[Congressional Record Volume 149, Number 7 (Wednesday, January 15, 2003)]
[Senate]
[Pages S308-S311]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              THE ECONOMY

  Mr. CONRAD. Mr. President, I rise today to talk about what the 
President has proposed in terms of an economic stimulus package or, as 
he now terms it, an economic growth package, because I think it is one 
of the key issues facing us and our country in the days ahead. As the 
chairman of the Budget Committee--at least until the new organizing 
resolution is adopted, at which time I will be the ranking member of 
the Budget Committee--I think I have a special obligation to my 
colleagues to review what the President has proposed and to give my 
take on it.
  I, along with my staff, have now given a detailed review to what the 
President proposes, and I have concluded that the President's proposal 
is, No. 1, ineffective with respect to giving stimulus to the economy;
  No. 2, unfair in terms of its application;
  And, No. 3, irresponsible because it will add almost $1 trillion to 
our national debt when we are already back into serious deficits and 
adding to the national debt right on the eve of the retirement of the 
baby boom generation. I don't believe this is a growth package. Indeed, 
I think it will inhibit growth because I believe it will put upward 
pressure on interest rates, and when the economy does resume stronger 
growth, higher interest rates will tend to choke off that stronger 
growth.
  I started by saying I think the President's plan is ineffective with 
respect to stimulus. I said that, because if one looks at the total 
cost of his plan, which we estimate at over $900 billion--not the $600 
billion that has been advertised but over $900 billion--with associated 
interest costs included, and, obviously, if you spend money or you 
reduce taxes, the interest costs to the Federal Government go up 
because you are adding to the debt. We are in debt now. We are paying 
interest on that debt. If you add to the debt you add costs.
  It is stunning to me. But only $36 billion of this $900 billion cost 
in the President's plan is for this year. This year is the time we have 
economic weakness. This year is the time our economy needs to be 
stimulated. Yet only about 5 percent of the President's package--in 
fact, less than 5 percent--is for this year. That makes no earthly 
sense to me. If the rationale is the economy is weak and needs a boost, 
why would you only use 5 percent of the cost of your package for 
stimulus now?
  Last year on a bipartisan basis, Democrats and Republicans on the 
Budget Committee in both the House and the Senate agreed on a set of 
principles to apply to a stimulus package. We agreed it ought to be 
effective immediately; that most of the money should flow in the first 
6 months, and that it should have very little outyear effect to avoid 
adding to the deficit and debt. The President's proposal stands that 
set of principles on its head. When the President's plan was first 
introduced, they said it was going to give over $100 billion of lift to 
the economy this year. Then they changed that and said that it would 
only be about $58 billion. Now we have had a chance to do a detailed 
analysis of the President's proposal and we find that it is not $108 
billion; it is not $58 billion; the lift to the economy this year is 
$36 billion. The President might argue it should be a little bit more 
than that because of the unemployment insurance legislation we have 
already passed. That is $3 or $4 billion. If you want to add that, 
fine. That would take us to about $39 billion. It doesn't change the 
point at all. Less than 5 percent of the cost of the President's plan 
is available this year. It is ineffective in terms of stimulus.
  Second, it is not fair. It is not fair in its application. It is not 
fair in its distribution.
  This chart shows the five quintiles--arranged in income order of 
earners in the United States. In other words, one-fifth of American 
taxpayers in each of these categories. We see the top 20 percent earn 
more than $68,000 a year. Under the President's plan, they get 78 
percent of the benefit. But look at what other folks get. It is 
fascinating. The bottom 60 percent get less than 8 percent of the 
benefit. The top 20 percent get 78 percent of the benefit. The bottom 
60 percent get less than 8 percent of the benefit. It is not fair.
  In fact, the unfairness of this plan becomes even clearer when you 
look at the other distributional effects. This shows the benefit of the 
plan to those people in our society who earn over $1 million a year. 
Under the President's plan, they would get an average tax reduction of 
$88,873.

  These are not Kent Conrad's numbers. This comes from the Center on 
Tax Policy. This is their analysis of the President's plan.
  Interestingly enough, the typical taxpayer--that 20 percent of 
taxpayers who are right in the middle--get an average benefit of $265. 
The President said this is fair. It is an interesting notion of 
fairness. I don't think it is fair. I don't think it is close to being 
fair to give to those who earn over $1 million a year more than $88,000 
of benefit and to those who are right in the middle of the income 
stream in our society $265. The President says that is fair. That 
raises a mighty serious question about fairness.
  It is ineffective. I think it is clear. Only 5 percent of the 
stimulus is available this year at the time when our economy needs a 
lift. I think it is abundantly clear it is not fair.
  But even more serious, I believe, is the reckless nature of their 
proposal. How is it paid for? That is a question too little asked 
around here. How is it paid for? Here is the reality. Every penny of 
this proposal is being paid for out of the Social Security trust fund. 
The President says it is class warfare when anybody questions the 
fairness of his plan. I think the President is engaging in class 
warfare to propose taking $900 billion out of the Social Security trust 
fund to pay for a tax program that is overwhelmingly skewed to the 
wealthiest among us. That is wrong. It cannot stand and it should not 
be passed.
  Not only does every penny come out of the Social Security trust fund, 
but it is going to dramatically increase the debt of our country.

[[Page S309]]

  You will remember in 2001 when the President told us that under his 
plan the debt of the country by 2008 would only be $36 billion. He was 
going to have a maximum pay-down of the debt. Events have proved quite 
otherwise. Instead of being virtually debt free, the President's 
policies are exploding the debt. We are not reducing the debt. We will 
be increasing the debt even more if we adopt the President's plan. The 
debt will stand at $4.7 trillion--nearly a $900 billion increase, if 
the President's plan is adopted.
  I think we have to consider this in light of our overall 
circumstances. This chart shows surpluses and deficits without using 
Social Security funds for other purposes--something virtually every 
Member of this body has pledged not to do. The President pledged not to 
do it. Yet, what we see is we are already on a path and are now using 
Social Security to pay for tax cuts and using Social Security funds to 
pay for the costs of government.
  If we look back over an extended period--back to 1992, and look ahead 
to 2012--back in the 1990s we were able to make progress on stopping 
the use of Social Security money for other purposes. We achieved it in 
2 years. We didn't use any Social Security money for other purposes for 
2 years in the Clinton administration. Now you can see we have plunged 
back into deficit and in a very dramatic and substantial way. The 
deficit this year is going to be in the hundreds of billions of 
dollars. If Social Security were not used, we would have more than $400 
billion in deficit this year and be approaching $500 billion in deficit 
next year.
  Looking ahead, this top line of the chart shows the current 
circumstance we face. You can see that we face deficits without using 
Social Security virtually the whole rest of this decade. If the 
President's additional tax cut plans are adopted, we will not escape 
from deficits the entire rest of this decade. Instead, we will be 
running massive deficits each and every year all of this decade.
  Now, some say: Well, Senator, we have run big deficits before. We did 
in the 1980s, and we were able to escape from it. That is true. The 
difference now--and I hope colleagues are listening, because there is a 
big difference now--the difference is the baby boom generation poised 
to retire. And this is not a matter of projection. It is not a matter 
of conjecture. It is a matter of fact. The baby boomers are alive. They 
are going to be eligible for Social Security and Medicare. They are 
going to begin to retire at the end of this decade, and it is going to 
change everything.
  Mr. DURBIN. Will the Senator yield for a question?
  Mr. CONRAD. I am happy to yield.
  Mr. DURBIN. On the question of the continuing deficits and the 
projections, I recall the Chairman of the President's Council of 
Economic Advisers suggesting a war in Iraq might cost us $100 billion 
and then it being kind of open ended as to what it would cost us to 
continue to occupy that nation and keep it under control for some 
period of time.
  When we project out the deficits which you said you can see on the 
horizon, based on the President's tax cut and the current state of the 
economy, does it anticipate that kind of emergency situation where we 
would be involved in a war in Iraq or we would be involved in a long-
term occupation?
  Mr. CONRAD. I am glad you asked the question because in these 
projections the full cost of a war with Iraq has not been included. 
This only anticipates proposals the President has already made on 
spending and taxes, as well as an anticipated supplemental to cover the 
defense buildup that is currently underway, but it does not cover the 
additional cost of a war. Those numbers would add to the deficit and 
debt I have outlined here.
  I might say to my colleague, it is true the President's Chief 
Economic Adviser said it could cost $100 billion, perhaps as much as 
$200 billion. In fact, if we are engaged in a 5-year occupation, the 
Congressional Budget Office has told us the cost would be in the range 
of $250 billion. None of those numbers are in these projections.
  Mr. DURBIN. One last question. I know the Senator wants to complete 
his presentation.
  So we can be certain that the baby boomers are going to arrive in 
need of Social Security and Medicare. That is coming. But we have this 
uncertainty when it comes to war and its cost, which could dramatically 
increase the deficit, money taken out of the Social Security trust 
fund, just as the baby boom generation comes of age and expects their 
benefits will be paid.
  Mr. CONRAD. I don't know how to say this in a way that will catch the 
attention of my colleagues and catch the attention of the American 
people: We are headed for a train wreck of enormous proportion. We are 
headed for a circumstance in which the head of the Congressional Budget 
Office said we are headed for either unsustainable debt and an 
unprecedented tax increase to 30 percent of gross domestic product--
that would be a 50-percent tax increase from where we are now--or the 
elimination of the rest of Government as we know it.
  That is not a Democrat speaking. That is the head of the 
Congressional Budget Office, who is nominated and put in place by our 
Republican colleagues. He is telling the truth. The Comptroller General 
of the United States has given us the same warning. We are headed for a 
cliff, as a Nation, as a country.
  Let me show you what that cliff is.
  This chart shows that the Social Security trust funds face a cash 
deficit as the baby boomers retire. But the words do not capture what 
is really going to happen. ``Cash deficit'' sounds pretty cold and 
impersonal--not a very meaningful couple of words.

  But here is what is going to happen. This chart shows where we are 
now. The trust fund is running surpluses. But in 2017, those surpluses 
turn to deficits. It is this money that is being used now to pay for 
those tax cuts, to pay for the defense buildup. But look what is about 
to happen. That trust fund, in 2017, as the baby boomers retire, is 
going to go cash negative, and then it is going to go cash negative in 
a huge way. It is going to achieve negative annual cash-flows of over 
$1 trillion a year.
  Is anybody listening? Is anybody paying attention to where we are 
headed? And the President says: Dig the hole deeper. More tax cuts, tax 
cuts that cost hundreds of billions of dollars this decade but cost 
trillions of dollars at the very time this is happening. At the very 
time the trust funds go cash negative, he is saying: Cut the revenue 
more--even in the face of increased spending for defense and homeland 
security, even in the face of an attack on this country, even in the 
face of the prospect of war with Iraq, even in the face of a crisis 
with North Korea. It is not responsible. It does not add up. It is 
reckless. And it should not go forward.
  And it is not just the Social Security trust fund. Shown on this 
chart is the Medicare trust fund. It has exactly the same pattern. We 
are running surpluses now--smaller than the surpluses in Social 
Security--but look what is going to happen in 2016. We are going to 
see, as the baby boomers retire, the costs mount geometrically, and the 
annual deficits approach $1 trillion in Medicare alone.
  Is anybody paying attention? Is anybody thinking about where we are 
headed? Is anybody thinking about what this will mean to a future 
Congress and a future administration?
  Economic growth? Absolutely. Stimulus package? Yes. We ought to take 
steps to strengthen the economy now. That makes sense. But we have to 
be very careful about the long-term effects of what we do because we 
are headed for a cliff.
  Let me just conclude by saying, there are other stimulus packages out 
there that provide much more stimulus this year--the Baucus package, 
the Pelosi package--in comparison to the Bush package, but have much 
lower costs over the 10 years.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. CONRAD. I thank the Chair.
  I hope our colleagues will think carefully about the consequences of 
what we do here.
  The PRESIDING OFFICER (Mr. Smith). The Senator from Illinois.
  Mr. DURBIN. Mr. President, it is my understanding we have about 10 
minutes left in morning business on the Democrat side before the 
Republicans have their time.
  The PRESIDING OFFICER. Nine and one-half minutes.
  Mr. DURBIN. I thank the Chair. If there is no one else on the floor, 
I would like to claim that time.

[[Page S310]]

  Mr. President, before Senator Conrad leaves, I say to the Senator, 
thank you for your presentation. I hope those who are following this 
debate will reflect for a moment on what Senator Conrad has brought to 
us this morning. He is the Democratic ranking member of the Senate 
Budget Committee. I am very proud of the work he does, and the American 
people should be grateful for the time he spends analyzing these tough 
issues.
  I know at times it must be a lonely assignment because in this 
revelry we have about the President's tax cut and the President's so-
called stimulus package, few people are really reflecting on the 
overall impact of this package on our economy.
  What Senator Conrad has told us this morning is very graphic because 
he has pointed out the fact that the President's package is 
fundamentally unfair, fundamentally unfair, in that the benefits he is 
providing for tax benefits are benefits that are, frankly, going to the 
wealthiest people in this country.
  The argument has been made on the Republican side of the aisle that 
many people working for a living today are ``not paying taxes.'' I 
actually heard a Pennsylvania Senator, a Republican, say: You know, a 
third of the workers in America don't pay taxes. Well, I wish he would 
have a little conversation with those workers who would be happy to 
remind him they pay taxes every single day for every hour they work. 
They are payroll taxes, taxes that come right out of their paycheck. 
These are people struggling to keep their families together, trying to 
guarantee to their kids the same quality of life we all want to see in 
America.

  The President has forgotten them. The Republican side of the aisle 
appears to have forgotten them. But we don't believe they should be 
forgotten. These are wage earners who, if given some resources through 
tax breaks, would end up spending that money to invigorate this economy 
and to move us forward again to get us out of this recession which just 
won't go away.
  The President's people like to say: You mean the Clinton recession? 
We inherited that problem.
  There is no question but that the statistics show the beginning of a 
downturn toward the end of the Clinton administration. But who would 
have guessed we would be stuck in this rut on the side of America's 
economy for so many months under the Bush administration? By now we 
should have emerged.
  Two years ago, the President said: I have the perfect formula. I am 
going to give you an economic stimulus package that will bring the 
economy back.
  He persuaded this body and a dozen Democratic Senators to join him 
and vote for a tax package which I opposed, another tax package 
designed to cut taxes on the wealthiest people in America. As we look 
back on that decision, which has added geometrically to the debt and 
deficit with which we are coping, you have to ask the basic questions: 
Did it work? Is America better today? Is our economy moving forward? 
The honest answer is no, it didn't work.
  So the President comes back this year and says: I have a magic 
formula that will move this economy forward, get us out of the 
recession, finally start restoring jobs in America, profitability to 
businesses, and portfolios will increase in size.
  We say to the President: What is it?
  He says: More of the same. Let us give tax breaks to the wealthiest 
people in America, and I just guarantee you that it will help.
  It doesn't stimulate the economy. As Senator Conrad and others have 
pointed out, most of the benefits the President wants us to enact 
really won't occur for many years to come. So we are going to give tax 
breaks to wealthy people, implemented over a long period of time, which 
will not have an immediate impact on this economy. We know they will 
have an immediate impact on the deficit and debt of America.

  How can we in good conscience say to the American people that we are 
going to ignore the millions in the baby boom generation who have paid 
into Social Security their entire working lives, who have played by the 
rules and followed the law in anticipation that when they reached 
eligibility for Social Security, it would be there to help them? We 
ignore them if we enact the President's so-called stimulus package 
because what the President does is create a deeper deficit and greater 
national debt by borrowing from the Social Security trust fund just as 
we need it for the baby boom generation.
  President Bush's economic stimulus plan betrays the baby boom 
generation. At a time when we promised them Social Security would be 
strong enough to provide the benefits for the baby boomers, the 
President is taking hundreds of billions of dollars out of the Social 
Security trust fund. It not only betrays that generation, it betrays 
their children and grandchildren, who will be saddled with that debt 
for years and years to come. Is that the legacy we want to leave? Think 
about it.
  At this moment in our history, when we are this close to engaging in 
a war, with 130,000 American troops positioned to invade Iraq, with 
consequences unpredictable at this moment, with the ultimate 
possibility that we will be occupying that nation, trying to stabilize 
it for a long period of time, the President doesn't say: America, come 
together, unified; be prepared to sacrifice, stand behind the men and 
women in uniform.
  He says to us: We can have it all. We can have our deficit. We can 
have our recession. We can have these tax cuts for wealthy people. We 
can pay for a war, and we can take care of Social Security.
  Who in the world is watching the store down at the White House? Who 
is adding up the numbers? I am afraid people are not really taking 
cognizance of the reality of what we face. For once can we step back 
when it comes to tax cuts and say: Instead of being dedicated to 
leaving no millionaire behind, we are not going to leave any middle-
income American behind? Wouldn't that be a much better dedication for 
this country?
  Should we not take those who have been activated in Illinois and Ohio 
and across the Nation in the reserves and say: What are we doing in our 
tax package to help these people who are giving of their lives and 
sacrificing for the Nation? Should we not be providing tax benefits for 
them as opposed to the wealthiest people in America who will stay home 
and follow the war in Iraq on the nightly news?
  I say to the President: Simple fairness dictates and the economy 
requires us to put a stimulus package together that is 1 year in 
duration, that is fair in terms of the tax benefits so the majority of 
benefits go to the majority of Americans to make certain that what we 
do ultimately will stimulate this economy, will not drive us deeper 
into debt, and will not sacrifice the Social Security trust fund.
  If we stick to those principles, we can have an economic stimulus 
plan to help America. Otherwise, we are committed to a plan the 
President has already demonstrated will fail. This plan will fail, and 
it will fail at great expense not only to the baby boom generation but 
to their children and grandchildren.
  I know some Republicans have said they have misgivings about this 
plan. That is encouraging. It is time we have an honest bipartisan 
discussion and say to the people in the White House: You have gone too 
far. You have suggested something not good for America, something that 
is not fair, something that does not move us forward.
  That is the discussion we need. That is the bipartisan conversation 
in which we should be engaged.
  Why are we not talking about dedicating our resources and time to 
things American families really care about? In Illinois right now, the 
No. 1 business complaint and labor complaint is the cost of health 
insurance. The yardstick by which I will measure the President's State 
of the Union Address is whether or not he has the political courage to 
step up and address this issue. If the President doesn't address the 
cost of health care in America, he is ignoring a major business expense 
and a major worry for families across the Nation.
  He can talk about dividend taxes, tax breaks of $89,000 a year for 
millionaires, but for goodness' sake, help the average family pay for 
their health insurance, be sensitive to the fact that millions of 
Americans have no health insurance protection. These are things real 
families worry about every single day. They are not concerned about

[[Page S311]]

whether or not Bill Gates or his father have added tax benefits. They 
want to know if they can protect their kids, if they can protect their 
family with health insurance.
  These are the real issues being ignored by this White House. I 
sincerely hope the Senate will not ignore them.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. THOMAS. Mr. President, I rise to speak in morning business.
  The PRESIDING OFFICER. The Senator has that right.

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