[Congressional Record Volume 149, Number 3 (Thursday, January 9, 2003)]
[Senate]
[Pages S101-S103]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              THE ECONOMY

  Mr. HOLLINGS. I commend our distinguished friend from Illinois. He 
has brought into sharp focus our dilemma with respect to the prime 
initiative of President Bush with respect to education.
  I just finished a column for the local newspaper relative to symbols 
versus substance. You will find our Republican colleagues very strong 
on symbols but very weak on substance itself.
  Let me ask the question, rhetorically, of course: What Governor, what 
mayor--all of us are facing these deficits--is cutting taxes in the 
face of these deficits? With voodoo? In other words, all you have to do 
to fix the deficit is cut your revenues. We heard this under President 
Reagan, and Vice President Bush called it voodoo. We heard all you 
needed to do was to cut taxes and the people would have so much money 
they would spend and everything else. We would have consumer demand. 
You would have sales tax revenues. You would have income tax revenues, 
they would all increase, and we would just grow out of a deficit.
  At that time Vice President George Herbert Walker Bush, Bush No. 1, 
called it voodoo.
  We just had, last year and the year before, of course, voodoo II. A 
tax cut of $1.3 trillion plus interest costs $1.7 trillion. We are 
cutting the revenues and at the same time in the 4 years, and I want my 
colleagues to check the record and mark it down, the defense budget has 
gone in the last a little over 3, nearer 4 years from 1998 until now, 
from $271 billion to at least $371 billion. It will probably be nearer 
$386 billion. We have increased defense costs $100 billion. We have 
increased health costs $107 billion, when you look at Medicare and 
Medicaid and the veterans. But that does not include the community 
health centers or child health care, of course. So we spend another 
$200 billion there. We have increased agriculture, farm subsidies 
another $35 billion.
  While we are increasing the spending that both sides of the aisle 
support--health care, defense, and agriculture, some $235 billion--and 
then we cut the revenues $1.7 trillion, in voodoo, and we end up with a 
deficit. We are just like the States. Only there is no serious purpose 
up here for the needs of the country. It is only for the needs of the 
campaign.
  We have been using this Congress and the White House to campaign. The 
heck with the country. Despite having just completed one election, 
we're already looking at the next election. And the blooming media has 
gone along with us. They treat politics as a spectator sport, where 
they want to know who is up, who is down, who is announcing, who is 
quitting, who is doing this, and who is doing that. You can't get their 
attention on paying the bill.
  As a result, the debt has soared to $6.3 trillion. We will be 
debating next month about increasing the debt limit. I want to see how 
many of my colleagues will vote for that. They have increased the debt 
by cutting all the revenues, increasing all the spending, and saying: I 
am against the Government, the Government is too big, the Government is 
not the solution, the Government is the problem.
  I have sent to the desk a value-added tax. I want to increase taxes. 
I am sober. I am experienced. I got a triple A credit rating back in 
1959 for the little State of South Carolina. I know what you have to do 
to pay the bill. I have been the chairman of our Budget Committee up 
here in the National Government, in the Senate. I can tell you, this is 
about my third try for a value-added tax.
  My bill will be referred to the Finance Committee. I know revenue 
measures under the Constitution derive in the House of Representatives. 
But I know also that we had a hearing back in the 1980s when we had 
this voodoo. Lloyd Bentsen of Texas was chairman of that committee. I 
brought Dr. Cnossen, the Hollander expert. He testified, because he 
knew he had helped the United Kingdom. He had written a value-added tax 
for Japan, for Canada--every industrialized country in the world save 
the United States has a value-added tax. That is one of the big 
deficiencies we have in international trade.
  They have a 15 percent to 17 percent advantage with their VAT. We 
have the disadvantage. When Dr. Cnossen testified, as they were leaving 
the room--I will never forget--former Senator John Chafee turned to 
Lloyd, the chairman, and he said, ``Lloyd, if we had a secret ballot we 
would vote it out of this committee unanimously.''
  We needed the money to balance the budget. We tried with Gramm-
Rudman-Hollings and had a temporary restraint on the Federal budget. 
But then instead of a prompter, a sword to prompt fiscal 
responsibility, it was used as a shield. We needed to take extreme 
action. But we didn't take it, and Gramm-Rudman-Hollings was out by 
1992. Bush I was running a $400 billion deficit and lost office to the 
Governor of Arkansas.
  Let's get to the Governor of Arkansas. When Clinton got nominated, 
his friend Erskine Bowles from Charlotte got together business leaders 
and market experts. They went down to Little Rock. Along with them was 
Alan Greenspan. Greenspan told then-Governor Clinton--he said, When you 
come to Washington you are going to have to not only cut spending, you 
are going to have to increase taxes.
  Clinton said, Are you serious?
  He said, The country needs it. We are not going to have any 
investment, we are not going to have any jobs, until the Government 
starts paying down the debt.
  And paying down the debt was the 8-year chant on the floor of the 
Senate. You can't hear it now. You can't hear it now, about paying down 
the debt. You have to have tax cuts and so forth. One side says let's 
have, I don't know, a $700 billion, $800 billion, $900 billion

[[Page S102]]

tax cut. The other one says, no, only $200 billion or $300 billion. We 
are back into the ying and the yang. We had that under voodoo I, under 
Bush II, year before last, when he said he wanted $2.3 trillion in tax 
cuts. The Democrats come around and said $900 billion and we 
compromised at $1.3 trillion and with interest costs $1.7 trillion. 
That is what we are on course to do.
  Politicians go on the weekend shows chanting, I am for the rich, you 
are for the poor, the ying and yang, and it is all campaign applesauce. 
It is not for the good of the country.
  I am telling you what we need to do is pay for the war. We have a 
President, a Commander in Chief who says, look, I am going to send you 
to get killed in Iraq, or maybe North Korea, or wherever he is 
headed. He is going to ask you to fight and sacrifice, but we are not 
going to pay for it. We are going to have to run deficits. In past wars 
we ran deficits, but we paid for it at the particular time.

  What really happened? If you take all of the deficits for the last 30 
years--right after World War II--under Presidents Truman, Eisenhower, 
Kennedy, Johnson, Nixon, Ford--you take the sum total of all those 
deficits. It is $358 billion.
  We just finished the fiscal year--one year under Bush II--which does 
not include the cost of the real war. It was only an excursion in 
Afghanistan. The Congressional Budget Office says the excursion in 
Afghanistan and homeland security amounts to $35 billion at the most. 
But in one year we have run a deficit of $428 billion. And to what do 
we owe this amount? Guess what. We had a stimulus--I want everybody to 
hear this--a stimulus of $428 billion in the last fiscal year. We are 
already $159 billion in the red the first 3 months of this fiscal year.
  Added together, you have a $587 billion stimulus in the last 15 
months. It hasn't worked. We are getting worse and worse. There is not 
going to be financial investment as long as we continue on this course. 
It is absolutely reckless to talk about whether any kind of a dividend 
can do it, or whether a marriage penalty can do it, or whatever else. 
They have to come around and argue about double taxation and everything 
else of that kind. We need to do both. We need to cut the spending and 
we need to increase the revenues. To accomplish this goal, we must have 
a value-added tax.
  I can tell you here and now that it will take a year to get this 1 
percent value-added tax up and running. It will take a year to get it 
the administration worked out, and to get the different businesses to 
change around their computers and for the IRS to institute it. And when 
we do it will get about $35 or $40 billion, and we will begin a modest 
effort to pay for whatever war, whether it is a domestic war, an Iraqi 
war, a North Korean war, or some of the 14 peacekeeping operations.
  I can tell you now the military is stretched. That Reserve crowd that 
flies the C-17s in my backyard have been there since September 12, 
2001. If they made $60,000 or $70,000 in private life, they are down 
now to $35,000 at the most. They cannot pay their rent. It is the same 
way with the National Guard. They are being called up everywhere in 
these particular cases.
  We need to come to grips with what we are doing and cut out the 
campaigning and start looking at the needs of the country. 
Specifically, every Senator says we are not going to spend Social 
Security. President Bush, in February the year before last, when he 
submitted his message to the Congress said: I am setting aside $2.6 
trillion for Social Security.
  We have that, and more. In the law, it says: You shall not spend the 
Social Security surplus on anything other than Social Security. That is 
section 13301, recommended in section 21 of the Greenspan Commission. I 
dropped in a bill that requires the Secretary of the Treasury to 
certify that if there is a deficit there cannot be a tax cut. That tax 
cut--whatever they pass in this pandemonium, pell-mell rush for 
reelection--whatever tax cut they pass will not take effect until that 
on-budget surplus or on-budget deficit is zero.
  That is the test of not using Social Security moneys. I want to keep 
them honest. I have already introduced it as a bill. It won't be a 
surprise. I had it all ready last year. We couldn't even debate the 
budget last year. We were criticized on the Democratic side of the 
aisle for not bringing up the budget. But I say bring it up and we will 
get the votes and find out whether they really want to protect Social 
Security because they have been spending it on any and everything but 
Social Security. Under section 21 of the 1983 Greenspan Commission 
report, it said set these funds aside in trust for the baby boomers. 
There is nothing wrong with Social Security except how they spend it. 
Now we owe the Social Security trust fund $1.3 trillion because we have 
been spending it on any and everything other than Social Security.

  Let us not double talk the electorate. Let us remember to tell the 
truth to the American people. But I can tell you the bottom line is 
there is a $428 billion deficit for 2002, and we are $159 billion 
already in the red in first 3 months of 2003--in the last 15 months we 
have $600 billion of stimulus money that hasn't stimulated the economy. 
Another $30 billion or $40 billion a year is not going to stimulate it.
  So we are whistling ``Dixie.'' We are doing this not for the country 
but for campaigns.
  I want to say one more word with respect to the economy. We were 
having a hearing, and the distinguished Senator from Kansas talked 
about Boeing and how they just lost some 10,000 jobs. I reminded him 
that since NAFTA, we have lost 55,200 textile jobs. The Senator from 
West Virginia, Mr. Rockefeller, reminded us how we lost the steel 
industry. We can go right on down. We have 6.3-percent unemployment in 
my little State of South Carolina. We are not manufacturing anything. 
We have exported the industrial backbone of the United States. What we 
have is not free trade. Now the Senator from Kansas understands that it 
is competitive trade.
  There are all kinds of subsidies. There is a standard of living. We 
require before you open up any manufacturing, you have to have clean 
air, clean water, Social Security, Medicare, Medicaid, plant closing 
notice, parental leave, safe machinery, safe working places--go right 
on down the list--the highest standard of living. You can go to Mexico 
for 58 cents an hour, and you can go to China for less than that. They 
are leaving Mexico to go to China. They are all talking about free 
trade. Nothing is free. It is competitive.
  We have to rebuild the economic manufacturing capacity and strength 
of the United States. We need jobs. We are not going to have any jobs 
until we get a competitive trade policy. Otherwise we are not going to 
have any investment long-term because what we are doing is increasing 
interest on taxes. You cannot avoid it. The interest costs for the debt 
is growing at $1 billion a day right now. If we go to war, oil costs 
are going up, and interest costs are going up. Rather than $365 
billion, interest costs are going to be up to $400 billion to $500 
billion for just carrying the charges--for the privilege of campaigning 
and the politicians looking out for their reelection and not for the 
country.
  I am sorry to say this. But that is the truth.
  I see others are now ready to speak. I will speak at length otherwise 
with respect to the draft. There is no sense of sacrifice in this 
country. Our friend, Charlie Rangel, over on the House side, has put in 
the draft bill. In the beginning, I was opposed to the creation of an 
all volunteer force. So I put the draft bill in the Senate three other 
times. And I put it in now a fourth time day before yesterday because 
there has to be a sense and a feel of shared sacrifice. Don't come and 
tell us we have a strong economy, and I am sending you to get killed; 
and, this is a wonderful thing. We have to have more confidence in our 
commander in chief. He simply cannot just go to flag factories, get his 
sound bite early in the morning, rat-a-tat-tat sound bite, have two 
fundraisers at night, and let the country go to--you know what--in a 
hand basket.

  That is what is going on. We have to sober up. We have to pay for the 
war. There has to be a shared sacrifice and sense of it in this 
country. I think the country is ready, but the Government is not.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Wisconsin.

[[Page S103]]

  Mr. FEINGOLD. Mr. President, I thank the Senator from South Carolina 
for his remarks.

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