[Congressional Record Volume 148, Number 1 (Wednesday, January 23, 2002)]
[Senate]
[Pages S13-S14]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        BUDGET COMMITTEE HEARING

  Mr. GRASSLEY. Mr. President, today, with the announcement that the 
Federal Government is facing near-term budget deficits, as opposed to 
long-term budget deficits, for the next

[[Page S14]]

2 or 3 years, but not for the next 10 years, we will hear a lot of talk 
from the critics about the need to postpone or repeal last year's 
bipartisan tax cut. The critics say we should revisit the tax cut for 
two reasons. First, they claim the tax cut is responsible for a return 
of budget deficits; second, the critics claim the tax cut will 
jeopardize our long-term economic growth. I will consider each of these 
claims.
  According to the CBO projections, the tax cut is responsible for less 
than 15 percent of the reduction in this year's surplus and less than 
40 percent of the reduction in the surpluses for the 10 years we 
project ahead. The slowdown in our economy and the additional spending 
enacted last year are responsible for most of the deterioration in our 
budget outlay. The second criticism is that the tax cut will reduce the 
surplus, thereby exerting upward pressure on interest rates and reduce 
future economic growth.
  A recent study by the congressional Joint Economic Committee 
concludes there is no evidence to support the criticism that interest 
rates rise because there is budget surplus or that there is a 
relationship.
  According to the Joint Economic Committee:

       Empirical studies on interest rates have uniformly failed 
     to find any statistical significant relationship between 
     interest rates and the budget balance of the U.S. government.

  This result is likely due to the fact that the deficits we have seen 
in the past were not large enough to affect the interest rates given 
the overall size of our financial markets which would also include the 
global financial markets.
  If the tax cut is not responsible for the rising deficits and higher 
interest rates, then why do the critics still complain? Maybe they have 
not read the studies to which I have referred.
  Based on the studies, I asked critics the legitimate question, What 
is there to complain about? One reason I believe they want to delay 
repeal of the tax cuts is because they have a desire to spend the 
money, which, in the end, actually, then, if you spend it, because you 
increase taxes, you still do not have any less deficit.
  Some critics have already announced they have plans to spend the 
money by raising taxes, or delaying the tax cuts, as they call it. As 
other spending plans become public, it will become obvious their cries 
for fiscal discipline are nothing more than crocodile tears.
  In addition to the critics who want to spend the tax cut, there are 
also critics who insist we cannot afford the tax cut because our long-
term budget projections show Federal spending will exceed revenue by 25 
percent within the next 50 years. To argue, as they do, that we cannot 
afford a modest tax cut today because we will need a huge tax increase 
in future years ignores the obvious: Congress cannot provide more 
government than the taxpayers are willing to pay for. Through our 
country's history, the Federal Government has never taken more than 
one-fifth of our Nation's income in taxes. That includes even in 
wartime. If we are not willing to pay 25 percent more for government, 
if we are not willing to do that now, why should we be willing to put 
ourselves into a spending policy where we expect our children and 
grandchildren to have higher taxes so they can pay for programs we 
instituted at a time when we were not willing to put taxes higher than 
they have ever been in the history of our country? Our challenge today 
is to get beyond the rhetoric and make affordable government once 
again.
  In addition to this point, as we prepare for the next budget season, 
I participated today in the Budget Committee review of the CBO 
report. Once again we are having this issue brought up about the tax 
cut being responsible for the budget deficits, as opposed to the war on 
terrorism, as opposed to the recession that is a result of the war on 
terrorism, and some technical budget adjustments that are made 
annually.

  In regard to the accusation that the tax cuts proposed by President 
Bush in the last election, and then in turn enacted by Congress--and in 
turn when it was enacted, it was enacted as a bipartisan tax relief 
package because several members of the Democratic Party voted for it--
in regard to that being the cause of the deficit, as is the insinuation 
on the part of those people who make that argument, I made the point 
this morning, and I would like to repeat the point I made in the Budget 
Committee to the Members of the entire Senate, that if you look at the 
$1.3 billion tax cut the bipartisan Members of this body voted for and 
the President signed on June 7, and you say that is the cause of the 
deficit, you have to also look at the fact that there was an 
alternative called the Daschle-Carnahan amendment that was offered that 
was $1.265 trillion, just 6-percent less than what the President 
signed.
  That amendment got 48 votes. It lost, but almost every member of the 
Democratic Party voted for that amendment.
  So whether you look at $1.3 billion that passed by a bipartisan 
majority, and a pretty overwhelming majority, or whether you look at 
the Daschle-Carnahan amendment, we have all but two or three Members of 
this Senate who voted for tax cuts of at least $1.265 trillion or the 
6-percent higher figure that was finally adopted of $1.3 trillion. 
Either way, just considering that 6-percent differential, you are going 
to end up with about the same budget deficit situation, short term or 
long term, under a policy either way that was backed by all but about 
two or three Members of this body last spring.
  So my point is this: It is wrong for Democratic leaders to blame the 
bipartisan tax cut that the President signed on June 7 for the deficit 
situation without taking credit themselves for backing such a tax 
policy that was only 6-percent less than what the President had already 
proposed.
  So I don't think we have a bad situation because of the reduction of 
taxes. We have a bad situation because of the war on terrorism, the 
economic recession caused by the war on terrorism, because of technical 
adjustments in the budget, and because of the additional appropriations 
we had to have for the military and for the domestic war on terrorism.
  That is where it is. But if you want to blame taxes, there are 97 or 
98 of us in this body who have to share that blame, not just the 48 
Republicans and 12 Democrats who voted for the bill the President 
signed.
  I yield the floor and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. BROWNBACK. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BROWNBACK. Mr. President, I ask unanimous consent to speak as in 
morning business for up to 5 minutes.
  The PRESIDING OFFICER. The Senate is in morning business. The Senator 
from Kansas is recognized.

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