[Congressional Record Volume 147, Number 178 (Thursday, December 20, 2001)]
[Extensions of Remarks]
[Page E2355]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


        UNDERPINNINGS OF ADMINISTRATIONS' BUDGET NO LONGER HOLD

                                 ______
                                 

                        HON. JOHN M. SPRATT, JR.

                           of south carolina

                    in the house of representatives

                      Wednesday, December 19, 2001

  Mr. SPRATT. Mr. Speaker, President Bush claims that his 
administration has ``brought sorely needed fiscal discipline to 
Washington.'' The same day, his budget director warns us not to expect 
another surplus until 2005, after the president's first term is over. 
If this is fiscal discipline, it has an odd bottom line.
  President Bush took office with an advantage no president in recent 
times has enjoyed: a budget in surplus. Ten days after his inaugural, 
the Congressional Budget Office projected a surplus of $313 billion in 
fiscal 2002, and over ten years, a cumulative surplus of $5.6 trillion. 
More than half of that has vanished. The Director of the Office of 
Management and Budget, Mitchell Daniels, blames the economy, extra 
spending, the fight against terrorism--everything but tax cuts.
  Last month, economists on the House and Senate Budget Committees 
updated their estimates of the economy and budget. Their analysis is as 
close as you can get to a consensus on where we stand now. They show 
that over ten years the tax cut takes a toll of $1.7 trillion on the 
budget and accounts for 55 percent of the depletion in the surplus. 
Spending related to the war on terrorism, initiated after September 11, 
takes another 11 percent. Other spending increases take 11 percent, and 
of that, the President's request for defense constitutes two-thirds. 
The remaining 23 percent is due to the economy.
  The economy is a major factor over the next two years. But as the 
economy recover, its drain on the budget tapers off. The President's 
tax cuts get bigger.
  Budget Committee estimates show a remaining surplus over ten years of 
$2.6 trillion, but virtually all comes from the Social Security Trust 
Fund, which everyone has sworn not to touch; and most of that is 
concentrated in future years where the outlook is very uncertain. When 
the President submits next year's budget in February, an updated 
forecast of the economy will come with it, and the $2.6 trillion 
surplus will surely shrink again. Mr. Daniels no doubt had that 
forecast in hand when he warned of the vanishing surplus.
  The Budget Committee estimates were put together as part of a 
bipartisan search for common ground. Leaders on Budget, Finance, and 
Ways and Means met to settle on policies to stimulate the economy. We 
settled instead for a statement of principles. We agreed that stimulus 
was needed but that it should be short-lived, to avoid converting a 
cyclical downswing into a structural deficit. We wanted the budget to 
recover as the economy recovers. The stimulus bill reported by Ways and 
Means forsook these principles and proposed more permanent tax cuts, 
with revenue losses continuing long after the recession ends.
  More than half of the surplus is gone, and the plan to save the 
Social Security surpluses and buy back government bonds is in grave 
doubt. But the administration seems to find no lesson in these results. 
On the same day Mr. Daniels made his gloomy prediction, the White House 
renewed discussions on a stimulus plan, and afterwards told the media 
that repeal of the corporate alternative minimum tax had to be part of 
any stimulus plan the President signed. In the short run, this will not 
help the economy; in the long run, it will not help the budget. In all 
events, it begs the question: How will we pay for the war on terrorism, 
for homeland defense, for reinsurance of terrorist damages, for 
victims' compensation, and for that matter, for the baby boomers' 
retirement?
  No one is blaming the administration for the recession, but it can be 
faulted for ignoring the clouds and betting the budget on a blue-sky 
forecast. We warned that its budget had no margin for error if the 
projections it was based upon failed to pan out. We warned that the tax 
cuts left little room for other priorities, like Medicare drug coverage 
or the solvency of Social Security. The administration acted as if we 
could have it all. Now that it's clear we can't, it seems as unwilling 
as ever to recast its budget. This is not fiscal discipline; this 
fiscal denial.
  If the administration wants to put the economy and the budget back on 
path, it has to heed the lessons of the last ten months and acknowledge 
that the underpinnings of its budget no longer hold.

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