[Congressional Record Volume 148, Number 2 (Thursday, January 24, 2002)]
[House]
[Pages H52-H59]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            A FRESH LOOK AT THE DISAPPEARING BUDGET SURPLUS

  The SPEAKER pro tempore (Mr. Shimkus). Under the Speaker's announced 
policy of January 3, 2001, the gentleman from North Dakota (Mr. 
Pomeroy) is recognized for 60 minutes as the designee of the minority 
leader.
  Mr. POMEROY. Mr. Speaker, well, here we are. It is a new year, we are 
all back from our districts, from time with our families; and it is 
time to take a fresh look at where we are as we begin a new legislative 
Congress.

[[Page H53]]

  You know, to many of us things might look very much the same as they 
did in December when we left; the same people representing the American 
citizens across the country, largely the same dynamics in place. In 
fact, with much of the debate that I have heard this week, it is almost 
like we picked up mid-conversation, even though there has been a period 
of several weeks where we have been gone.
  In one facet, however, there is very sharp difference of reality 
compared with where we were as we got to town one year ago, and it is 
trying to explain this significant different development that I will 
address in the course of my remarks.
  What is different? What is different is the Federal budget. One year 
ago, we looked at tremendous budget surpluses of a historic nature. We 
were on the cusp of a plan to march toward reducing and then 
eliminating the debt held by the people of the United States to their 
Federal Government, eliminating that debt for the first time since 
Andrew Jackson was President.
  We were debating how we might use these surpluses to advance Social 
Security reform before the baby boomers move into Social Security in 
the next decade. We were discussing how we might use these surpluses to 
bring on to the Medicare program a prescriptive drug benefit so 
desperately needed by so many then and continuing today.
  All of these discussions were made possible because of a steady 
disciplined march toward establishing sound fiscal policy, generating 
elimination of the annual budget deficit, and then producing these 
record surpluses. This march began in 1993 with the budget bill passed 
by one vote in the House, without any participation by the Republican 
side, I might add, and passed by one vote in the Senate; and it set the 
course for tackling the deficit.
  The course was certainly assisted by the fact that the economy went 
from a significant recession into a wonderful boom run through the 
decade; and as the economy grew faster than expectations, the revenues 
coming into the Federal Government grew faster than expectations.
  Now, in the face of good times on a bipartisan level, this Congress 
held pretty steady with spending. I think Republicans and Democrats 
alike can take some pride in showing some discipline on the spending 
side and the contributory role that it had in producing the much 
brighter budget situation. So as we convened one year ago, we could 
look at the product of years of hard work, gut-wrenching choices, but 
take some satisfaction in a job well done. We tackled the deficits and 
eliminated them. We built surpluses and had actually the prospect 
before us of eliminating the national debt. What a wonderful legacy for 
members of my generation, the baby boom generation, to leave for their 
children.
  Well, that was then. Unfortunately, the situation now could not be 
more different. The 10-year projection from a surplus standpoint was 
$5.6 trillion a year ago. This year, it has been revised and revised in 
one of the most significant dramatic reductions ever.
  This chart shows the vanishing budget surplus over 10 years, and it 
truly is staggering: $5.6 trillion projected 1 year ago. Based on the 
economic forecasting, the slowing economy reduced this $5.6 trillion to 
$3.3 trillion. The biggest development between those forecasts were the 
slowing economy and the enactment of a tax cut last May that absolutely 
committed all of these surplus revenues.
  Yesterday, the Congressional Budget Office further reduced the 10-
year unified budget surplus to $1.6 trillion. Now, you may say that 
sounds like a surplus; I thought you were talking about deficits. That 
counts the Social Security surplus, the Medicare Trust Fund, and the 
general fund; so on a unified budget basis we are at $1.6 trillion. If 
you just count the general fund alone, it is deficits for each of the 
next 10 years.
  We have gone back to debt as the way we fund our operations, which 
means we do not pay for what we spend. We run it up on the tab, and we 
are going to pass that tab on to our children.
  You might wonder how in the world did this happen. I think it is 
worth understanding where the error occurred so that we might learn 
from it as we face the difficult policy decisions that we now confront.
  This chart shows what I believe was a mistake, a legislative mistake 
of historic proportion. When we passed the budget bill, which included 
the President's tax cut, last May, we committed every dollar of 
budget projection. We left no rainy day fund. We left no room for 
error. We left no possibility that things would not turn out in 
anything but the rosy projection that we looked at. We made no room to 
deal with the slowing economy, and we certainly had no contingency for 
something as devastating as what hit us with the terrorist attack of 
September 11. The result was we built a plan that required everything 
to work perfectly in order to not slide into deficits.

  I used to be an insurance commissioner, and there was no way I would 
let insurance companies price their product in a way that just 
predicted the rosy upside scenario. The way my constituents work is 
they deal with reality. Their family budgets are based on the fact that 
things may not work out perfectly.
  Well, we made a bad mistake betting the ranch that the country was 
going to have a perfect run. It has not had a perfect run, and now you 
can see the consequences from the reversal of fortune.
  This chart shows what has happened as we have gone from the prospect 
of eliminating the debt and actually developing on a unified basis a 
budget surplus, to just more deficit spending, continuing the debt at 
the extraordinarily high levels, driving up interest rates, and leaving 
a legacy of red ink for our children.
  The non-Social Security budget has fallen from $3.1 trillion surplus 
to $760 billion worth of deficit. Again, according to the Congressional 
Budget Office, the Federal budget, excluding Social Security, will be 
in deficit every year between now and 2010.
  Again, take a look at this chart. This was our opportunity. We passed 
a tax cut that is irresponsible in its dimensions. We face a slowing 
economy. We have a God-awful terrorist attack. Now, as we reconvene 1 
year later, we are looking at a sea of red ink from the ongoing 
deficits that we face.
  What are the implications then going forward of these budget 
deficits? Well, instead of saving the Social Security surplus and 
taking every dollar coming in on Social Security and paying down the 
national debt so you have a better fiscal position of the country to 
meet the Social Security obligations when baby boomers retire, instead 
of that, we are going to spend more than $700 billion of revenue coming 
in from Social Security money. We are going to spend that on running 
the Federal Government, money coming in for Social Security spent on 
general government spending.
  We have seen this before. It is that era of deficits we worked so 
hard to climb out of, and, dang it all, we are back in the very same 
mess. Instead of saving the Medicare surplus, leaving us the 
opportunity to enhance the program, leaving us the opportunity to at 
least make sure we could meet the existing obligations of the program, 
all of the $400 billion of Medicare surplus, all of it, is committed 
right out the door in government spending. It could have been used to 
pay down the debt, to position the Federal Treasury for when baby 
boomers retire. Now every nickel is spent on the general spending of 
government.
  Instead of strengthening and adding to Social Security and baby 
boomers' retirement, we drain the trust funds of hundreds of billions 
of dollars. Instead of eliminating the publicly held debt, we will pass 
on to our children under existing projections $2.8 trillion in debt. 
Instead of paying $600 billion in interest costs, even if we had 
continued to reduce borrowing at this rate, there was a very large 
interest cost associated, given the trillions of dollars of national 
debt that we have. We were projected to spend $600 billion this decade 
on interest costs alone. That figure now is now $1.6 trillion, a $1 
trillion increase in government spending just to pay the interest.
  Interest costs do not pave roads, interest costs do not help schools, 
interest costs do not put forth prescription drug coverage to help our 
seniors. Interest costs do not do anything. And we have put ourselves 
in a fiscal position where we are now going to have to spend $1 
trillion more in these interest

[[Page H54]]

costs over the next 10 years because of the fiscal foolishness of that 
tax cut, compounded with the difficult circumstances of the recession 
and terrorist attack.
  All of this means that instead of reducing long-term interest rates, 
allowing you to get a better deal on your home mortgage, allowing 
businesses structuring long-term debt to operate at significantly lower 
expense levels, the Federal budget is going to put upward pressure on 
rates. The markets will know the Federal Government, the big interest 
hog at the trough, is once more gulping up credit; and it is going to 
cost more for everybody else relative to long-term lending.
  As bad as the situation I have told you is, it is worse, because the 
Congressional Budget Office did not account for some things that we all 
know are going to happen; and I will tell you what some of them are.
  The President has asked for $18.5 billion to increase homeland 
security. He announced that just this morning. I will tell you what, I 
cannot speak for my colleagues, but I am inclined to look very 
favorably toward the President's request. We have to do what we need to 
do to get security for the people of this country.
  The President also announced yesterday morning a $48 billion increase 
for defense.

                              {time}  1215

  So on top of these figures, $18 billion yesterday, $48 billion today, 
and that is just in additional expenses announced by the President on 
homeland security and defense.
  The President continues to support, in the face of this red ink, a 
very expensive economic stimulus bill; whether one will pass or not 
remains to be seen. The cost to fully fund the recently enacted 
education bill, not a nickel of it is anticipated under the debt 
situation I have outlined. We are going to fund that education bill, at 
least in large part, and it is going to drive this debt situation 
higher.
  We will extend expiring tax breaks, and that is going to drive the 
debt situation higher. Those of us representing rural America are bound 
and determined to pass a farm bill so badly needed by our farmers, and 
that is not included in the CBO budget projections. That means the 
budget projection is going to be worse on that one as well.
  Mr. Speaker, when all of these actions are taken into account, and 
probably some more as well, the tax bill with many expiring provisions, 
those are likely to be extended, the alternative minimum tax, which 
will impact millions of Americans, an additional 35 million Americans 
will be hit with a tax increase under alternative minimum tax if we do 
not address that, and that has additional expense as well.
  The long and the short of it, then, is that we have gone from surplus 
and wonderful opportunity to deficits in a single year.
  Mr. Speaker, I say to my colleagues, we have to come to grips with 
this new fiscal reality as we start looking at what is to be 
accomplished with this Congress this year. We have to understand that 
any stimulus bill is going to be funded 100 percent from revenue coming 
in for Social Security. We have to understand that we are going to 
drive the deficit situation worse. As we look at these new spending 
areas, including those outlined by the President or those championed by 
many Members of the House, we have to understand that they are funded 
on debt and that we are basically sticking our children with the tab. 
We have to have a whole new dimension of fiscal responsibility, because 
the sunny days of surplus are behind us and the damnably dark days of 
deficits are once again with us.
  I see a couple of colleagues that have joined me on the House floor, 
and each of them I have had the pleasure of working with on budget 
matters. I recognize at this time the gentleman from Pennsylvania (Mr. 
Hoeffel), my friend and colleague.
  Mr. HOEFFEL. Mr. Speaker, I thank the gentleman. I want to compliment 
the gentleman for organizing this Special Order and for his leadership 
on budget matters. The gentleman from North Dakota (Mr. Pomeroy) has 
lead the charge for fiscal responsibility and restraint in Congress for 
many years before I got here. I am proud to stand with him today to add 
my voice to those who are extremely alarmed by the budget problem, the 
budget crisis that we find ourselves in.
  The charts that the gentleman has been describing, the points that he 
has made in his presentation, point out in crystal clear fashion the 
huge budget problem we are now faced with. We have burned through $4 
trillion of an estimated surplus that was projected a year ago at a 
total of $5.7 trillion. Now the Congressional Budget Office says the 
surplus for the next 10 years is just $1.7 trillion; $4 trillion is 
gone from the projections due to war, due to recession, and due to tax 
cuts, those three reasons.
  The President, the White House and the Congressional Members of the 
Republican Party are very sensitive to the notion that the tax cut may 
be responsible for this loss of surplus and the return of budgetary 
deficits. They are correct that it is not the only reason, and it is 
wrong for anybody to suggest that the big tax cut of last summer that 
will cost $1.7 trillion over 10 years, that is not the reason that 
deficits have returned. But we cut it too close to the bone. We did not 
allow for the unforeseen. We said at the time a tax cut that large, if 
the economy leveled off, could push us close to deficit spending again, 
but we did not anticipate that the economy would actually go into the 
recession that we are still in. Certainly nobody could anticipate the 
war that we are in after September 11 and the huge amounts of spending 
that we all agree need to be spent to improve our homeland security and 
to prosecute the war on terror.
  So because of war and recession and a tax cut that was too big and 
too gimmicky and too much favoring the wealthy, we have burned through 
$4 trillion of a surplus projection that was after all just a 
projection. It is not going to come true. We now have a very real 
government deficit, a budget deficit. This current fiscal year, and for 
at least the next 2 years, we are back into deficit spending.
  Now, what is wrong with that? Is there anything wrong with deficit 
spending? Does it matter to people that we are no longer continuing 
with balanced national budgets that we enjoyed for 3 years? Does it 
matter that we are now once again borrowing money to pay for ongoing 
government operating expenses? I think it matters very, very much.
  It is bad for the government to borrow. I mean it is just a bad 
policy. We should pay our own way. We should balance revenue and 
expenditures. We should not borrow money because it means we are going 
into debt and we have to repay that money. It is bad to allow the 
government debt to increase. We have been accumulating debt for 200 and 
some years. We quadrupled our level of debt during the Reagan and Bush 
years. During the Clinton years that debt was actually reducing as we 
balanced the budget and ran surpluses for 3 years. But now we will go 
back to increasing the government debt, a debt that our children and 
grandchildren will have to pay. It increases our annual interest 
payments on that debt.
  The gentleman from North Dakota (Mr. Pomeroy) just pointed out 
correctly that we now have $1 trillion of increased interest payments 
over the next 10 years on our new borrowing. Paying interest on a debt 
is legally necessary. It is also the most unproductive thing we can do 
with Federal money. It does not buy a tank, it does not pave a road, it 
does not educate a child or provide prescription drugs for anybody; it 
is paying off legally-obligated interest payments to the people that 
lend us money. It is a bad position to be caught in and we do not want 
to be increasing our interest payments, but we will if we continue down 
the road toward government deficits.
  We will also be increasing the interest rates that consumers have to 
pay. When consumers borrow for a house or for a college education or to 
buy a car, when we are borrowing money, when the Federal Government is 
in the private markets borrowing money, we are pushing up long-term 
interest rates and increasing the interest that consumers have to pay 
on their personal debt. It is a very bad practice.
  But perhaps the worst is we are breaking our promise to stop 
borrowing from the Social Security and Medicare Trust Funds, because 
that is the first place we will go. When we start running deficits and 
borrowing money, the first place we will go is to

[[Page H55]]

borrow even more, a practice that we stopped, from the Social Security 
Trust Fund and the Medicare Trust Fund.
  Now, that money will be paid back. We are not stealing the money, and 
seniors should not be alarmed about that. But it is a bad practice. We 
should not continue to borrow from those trust funds. That is not why 
they are there. All of this is going to result from the deficit 
spending that we are facing.
  We have a war, we have a recession, and we have big tax cuts. We need 
fiscal responsibility. We do not need fiscal denial. We need both 
political parties, both Houses of Congress, and the White House to face 
reality and to make some tough decisions and to be honest with 
ourselves, honest with our colleagues, and honest with our constituents 
about what we need to do.
  Some people, for example, have called for a tax freeze. It is a 
proposal I favor. There is certainly not consensus on this at this 
point. One of the most distressing things about this notion is the 
response we hear from the White House and Republican colleagues that 
that is a tax increase, that Democrats are dying to increase taxes. 
Nobody is for that. Nobody is talking about raising taxes. I am not 
sure, I say to the gentleman, what it is about the word ``freeze'' that 
our colleagues do not understand. A tax freeze is not a tax increase. A 
tax freeze is a tax freeze. It means holding things in place. Why is 
that something we should consider? Because we do not know yet what it 
is going to cost to win the war on terror.
  The President is going to ask for a 15 percent increase in the 
defense budget next year. We are all going to vote for that, or 
something close to what the President is recommending, because we have 
to win that war on terror. But we do not know over the next 10 years 
what the cost is going to be. We do not know what it is going to cost 
to improve homeland security. Hundreds of billions of dollars need to 
be spent in the next couple of years alone on improving homeland 
security. We do not know what that cost will be.
  Should we not take a time-out? Should we not determine what our 
future costs are? Should we not factor in what it is going to take to 
address health care needs and public education needs? What about our 
desire to add prescription drugs to Medicare? Everybody wants to do 
that and we need to do it to keep faith with seniors, but it is going 
to cost a lot of money.
  Mr. Speaker, I would suggest we consider a wartime tax freeze, 
because that is what we are in. In the Second World War, the United 
States increased taxes 500 percent, a factor of 5. Nobody is talking 
about a tax increase now. But that is what had to be done in the Second 
World War, and we still fell into debt as a result of that war.
  We must be fiscally responsible. We must do the right thing by the 
taxpayers. We must avoid government debt. We must avoid increasing our 
interest payments. We must avoid crowding out private sector dollars 
which then increases interest rates that consumers must pay. We must 
avoid borrowing more from the Social Security Trust Fund and the 
Medicare Trust Fund. We need to be fiscally responsible. That is why we 
are sent here. That is what we have to do.
  I thank the gentleman for his leadership. I join with him in this 
enterprise. I am glad to be standing shoulder to shoulder with the 
gentleman.
  Mr. POMEROY. Mr. Speaker, I thank the gentleman for his comments, and 
I very much appreciate his ongoing leadership on budget issues. They 
are at the core.
  I have a chart which illustrates the point the gentleman was making 
about how did we get in this hole? We have to be candid about assessing 
what happened because that is how we are going to learn how to go 
forward. This part, looking out 10 years, is lost revenue due to the 
tax cut. So as we can see, the tax cut played a very major role in this 
sharp change in the fiscal fortune of our country. It certainly was not 
the only factor. The green shows the effect of the slowing economy. We 
slipped into a recession, and that has certainly made a bad situation 
worse. The blue and the purple underscore additional adjustments, 
including expenditures that will be made, not anticipated, in the 
budget forecast.
  Combine all of these and we see that the Republican tax cut was 
perhaps the largest driver in putting us back into deficits, but it has 
been joined by a number of other considerations as well. It just goes 
to prove the point, we do not bet the ranch on everything working out 
perfectly. The budget bill did, and things have not worked perfectly, 
and now we have deficits to work with as a result.

  I see that the gentleman from North Carolina (Mr. Price), my cochair 
of the Democratic Budget Group, has joined me on the floor. I do not 
think the body has a more astute student of the budget than the 
gentleman from North Carolina, and I yield to him for his comments at 
this time.
  Mr. PRICE of North Carolina. Mr. Speaker, I thank the gentleman for 
yielding. I want to commend the gentleman from Pennsylvania (Mr. 
Hoeffel), one of our colleagues who is most attentive to the budget 
process, for his statement. And I certainly want to thank my friend and 
colleague, the gentleman from North Dakota (Mr. Pomeroy), an 
outstanding member of the Committee on Ways and Means, with whom I 
cochair the Democratic Budget Group. We meet every Wednesday morning 
and go over the sometimes arcane budget figures that we are dealing 
with. Those figures now are coming to life as we understand how much 
things have changed in this past year and as we stop and see what these 
figures portend for our country's fiscal solvency and the kinds of 
things we need to do over the next 10 years.

                              {time}  1230

  These are figures we must attend to, and I commend my colleague for 
taking out this Special Order today to focus on our fiscal situation.
  A year ago we were looking at a unified budget surplus over the next 
10 years of $5.6 trillion. Today that figure has been reduced to $1.6 
trillion.
  I would just like to ask my colleague to elaborate on the fact that 
this is actually an optimistic figure, this $1.6 trillion. Is it not 
true that it does not include the likely extension of certain popular 
tax credits like the research and development tax credit, as well as 
the repair of the alternative minimum tax that we all know is going to 
have to take place unless many, many middle-income people are going to 
run up against that tax?
  It does not include the farm bill that is likely to pass in this 
Congress. It does not include the defense and homeland security 
requests that are going to be coming from the President and that we are 
going to want to support. None of that is included in this estimate.
  So when we say that the surplus is now only $1.6 trillion, that is 
actually an optimistic estimate. If we do all these things, then we are 
looking at a figure that is considerably lower. The figure that is now 
$1.6 trillion could go well under $1 trillion, something like $700 
billion dollars or $800 billion. And natural disasters are not, I 
believe, in the mix either, the normal expenditures we make for 
recovery and relief after natural disasters.
  So the figure we are looking at is really a best-case scenario. Yet, 
how much worse it is than what we thought we were facing just a year 
ago!
  Mr. POMEROY. Mr. Speaker, reclaiming my time, I thank the gentleman 
for his comments. The Congressional Budget Office I think did a good 
piece of work in their analysis which was published yesterday 
forecasting the loss of the surplus, the 10-year run into deficit that 
we will now have.
  They, however, in their forecasting, are bound to very formalized 
models, and these models cannot capture some of the extraordinarily 
likely and, in fact, inevitable actions that this Congress will take.
  Let us just review them again. First, $18.5 billion announced by the 
President this morning in homeland defense is likely to be added to the 
tab; next, $48 billion announced yesterday for defense, certainly 
likely to be added to the tab; $73 billion presently in the farm bill 
budget commitment likely to be added to the tab. That is on the 
spending side.
  Are we going to do anything to fund the education bill we have just 
passed with such fanfare? You bet we are going to spend some money 
there. That is an addition on the spending side.
  Then there is the tax side, because there are tax issues that simply 
have

[[Page H56]]

to be addressed, tax cuts that have to be advanced. These include 
extending the tax cuts that were time-limited and expired at the end of 
the last year. They include fixing the alternative minimum tax so that 
35 million Americans do not find that they are seeing their taxes on 
the one hand go down under their existing tax form, but the alternative 
minimum tax raising significantly their tax liability on the other 
hand. We are going to fix that. It is going to be expensive to fix 
that. That is in addition to all of this.
  I actually believe that on a unified budget basis, which means all 
the revenues of the general fund, all the revenues coming in from 
Medicare and all the revenues of Social Security will be committed and 
spent and exceeded if we do not sober up to this new fiscal reality and 
collectively work together to address it.
  I have been disappointed in my time in this body at the very small 
common ground we can find between the partisan aisle. One area where I 
would have thought we might have found common ground is that red ink is 
bad, balancing the budget is good. We have seen this attacked, frankly, 
on both sides of the aisle, but attacked most vigorously by the 
Republican tax cut that passed last May.
  Last year is last year; what is done is done. But let us understand 
what happened as a result of that action and move together to fix it. 
We have got to reject that we are going to languish for the next 10 
years in deficits, because our children will pay a terrible price if we 
act so irresponsibly as to run government on the red ink.
  Mr. PRICE of North Carolina. If the gentleman will continue to yield, 
here, too, we are talking about a best-case projection. The figures 
that we have from the Congressional Budget Office suggest that the 
Republican tax act, including interest, is going to cost $1.7 trillion 
over the next 10 years. That is 41 percent of the reduction in the 
surplus that we are talking about.
  As the gentleman has stressed, there are other factors that reduce 
the surplus. There is the war on terrorism; there is the declining 
economy. But the most important factor is the Republican tax act; and 
as the gentleman knows, there are some very unrealistic sunset 
provisions in that Republican tax act; assuming, for example, that the 
estate tax comes back online full force in 2011. We know that is not 
going to happen.
  So the figures that we have been given show that if that tax act does 
not sunset, if it in fact stays in effect, then we should add another 
$400 billion to the tab. What it costs over this period will go to 
something like $2.1 trillion. So this is, again, a conservative 
estimate of the kind of burden that we are going to bear.
  Let me now refer to the gentleman's chart dealing with the national 
debt. It was only a year ago that the Congressional Budget Office was 
estimating that the debt held by the public would essentially be bought 
down, or that all of it that could be redeemed would be redeemed, by 
about 2006. CBO was also estimating that the publicly held debt would 
essentially be wiped out by 2008.
  Again, what a difference a year makes. That debate we were having a 
year ago, about how much of the debt we could realistically hope to buy 
down on favorable terms, seems like a very quaint debate right now, 
because we are in a different world, fiscally.

  Dr. Crippen, the director of the Congressional Budget Office, in our 
hearing before the Committee on the Budget yesterday, confirmed that 
what we are now looking at by 2006 is not buying down the redeemable 
debt but buying down a very small fraction of the redeemable debt and 
leaving something like $3 trillion in publicly held debt in place. By 
2008, the debt will still be in the neighborhood of $3 trillion.
  What, I asked him, are we foregoing by failing to buy down this debt? 
Of course, our colleague, the gentleman from Pennsylvania, focused on 
one aspect of the answer, and that is that we are going to be paying an 
additional $1 trillion in debt service. If there ever was money down 
the rathole, it is that money we pay in debt service, $1 trillion more 
than was estimated a year ago. Think of the more productive public and 
private investments that those funds could be going into. Yet it is 
going into debt service.
  In addition, we are not going to be paying down nearly the amount of 
publicly held debt we need to pay down in order to be in a position in 
the next decade to meet our obligations to Social Security and 
Medicare. We are building up assets in the Social Security Trust Fund 
at present, but we are going to need to redeem those bonds as the cash 
flow in Social Security reverses and the baby boomers retire.
  The best way we can today be preparing to meet those obligations is 
to be getting rid of that publicly held debt and that annual burden of 
debt service. That is exactly what we are going to be unable to do 
unless we get hold of our fiscal situation and maintain a disciplined 
and systematic schedule of debt reduction, to remove this burden and 
get in a position to meet those obligations to Social Security when the 
bill comes due.
  So I thank the gentleman for focusing on this. The opportunity costs 
for Social Security are obvious, because this is an obligation we are 
going to have to meet. There are also other costs. We need to add a 
prescription drug benefit to Medicare. That is a very expensive 
proposition; yet there is nothing more important to modernizing 
Medicare and meeting the health needs of our senior citizens than 
making that prescription drug benefit a central part of Medicare, 
available to any beneficiary who wants it. Yet I do not need to tell my 
colleagues that the fiscal situation we are describing here today is 
going to make it ever so much more difficult to meet that obligation.
  Again, I thank my colleague for focusing on this fiscal situation. We 
have a job to do in, first of all, telling the truth about this budget 
and making certain that we have a common understanding here of the 
situation we face.
  After all, both parties have counted on this surplus. Both parties 
have pledged their fealty to the Social Security and Medicare Trust 
Funds and have said that we are going to reserve those Social Security 
revenues for paying down debt and for ensuring the future of Social 
Security. We have counted on these revenues, and now they are going to 
be borrowed to pay for the President's tax cut.
  We have a job to do in being truthful about the situation that we 
face, and together, one would hope in a bipartisan way, figuring out 
how to maintain fiscal responsibility and maintain our commitment to 
Social Security. We must begin now to formulate a responsible budget 
that will preserve our solvency and our fiscal options for years to 
come.
  So I thank the gentleman for his leadership and for the very sobering 
information he has presented here today.
  Mr. POMEROY. I thank my colleague, reclaiming my time, Mr. Speaker, 
for his very thoughtful comments.
  The newspapers today carried a discussion about how the stimulus 
package will be put together. We also have to acknowledge this stimulus 
package is all funded from the debt. We have shown the Members where 
the surplus has gone, so any stimulus passed is debt-funded. That means 
it has to be put together in a way that really makes it worthwhile in 
terms of addressing the economic slowdown, because otherwise we are 
just running up the tab some more.
  When we are in a hole, the best way to try and reverse it is to first 
stop digging, and passing a stimulus package on the debt reflects more 
digging. The majority proposal embraced by the President, pursuing an 
agenda of permanent tax breaks which go mostly to the affluent, and 
addressing the corporate AMT repeal, would have the least bang for the 
buck and do the least to stimulate the economy, even though it would 
cost the budget and continue to be funded, again, from the debt.
  This budget business can get pretty arcane. We are challenged 
sometimes to get Members to focus on the long-term debt, even while 
they think about something as exciting as passing a new stimulus bill, 
spending more money, passing another tax cut. I think Members as a 
collective body here in Congress need to really evaluate how American 
families conduct themselves. We ought to try and follow the example of 
American families.
  The people I represent are concerned about putting together something 
that they might pass on to the children. They do not, in their elderly 
years, try and run up their credit cards, double-mortgage the home, 
roar a bunch of

[[Page H57]]

debt up that will ultimate be a burden on their children when they are 
gone. Far from it. They do not want anything about how they have 
conducted themselves to fall as a burden on their children. That is how 
families conduct themselves.
  How have we conducted ourselves in management of the Federal 
Government? Let us look again at this chart.
  We were on a path to pay off the national debt. We were even on a 
path to leave something in a positive balance, leaving something for 
our children. Last year came and last year went, and now the situation 
is totally different: red ink as far as the eye can see. We are going 
to leave our children debt. We are running up the debt before we pass 
on this country to our children.
  If we do not come squarely to terms that that is not the thing to do, 
that we owe our children more than that, we are going to have a 
hellacious debt that they will have that will limit the dimensions this 
great country of ours will be during their lifetimes when we are gone.
  I yield to my friend and colleague, the gentleman from New Jersey 
(Mr. Holt), for his comments on this issue.
  Mr. HOLT. Mr. Speaker, as a member of the Committee on the Budget, I 
really want to commend my colleague, the gentleman from North Dakota. I 
sense some animation in his voice right now as he is getting into this. 
There should be outrage throughout the country because of what is 
happening here.
  A year ago, as the gentleman pointed out so well, we were arguing 
about how rapidly we could pay down the debt. Now, as the gentleman 
points out so well, we will be, and our descendants will be, saddled 
with the debt and the interest that goes with that.
  The other side will say that this is because of the economic downturn 
and cyclic factors; and, indeed, there are some things that happened 
that perhaps were not fully foreseeable. The economic downturn was 
worse than people imagined, the war on terrorism has descended on us 
now, and we have obligations.
  But when we had the budget before us last year, some of us said: 
build a cushion into the budget for this kind of unforeseen thing. So 
some of what happened was beyond our control, but some of it was very 
much the work of the leadership and the leadership of the Committee on 
the Budget for putting in place a tax cut that put us on this path so 
that we cannot at the current rate pay down the debt.

                              {time}  1245

  Mr. HOLT. And the reason we should be outraged about this is that 
this is not some financial technicality. This is money out of the 
pocket of any American, any American who has student loans, any 
American who borrows to buy a combine, any American who has a mortgage, 
any American who does anything involving interest. And so this is not 
just a financial technicality. This is bread and butter for Americans. 
And the sooner we can shape up and get back on a path to pay down the 
national debt, the better will be the financial situation of all 
Americans. And we start by telling the truth.
  I commend my colleague from North Dakota (Mr. Pomeroy) for telling 
the truth. His numbers hold up. They are clear and accurate. We have 
heard our colleague, the gentleman from South Carolina (Mr. Spratt), 
the ranking Democratic member of the Committee on the Budget go through 
these. And one thing I have learned through my years here in Congress, 
do not pretend to know more about numbers, budget numbers, than the 
gentleman from South Carolina (Mr. Spratt). He knows them well.
  He has shown how we have gotten onto this path. And in order to get 
off of this path so that we can begin to pay down the debt, the first 
thing we have got to do is be honest with the numbers. I commend the 
gentleman for doing it. He has laid it out so very clearly.
  Mr. POMEROY. Mr. Speaker, I thank my colleague, and as a member of 
the Committee on the Budget, he has a very important role because we 
have got to get this debt under control. I appreciate his very 
intelligent, committed approach to this central question of the 
government. Will we or will we not pay for the operations that we fund? 
If we do not, our children will, and that is simply not fair. I very 
much appreciate his observations.
  Mr. Speaker, I yield to the gentleman.
  Mr. HOLT. Just a brief comment. While we were standing here talking, 
I was pleased to observe that we have done something else that is 
important to restoring trust to our process here in Congress, trust to 
the very idea of Americans being able to govern ourselves. And, that is 
we have picked up, I believe, the last signature, a Democratic member, 
a member of our party, signed the discharged petition to bring campaign 
finance reform to the floor for a vote. This is a historic step. It 
happened even as we spoke right here and I am pleased to acknowledge 
it.
  Mr. POMEROY. Reclaiming my time, the gentleman has made an important 
announcement. The discharge petition for campaign finance reform has 
hit the mark; 218 Members have signed it and this bill will now come to 
the House floor. This is a tremendous achievement for this body.
  At a time when the country is sickened by what has happened with the 
Enron Corporation and is looking carefully, as we all are, at what 
political shenanigans occurred in the process of this bankruptcy, this 
large company using phony books and pouring tens of thousands of 
dollars into the political system, the hue and the cry, enough is 
enough, address campaign finance reform grew louder and louder and 
louder.
  We have been stymied by a very determined Republican majority 
leadership that has done everything possible to keep the body from 
joining the Senate in passing campaign finance reform. And yet, 
tirelessly the work went on to get the signatures. We have a provision 
that majority rules around here. And when you have got most of the 
Members to sign a discharge petition to bring something to the floor it 
comes to the floor whether the majority leadership likes it or whether 
they do not.
  Just now, moments ago, very important signatures of the last 
remaining Members were placed onto the campaign finance reform 
discharge petition, 218 signatures were reached. This bill will come to 
the House floor. The House will act like the Senate will act and we 
will send to the President a campaign finance reform bill.
  I yield with this happy news to my colleague from Maine (Mr. Allen), 
who has been a leader in the effort to get campaign finance reform.
  Mr. ALLEN. Mr. Speaker, I thank the gentleman. This is a very 
important day. As the gentleman mentioned, for a very long time now the 
House leadership has fought to prevent campaign finance reform coming 
to the floor under a set of rules that would be fair and appropriate. 
But today with the gaining of the final signature, we reached 218 
signatures on this discharge petition. We know that that legislation, 
the Shays-Meehan bill, will come to the floor. I think a lot of credit 
goes to the gentleman from Massachusetts (Mr. Meehan), the Democrat who 
has been pushing this bill for a long time, and to the gentleman from 
Connecticut (Mr. Shays), the Republican who has worked tirelessly to 
make this a possibility. Against the leadership of his own party, he 
has worked extraordinarily hard to make this happen.
  Most of the signatures on that petition are Democratic signatures, 
but there are some Republicans who are willing to stand up to their 
leadership and say that the time for campaign finance reform has come. 
It is embodied by the Shays-Meehan bill, a bill which has already 
passed the United States Senate under the name the McCain-Feingold 
bill. And now we will have a chance, the leadership cannot deny us a 
chance any more to vote on this legislation. So it is a great day, and 
that certainly will be the big story.
  But let me come back, I want to make a couple of comments about the 
budget.
  Mr. POMEROY. Reclaiming my time for a minute just before we leave 
this wonderful breaking news, we have got to credit the minority 
leadership for their role in getting the signatures. We do not have a 
majority here on the Democrat side, so we surely would not hit the 
target without some very brave participation from the Republican side 
of the aisle. And, after all, the very name McCain-Feingold represents 
on the bill that passed the Senate it is a bipartisan provision there. 
It ought to

[[Page H58]]

be a bipartisan provision here. But what our leadership had to 
encounter was a very different posture from the majority leadership.
  We believe the time came for campaign finance reform and the 
gentleman from Missouri (Mr. Gephardt) drove it as hard as he could. He 
has met the absolutely unyielding opposition, to even allow for a vote 
by majority leadership, the idea of campaign finance reform. I did not 
fault them for opposing it, but at least let us vote. The people want 
campaign finance reform. Let us vote. They did everything they could to 
stop it, but finally the people will have their way. This House gets to 
vote on campaign finance reform. And I applaud every single Member that 
put their signature on that discharge petition. This was not to be 
denied and now it no longer will be.
  Mr. Speaker, I yield to the gentleman from Maine (Mr. Allen).
  Mr. ALLEN. Mr. Speaker, this is a great development. We have to say 
that maybe finally with the collapse of Enron there is a recognition in 
this country that big money and politics is not a combination that is 
healthy for ordinary Americans, and I hope that we can change that.
  Mr. ALLEN. Mr. Speaker, I wanted to make just a couple of comments 
about the budget. I have not been here for the whole debate, but I 
wanted to say that those of us last year who said over and over again 
as the President rushed this enormous tax cut through the Senate and 
through the House, we said this is a reckless proposition. It is an 
irresponsible proposition because it leaves no room for error, no room 
for error. They were making the assumption, in fact, the gentleman may 
have a chart available there that shows how the tax cut basically over 
the next 5 years would simply eat up, and that is the chart I was 
referring to, would eat up all of the non-Social Security, non-Medicare 
surplus. That really is what did the damage. And though certainly other 
factors have come into play since then, that you need to spend more 
money to defeat the terrorist network, the decline in the economy, it 
was that miscalculation that really was the more serious mistake.
  I do not know whether others have mentioned it, but right now as a 
result of a downturn in the economy, virtually every State in this 
country is facing a State budget shortfall and all of the stimulus 
packages which came before the House and the Senate late last year, all 
of them would have made the predicament of our State governments much 
worse.
  In my home State of Maine, it does not matter what the proposal was, 
we have been faced with a $250 million shortfall over the next 2 years. 
And all of the stimulus packages were designed in such a way as to make 
that situation worse. The basic problem is that when you change Federal 
tax law, State tax law changes automatically in 44 of the States. And 
when we act here, it is very important that we keep in mind our 
colleagues in State government who are trying desperately to protect 
Medicaid, education funds, all of those things that State governments 
do, and do so well.

  Mr. POMEROY. I appreciate very much the gentleman's comments, as well 
as his ongoing participation in the Budget Group and his advocacy for 
sound fiscal policies in this country.
  Mr. Speaker, I yield the balance of my time, about 4 minutes 
remaining as our time is expiring, to the gentleman from Texas (Mr. 
Stenholm), who year in and year out has been the leading proponent for 
balanced budgets and sound fiscal policy. I am very pleased he has 
joined me for the conclusion of the special order, and I yield to the 
gentleman at this time.
  Mr. STENHOLM. Mr. Speaker, I thank the gentleman for yielding, and I 
apologize for being a little bit late.
  I want to commend the gentleman for beginning this discussion, one 
which I predict we will see day after day after day now talking about 
the economic situation facing our country.
  The gentleman has joined me, as I joined him last year, in pointing 
out that there were perhaps some better ways to go about our economic 
planning, that we should have first, last year, fixed Social Security 
for the future. We should have fixed Medicare and Medicaid. We should 
have sat down and had open and honest discussions and debate and then 
votes on the floor of the House as to how we should provide for the 
future of Social Security, and how we should provide for the current 
future of Medicare and Medicaid. Most of our rural hospitals and now 
urban hospitals are facing the problems that we have created by 
nonaction or by passing an economic game plan that has now got us into 
the predicament we are now in less than 12 months after we stood on 
this floor.
  I stood where the gentleman now stands and I looked at my friends on 
the other side of the aisle and said I disagree with you, but I hope 
you are right. And I sincerely did hope they were right, because the 
country would have been much better off had they been right. But then 
September 11 comes along and we had an unforeseen circumstance. We also 
now know we are in a recession, all of which had a major effect on the 
short-term implications of the budget.
  But the economic game plan we are under for the next 10 years also 
has had a major implication, and one in which we are now going to have 
to have serious and open and honest discussion about where do we go. We 
cannot undo what we have not done. We should have dealt with Social 
Security first, we should have dealt with Medicare and Medicaid first. 
The leaders of this House on that side of the aisle chose not to do 
that. They chose to put in place an economic game plan that will now 
require us, this House, to increase the national debt limit from $5.95 
trillion to $6.7 trillion sometime next month or the month after. We 
cannot escape from that.
  Mr. Speaker, I will yield back at this point. I look forward to 
participating in the future with the gentleman and others as we talk 
about and hopefully can have some more honest debate on this subject.
  Mr. POMEROY. Mr. Speaker, I thank the gentleman very much for his 
comments and even more for his ongoing leadership. We have major work 
ahead of us trying to once again dig out of the hole that we put 
ourselves into, and I appreciate working with him.
  Finally, Mr. Speaker, with about 2\1/2\ minutes remaining, I would 
yield the balance of the time to the other gentleman from Texas (Mr. 
Doggett) that has joined us, an excellent colleague of mine on the 
Committee on Ways and Means.

  Mr. DOGGETT. Mr. Speaker, I thank the gentleman from North Dakota 
(Mr. Pomeroy). I appreciate the leadership he has shown on this and in 
our committee.
  Let me take this opportunity to discus the link between the two 
subjects that the gentleman has been discussing: the mess we have with 
growing amounts of red ink in the budget and the mess we have with 
special interest money here in Washington.
  Today is truly historic. During my entire career in Congress no one 
has succeeded in securing the signature of 218 members on a petition to 
discharge a bill for the House to act on. Since 1993, it has just not 
happened, and rarely has it happened in the entire history of this 
Congress.

                              {time}  1300

  Today, this historic step is taken; and it is closely related to what 
we have been talking about this last hour, because the reason we 
confront much of this mess is a direct result of special favors 
purchased by special interest lobbyists who come up here to avoid 
paying their fair share of taxes and ask to be treated in a different 
way than all the rest of us. We saw one after another approved last 
year, one after another being considered this year, cloaked under the 
term ``economic stimulus.'' Enron, for example, paid no taxes and gave 
more in ``soft money,'' banned by our reform bill, than all of its 
contributions to House and Senate candidates combined.
  We can do something about the entire agenda of this Congress by 
approving this campaign finance bill. I want at this time to call under 
the discharge petition and applicable House rules for a full and fair 
debate of campaign finance on February 11, the second Monday of the 
month. I call on the Speaker, the gentleman from Illinois (Mr. 
Hastert); the majority leader, the gentleman from Texas (Mr. Armey); 
and the majority whip, the gentleman from Texas (Mr. DeLay), even 
though they are 100 percent against campaign finance reform, to 
immediately schedule

[[Page H59]]

the House in session on the second Monday in February. The House has 
spoken: ``Delay no more.''
  I also want to take this opportunity to pay tribute to our new whip, 
the gentlewoman from California (Ms. Pelosi). She is doing a wonderful 
job; and while many people deserve some credit, certainly the decision 
of these fine individuals who have come forward and signed, I believe 
it would not have happened without the leadership of the gentlewoman 
from California (Ms. Pelosi). She is reinvigorating our caucus. It is 
appropriate that we see the first indication of her new leadership in 
the fact that we have joined together and are ready to cooperate with 
our Republican colleagues to make genuine reform a reality.
  I thank the gentleman from North Dakota (Mr. Pomeroy) for his 
leadership and Ms. Pelosi for her crucial leadership because now that 
the House has forced the Republican leadership to schedule debate, as 
set forth in the discharge petition, it is essential that we work 
together to prevent those who have obstructed campaign finance reform 
for so long from further delays. Those responsible for delay are so 
wedded to the same special interests that are creating the budget mess 
that we have. We must work together to ensure that this reform is 
enacted immediately because genuine campaign finance reform is 
connected to every other issue--Social Security, cleaning up the Enron 
mess, creating a fair tax system, and setting the Pentagon's budget--
the Congress will consider this year.

                          ____________________