time we are being asked to pay off the Federal
debt and the publicly held Federal debt.
That is why it makes such good sense, fiscal sense, to take this
opportunity now of preserving this trust fund money, reducing the
national debt, so we are on much sounder fiscal footing to deal with
the aging population. That is really what this debate is about.
Yes, the President is correct in saying that dipping into the trust
fund today is not going to affect the current payments going out to
current recipients. That is true. Because IOUs are still going to be
added to those trust fund accounts. But if the money behind the IOUs is
meaningless and spent for other purposes, then why do we not just
reduce FICA taxes today, still continue to throw the paper IOUs in
these trust funds and deal with it when they come due which is what I
am hearing the current administration basically proposing.
Mitch Daniels, the Director of the Office of Management and Budget in
the administration, is basically saying that there is nothing
inherently wrong with using the trust fund for a plus-up in defense
spending, for instance, because the country is still going to meet
those IOUs that are added to the trust fund.
But if we are not taking this opportunity to reduce the national debt
today, it is going to make it very difficult to meet those obligations
in the future. I think that is such a fundamental point in this entire
debate. The difference in these numbers must be important whether we
are looking at Congressional Budget Office numbers or Office of
Management and Budget, the administration's budget numbers, because,
correct me if I am wrong and maybe the gentleman from Maine has a
better memory than this, but back in 1995 when the Republican
leadership in Congress decided to take on the Clinton budget numbers,
it was over the stated purpose that the Clinton administration was
relying on their own OMB numbers to justify their budget calculations
rather than relying on the Congressional Budget Office numbers.
Now we have the same situation today, where many of us are crying
foul because of the bookkeeping and the gimmicks that are being played
with OMB numbers, I mean some bookkeeping changes that have not been
made in the last 35 years in order to pretend as if we are not dipping
into these trust funds. I think there is some political rhetoric being
used here in what numbers we are using, but the fundamental point is
that I am hoping that this Congress and the administration working with
us will be able to find a bipartisan solution to continue using the
trust fund money to reduce our national debt so we are going to be in
the fiscal position to deal with the aging population and the baby
boomers when it comes time for them to retire and start entering these
very important programs.
Mr. ALLEN. I had a couple of thoughts that were triggered by the
gentleman's comments. First of all, the gentleman from Wisconsin is
correct. It was the Republicans insisting on using CBO numbers and not
OMB numbers because they said then the CBO numbers were more accurate
than the OMB numbers. The same holds true today.
Mr. KIND. As the gentleman recalls, the ultimate outcome of that
insistence back in 1995 led to the shutdown of the Federal Government.
Because the leadership in Congress was insistent that the
administration use CBO numbers rather than OMB numbers and it led to
the shutdown of the government which as we later found out was not
exactly popular with the vast majority of Americans throughout the
country.
Mr. ALLEN. And not something we want to go through again. But there
is a further point in that connection. I had another chart but I do not
have it here today which shows that during the first Bush
administration, the economic projections from OMB as to the health of
the economy were always significantly above, about .8, .7 percent above
the consensus private forecasts. That is about what the first year of
this administration's projections of economic growth are above the
private forecasts. So now under both the first Bush administration and
now the second Bush administration, we see that OMB is more optimistic
about the economy than the private forecasts.
You have to say to yourself, what is going on here? They are trying
to make the numbers look good so the budgets look good so they can get
through an immediate funding crisis. If you look at the Clinton
administration, in the 8 years of the Clinton administration, only in 2
years were the OMB projections above the consensus private forecasts.
In 2 of those years, they were exactly the same. In the other 4 years,
they were actually lower. They were more conservative than the
consensus private forecasts. One of the disturbing aspects of this
administration in its first few months is that it looks and feels as if
the Office of Management and Budget has become an arm of the spin
machine, that numbers are being manipulated, not just numbers related
to projections of future economic growth but numbers that make the
accounting change in Social Security that the gentleman was referring
to, the gimmick I mentioned earlier about moving $33 billion in
corporate tax revenues from 2001 to 2002, all of these gimmicks, all of
this
[[Page H5385]]
manipulation is really a way to kind of make the numbers come out
right.
But that is not the way we ought to be doing our budgeting. It is not
conservative. It is not fiscally responsible. We ought to be getting
the best numbers we can and then be arguing policy. But we should not
have to be doing what we have wound up doing the first few months of
this administration which is arguing about the accuracy of the numbers.
That did not happen to anything like this extent before. It really is
important that OMB get back on track with CBO and stop manipulating
numbers because we have got a real problem.
Mr. KIND. These are not insignificant differences, a percentage point
here, a percentage point there on projected economic growth. When you
project it out over 4, 5, 10 years, these numbers explode on you. And
so it is important that we deal with an accurate projection and
description of what the economy is doing and forecasting. When you see
the OMB starting to manipulate these numbers, have these gimmicks
within the bookkeeping system that have never been tried before in the
last 40 years, it undermines the confidence that many of us have in the
numbers that the administration is using in order to justify their
budget requests. And it makes it a much more difficult proposition then
to work in a bipartisan fashion to reach agreement on these important
issues. That is why many of us earlier in the year when we were
discussing the merits of a tax cut of this size were using more
conservative numbers. Many of us supported an alternative tax proposal,
one that was based on more conservative economic figures because we
felt it was prudent and made fiscal sense to hedge our bets a little
bit because as quickly as the surplus can appear, many of us knew it
could disappear.
Given the incredible size of our Nation's economy, a slight change in
growth one way or the other was going to have a huge impact on
budgetary decisions before this Congress. So many of us supported an
alternative tax relief plan that would provide meaningful tax relief to
working families, dealt with the marriage penalty, dealt with estate
tax relief or family-owned businesses and family farms but within a
more fiscally responsible framework, not of the magnitude of the tax
cut that was ultimately passed and which is now having the most
important impact on dipping into the Social Security trust fund again.
The reason why many of us felt it was important to be somewhat
conservative was because of the obligations our Nation faced, of Social
Security, Medicare, trying to come up with a bipartisan prescription
drug plan that was going to provide meaningful relief to our seniors
who are suffering under this burden of escalating drug prices that they
need to have, our obligations to a strong national defense, just
quality of life with our military personnel.
This was not going to come cheap. In fact, the President is still
calling for a 9 percent increase in defense spending, roughly $20
billion that does not exist right now. It puts a lot of us in a tough
position that supported many of these policy proposals but because of
the slowdown because of the magnitude of the tax cut, it is going to
make it very difficult for us to meet these obligations for our Nation.
Mr. ALLEN. Again, I think what we are trying to say is that if any of
us have a child 5 or 10 years away from going to college and we know we
are going to be paying for that out of our own pockets, the prudent
thing to do is start setting aside some money to pay for the college
expenses. If we are the owners of a business and we can see that we
have reached the capacity of growth within our existing buildings and
we are either going to grow and do a major expansion or we are going to
be at a competitive disadvantage and we have to do that in 3 or 4 or 5
years, we would start to figure out how to set aside funds to be able
to do that when the time comes.
We are, as a country, in the same spot with respect to Social
Security and Medicare. We know that the leading edge of the baby boom
generation within 9 or 10 years is going to start to qualify for those
two programs. So as many of us have argued over and over and over
again, even though we have lost the point on the debate in the tax cut,
we have said what is prudent to do is to use the Social Security and
Medicare surpluses to pay down the national debt, to reduce the amount
we pay in interest costs on the national debt, to be ready to wade in
and support those two programs when the baby boom generation starts to
move into them. That would be prudent fiscal planning. It is not
prudent to go out and take a big vacation right now and spend all of
the surplus over the next 5 or 6 years based on projections that we
knew even a few months ago were inherently unreliable.
I want to come back to the way I began, the statement that the
President made in Portland, Maine on March 23. He said, ``We've
increased discretionary spending by 4 percent.'' Not exactly. Right
now, now that the defense budget is in, that 4 percent number is 7.2.
It should read, ``We've increased discretionary spending by 7.2
percent,'' 7.2 percent more than the Clinton administration did in the
last year of that administration.
He also said, ``We set aside $1 trillion in the budget over a 10-year
period for contingencies.'' Well, not exactly. It was not true then. It
is not true now. If it were true then, if there were truly a
contingency fund, we would not be in the dilemma that we are in today
because we have not had a loss of $1 trillion just from economic or
technical factors, although it is $639 billion. This tax cut was rushed
through. It was too big to be responsible, it was too weighted to the
wealthiest Americans, and it was rushed through without considering
either how the economic numbers, how the projections would work out
over time and without even the President's own request for defense
which has turned out to be by far the biggest increase, not education
as he was saying in March, the biggest increase in his proposal.
If we are going to get back on track, we have to be honest about the
numbers and honest about the claims and look at this problem we have
with our budget, look at exactly what caused it, largely the tax cut,
also the economic slowdown, also some additional requests for spending
by the administration and also some other numbers that we have to deal
with. But let us look at the numbers honestly and let us try to figure
out how to work our way through this to get the best result for the
American people.
Mr. KIND. I do not want to speak on behalf of my friend from Maine,
but for me really the crux of the issue is what decisions can we make
in this body that will set up our younger generation, the next
generation, for success later on in life, so that they can meet the
obligations that they are going to face when the reins of leadership
turn over to them. I fear that if we make it impossible by not reducing
national debt, by not shoring up the Social Security and Medicare trust
funds, it is going to be impossible for that next generation to meet
those obligations and we will see a fiscal crisis never before
witnessed in this Nation.
It is almost deja vu all over again as far as economic policy. We
have seen this. It is really the repeat of Reaganomics back in the
early 1980s where they ushered through this huge tax cut but also
simultaneously tried paying for a huge increase in defense spending
which led to year after year, a whole decade's worth of deficit
financing which left us in a position of dealing with a $5.7 trillion
national debt.
{time} 2115
The difference between that then and what we are facing today is back
then the country could afford to make that mistake, because we had time
to recover.
We do not have that luxury anymore. We have this aging population
staring us in the face. They are going to start retiring in the next
decade. We do not have the luxury of being able to deal with a fiscal
mistake that was made and trying to dig ourselves out of that hole in
time to prepare for this aging population.
That is really the big difference between the economic policies of
the early eighties and the same type of economic policy being pursued
today. We do not have that margin of error in order to correct the
mistakes, to dig ourselves out of debt, as we were starting to succeed
in doing throughout the decades of the 1990s. Instead, we apparently
have now reversed track and have jeopardized the good work being done
just a few short years ago.
[[Page H5386]]
Mr. ALLEN. What is so startling is all this has happened in just a
few months, so those of us who were saying this is a reckless approach,
this an irresponsible approach back in March and April, now find
ourselves saying, you know, we told you this was a possible outcome. We
told you that the policy was irresponsible. Now, Mr. President, how do
we dig ourselves out of that?
I think that the point the gentleman was making about Social Security
and Medicare, it is very true. But it is also true when I travel around
my State of Maine and talk to business owners, for example, they say to
me, apart from health care, which seems to be their number one problem,
the high cost of health care, they talk about the qualifications of the
workforce. They realize that they are only going to succeed if they
have well-trained, well-educated, well-qualified workers for the jobs
which they need.
It gets harder and harder. If too many kids do not get Head Start, if
you do not have enough spending on title I funds for kids from
disadvantaged areas, if you are not fully funding special education in
accordance with the promises made by this Congress in the past, if
young people in this country do not have the funds to go on and get the
college or technical college education they need, we are not going to
be as strong a country, as competitive; and our businesses will not do
as well. Those are simple facts.
Yet the examples I have given are examples of public investments.
They cannot be made by our businesses. They cannot be made by
individual families, many of whom are struggling and do not have the
funds for private school or private college. They are only the kinds of
investments that we can make together. We cannot make those investments
together if all the money has gone in a tax cut that is too large to be
responsible, where most of the money, or at least half of the money, is
going to people in this country who make over $300,000 a year.
We have to look again at this tax cut. We have to figure out how we
can make sure that our overall budgeting over the next few years is
reasonable, responsible, disciplined and conservative, not
irresponsible and reckless, I guess I would say.
Mr. KIND. If the gentleman will yield further, with the drastic
change in the budget numbers, and there is no sign of immediate
economic recovery on the horizon, I think the responsible thing to do,
one that really requires real leadership right now and a gut check, is
for the administration to submit a new budget proposal, in light of the
fact that their own numbers, a 7 percent increase in discretionary
spending, is just not affordable right now within the context of the
overall budget, unless, again, they are willing to dip into the Social
Security and Medicare Trust Funds, which I do not think there is a lot
of bipartisan support to do.
I think just about everyone in this Chamber now is on record
supporting the lockbox proposal, walling off those trust funds, the
surpluses being run in those programs for debt reduction; and that is
why we are hoping that the administration, the President, will take a
look at this and realize that things have changed.
That is okay. Mistakes are made from time to time. But we are still
in a position of being able to recover. We are not down this road that
far yet. These numbers have just come out. We have not passed the next
fiscal year's budget, so there is still time to recover.
It is going to require, I think, a whole lot of cooperation across
the aisle and shared responsibility across the aisle to make this add
up, to maintain some fiscal discipline, but also meet our obligations
that exist.
We have an Elementary and Secondary Education Act we are trying to
reauthorize that is going to require resources, bipartisan thinking, in
order to solve that dilemma. We have the next farm bill reauthorization
to come to the floor here shortly. Lord knows our family farmers are
struggling to survive. You talk about a national security issue, food
security ranks right up there at the top as well. We have that
obligation to meet.
We also need to be thinking long term and maintaining the solvency
again of these important programs, like Social Security, Medicare, so
we are not just punting on this issue, which would be the easiest thing
for us to do today. I think that is one of the reasons why the
President appointed his Social Security commission, because he realizes
we need to take a hard honest look at this and start finding some
bipartisan solutions to the challenges we face.
We still have time to recover. I guess that is one hopeful note in
tonight's discussion. Hopefully, we are going to get enough consensus
and enough bipartisan work here in the coming weeks before the ultimate
budget is passed to recover from the new economic realities and do the
right thing for our kids.
I have got two little boys myself. I am a little concerned about the
fiscal obligations they are going to be facing. The numbers are not
working in their favor right now. With the generational trends with the
aging population, more and more will be asked of the next generation to
deal with these challenges. We can help by starting today in dealing
with accurate economic numbers and making some probably pretty
difficult choices in the weeks ahead.
I thank the gentleman again for organizing this Special Order and
highlighting in such a coherent fashion the dilemma we are in and the
challenges we face.
Mr. ALLEN. Mr. Speaker, I thank the gentleman for being part of this
debate. I know we can do better, and we will do our best to do better.
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