[Congressional Record Volume 148, Number 126 (Tuesday, October 1, 2002)]
[Senate]
[Pages S9654-S9655]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            DEFICIT SPENDING

  Mr. NELSON of Florida. Mr. President, during the last few weeks, 
there has been much discussion about whether or not we should expand 
our war against terrorism to a specific war in Iraq. A lot of us have 
been on the talk shows and on the news programs. This morning Senator 
Brownback of Kansas and I were on CNN talking about this very subject. 
It is expected that we will take up a resolution with regard to a war 
with Iraq probably later this week.
  In the midst of this very public discussion, largely neglected have 
been conversations about a battle we are in the midst of fighting on 
our own soil--an economic battle against the long-term fiscal stability 
of our country, an economic battle involving the condition of our 
budget and our national economy.
  As we talk about protecting against terrorism and protecting against 
Saddam Hussein in Iraq, clearly, we have to talk about military 
strength. But there is also a major component to being militarily 
strong; that is, to be economically strong.
  Let's look at our condition. Last year the administration told us we 
could expect over $5 trillion of surpluses over the next decade. As a 
member of the Budget Committee, having gone through a similar situation 
way back in the early 1980s, I warned that that was a risky gamble. I 
cited the experiences of 1981 when we voted for a huge tax cut. I 
recalled, as we had this debate over a year ago about the projected 
surpluses over time, that those surpluses may not materialize. If you 
give a tax cut that is too large, it is going to throw you back into 
deficit financing.
  Indeed, that is what happened in 1981. We had a tax cut that was so 
huge, we had to undo it--not once, not twice, but three times in the 
decade of the 1980s.
  Last year when we were having this debate, I suggested that you just 
couldn't count on a 10-year forecast, that there was too much risk 
associated with planning that far in advance. At the time I supported a 
huge tax cut. I supported one version on an amendment that was up to 
$1.2 trillion over a decade and one that would give back to our 
citizens and assist those who were struggling to make ends meet but one 
that wouldn't break the back of the Federal Government should things 
not appear quite as rosy as we thought they were going to be, which has 
been the case.
  Things didn't turn out anywhere close to the rosy picture that was 
painted for us a year ago. After passing last year's tax cut, which 
goes upwards of $2 trillion over a decade, we find that if we adopt 
over the next decade the administration's, the President's spending and 
tax policies, we will not see the $5.6 trillion of surpluses, but we 
will see instead $400 billion of deficits.
  Some point to congressional spending as the root of this problem. 
That is simply not accurate. We will experience these deficits using 
the administration's, the President's, the White House's own proposals 
for spending and additional tax cuts. This doesn't even take into 
account the trillions of dollars of Social Security funds that are also 
going to be spent.
  The true deficit, not counting Social Security surpluses, is not $400 
billion. Over that decade, it is going to be $2.7 trillion. Remember, 
in the election of 2000 we all said we were not going to touch the 
surpluses in Social Security; that we were going to leave those alone; 
that there was going to be a fence off of Social Security surpluses. 
Then those surpluses would pay off the national debt over a 12-year 
period. That didn't happen.
  The Congressional Budget Office tells us nearly $6 trillion of last 
year's projected surplus is gone. There is nothing left.
  Now, let's recap where it went. According to CBO, 34 percent of the 
lost surplus went to last year's tax cuts. Twenty-nine percent of it 
was lost due to the overestimations of revenue by the administration; 
that was the rosy picture of what the surpluses were going to be, 
projecting over 10 years. In other words, lost revenue accounts for 63 
percent of the disappearance of last year's surplus.
  The remainder of the lost surplus went to the war on terrorism--
something we obviously have to finance--or was directly related to the 
recession. Twenty-two percent of that went to increased spending on 
national defense, and only 15 percent of the disappearance of the 
surplus is as a result of the economic downturn.
  For all of those folks asserting the overspending has eaten through 
our surplus projects, that is simply not accurate. The two largest 
reasons for the disappearance of the surplus are tax cuts and the 
administration's rosy estimates of the revenue.

  The third biggest reason is what you would expect: Spending on 
defense. The smallest cause of the disappearance is the economic 
downturn.
  The fact is, the surplus is gone. We are back up to our eyeballs in 
national debt. Last year, the administration said the debt held by the 
public would be virtually eliminated. Last year, the administration 
said the debt would be eliminated by 2008. It didn't happen that way.
  Now we are in the middle of deficit financing. Instead of having no 
debt, we are going to be stuck over that decade with $3.8 trillion of 
debt, and the consequences of this enormously increased debt are that 
the interest cost to the Federal Government will have tripled from $620 
billion over the decade to $1.9 trillion. That is going to have real 
consequences in our national economy.
  Why do you think the stock market is going in the tank, it is right 
now? Every day it is losing. It is down in the 7,000 range on the Dow 
Jones. It is not just because of the threatened war on Iraq. That is 
one element of it. But it is a fact that the Federal Government has now 
gone back into its old ways of deficit financing; that is, borrowing 
money to pay present bills every year, projected over this decade to 
the point that we said we were not going to do it. We must pay 
attention to our bottom line and to the economic security and the 
fundamental financial strength of America. That is what gives texture 
and vibrancy for us as a Nation that needs to be militarily strong, as 
well as morally strong. We need that undergirding of economic strength.
  With deficits projected the rest of the decade, we are going to be 
digging a deeper national debt hole. And when is that going to occur? 
Lo and behold, it is going to occur just at the time that all of the 
baby boomers are going to retire and our cashflow situation is going to 
get worse.
  We are living right now on the positive cashflow out of the Medicare 
and the Social Security trust funds. But by the year 2016, those trust 
funds go from cash positive to cash negative, and they do it in a very 
big way.
  We cannot afford to continue to cut receipts in the hope that doing 
so will somehow miraculously turn into more revenues. We have to begin 
to think more realistically before our overly rosy optimism financially 
paralyzes our Federal Government. At the same time, our economy is 
continuing to be sluggish. Although most analysts remain optimistic 
that we will pull out of this recession eventually, the path is not 
rising very fast, if it is rising at all.

  The economic indicators are disturbing: Last week, leading economic 
indicators dropped for the third month

[[Page S9655]]

in a row, and Nasdaq hit a 6-year low. The Dow Jones is down 1,200 
points since August 22. Oil prices just recently spiked to a 19-month 
high, and consumer confidence is at its lowest since November 2001.
  Since the beginning of 2001, 2 million jobs have been lost, the first 
decline in the number of private sector jobs in 50 years. The U.S. 
poverty rate rose last year for the first time in 8 years.
  Last year's administration spending and tax cut plan has resulted in 
today's collision course of more deficits, more debt, more economic 
insecurity, higher interest rates, lower economic growth and lower 
employment.
  All of this is occurring right under our noses. Yet I do not believe 
that the administration is paying attention. I appreciate the ongoing 
dialog about a potentially impending war in the Middle East--but we 
also need to pay attention to the battles that we are already waging. 
We must do something to reinvigorate the economy. We must pay attention 
to our Government bottom line. We must not continue to raise the debt 
for our grandchildren to later pay off.
  The ACTING PRESIDENT pro tempore. The Senator from Wyoming.
  Mr. THOMAS. Mr. President, I want to make a few short comments before 
I turn it over to my friend from Iowa. I have been listening to my 
friend from Florida. He is blaming the administration for the deficit. 
I remind him who it is that spends the money. The administration cannot 
spend a dime unless it is authorized by the Congress.
  We find ourselves in a Congress that doesn't even have a budget. When 
we talk about spending and deficits, we should talk about ourselves and 
wonder why we haven't done one of the things we have done every year, 
and that is have a budget. We don't have a budget.
  So I agree, as a matter of fact, with the spending, but we need to 
take action.

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