[Congressional Record Volume 149, Number 42 (Monday, March 17, 2003)]
[Senate]
[Pages S3811-S3813]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE BUDGET
Mr. ALLARD. Mr. President, before I begin my remarks, I thank the
budget chairman for his consideration. He is doing a great job. This is
the first year he has assumed responsibility as chairman of the Budget
Committee. In that position, he has expressed a willingness to work
with all members of the Budget Committee and work with Members of the
Senate to get a budget out of the Senate. I commend him for that
effort.
I think it was extremely disappointing not only to me but to the
American people that last year we did not get a budget passed. That is
the first thing that has to happen. If we want to see this process move
forward in an orderly manner, we need to pass a budget.
I rise today to make a few comments relating to the budget resolution
that is before us. This resolution, in my view, is one of the most
important, only next to the legislation committing and supporting our
Armed Forces, which is perhaps the most important the Congress will
consider.
As my colleagues know, the budget resolution establishes the
framework by which Congress will appropriate funds over the next year
and it sets a model for the future. Further, this resolution will
establish a series of important mechanisms for the enforcement of
budget policy and outline important policy priorities to be ultimately
determined by other Senate committees.
I serve on the Senate Budget Committee, and I will take this
opportunity to comment on the pending resolution, as well as a number
of important choices facing this body as we proceed with this debate.
I will make a few comments on the current climate. I have stated
numerous times in recent years that continual increases in
discretionary spending threaten the long-term fiscal stability of the
Government and doom the taxpayer to greater long-term obligations. The
slim window of historic surpluses we experienced in Washington from
1998 through 2001 sparked a rapid spending spree, unlike virtually any
this Nation has ever experienced.
From the year 2000 to 2003, the Federal Government will have spent
more than in any other 4-year period in the last 60 years, excluding
the war years of World War II. When compared to the previous 4 years,
1996 to 1999, the Government has increased spending by a startling $782
billion, The 4-year cost per household of the Federal Government
reaching $73,000. This reckless spending represents irresponsibility in
the short term and far worse in the long term.
Today our Nation stands in the midst of a war on terror and on the
brink of a costly engagement with the savage totalitarian Government of
Iraq. These are conflicts that this country did not ask for but
obligations we must meet. Today's international landscape demands
nothing less than total commitment to our Armed Forces. I am pleased
this budget resolution meets that commitment. I would go one step
further and state clearly the defense of the homeland and the
protection of American interests is the paramount responsibility of the
Federal Government in this Republic.
By abandoning fiscal restraint and discretionary spending over the
last 4 years, we have not only continued to bleed current and future
taxpayers but created enormous fiscal obstacles to the prosecution of
this Nation's defense.
I will speak briefly on defense and the war on terror. The budget
resolution reported by the committee provides for $400 billion for
defense in fiscal year 2004. That is meeting the President's request
for the continued aggressive prosecution of our war against terror
around the world. The full amount of the President's request for
Homeland Security is also included, the new Department of Homeland
Security, growing from $21.3 billion in 2003 to $27.1 billion in 2004.
These dollars will go to the securing of our borders, the training and
supply of first responders, bioterrorism preparedness, and increased
interagency coordination. I can think of no greater priority in these
troubled times.
In talking about the growth package and the tax cuts, perhaps the
area of the budget which will face the greatest scrutiny this week will
be the reconciliation instruction for the President's proposed growth
package. This resolution provided for $698 billion from 2003 through
2013 for growth, job creation, and tax relief. I support the
President's approach to this growth proposal: Mixing tax relief
targeted to working families, encouraging investment by the small
business sector--which, I might add, is the backbone of this economy in
this country--and eliminating the double taxation of dividends.
A number of colleagues made clear they do not believe this package
will stimulate the economy and insist the most stimulative effect would
be through increased spending. This is not only an argument I fail to
embrace, it is one I find dangerous in light of the incredible recent
increases in spending that have proven ineffective in changing the
economy.
Today, Federal revenues are down for the second consecutive year.
That is an unprecedented decrease. The Nasdaq stands at one-quarter of
its value just 3 years ago. To those who claim that the Federal
Government can spend its way out of such conditions, stimulating growth
by absorbing more of America's paycheck, I ask where the evidence is
that this, indeed, works.
As I stated earlier, Congress has added $782 billion in spending over
the last 4 years. In light of the sum of this regrettable spending
spree, the President proposes a rather humble growth package over the
course of the next 10 years. The amount provided in this resolution
accommodates the acceleration of several key tax cuts already
implemented into law such as the marriage penalty tax and the cut in
marginal income tax rates. Further, there is room in this package to
increase the child tax credit and increase small business expensing
limits. These are very real ways to allow working Americans to keep
more of their money, and to do so starting today. I trust they will
know best what to do with these savings and can see only beneficial
stimulus.
With regard to the dividend proposal, the resolution also
accommodates the President's desire to cut one of the Tax Code's most
egregious examples of double taxation, that tax placed on corporate
dividends. It is unfortunate that
[[Page S3812]]
dividend taxation is an area where the United States is a world leader,
taxing dividends at a rate higher than any nation in the world other
than Japan. I would like to be clear on the nature of this tax. It is a
tax on capital. It makes capital more expensive. It makes doing
business more expensive. Capital can be used far better by those
innovating and investing in the private sector rather than through
expanding government largess.
The Wall Street Journal outlined the benefits of this proposal in a
February 26 article. The Wall Street Journal reports that the dividend
proposal would increase job creation by as many as 500,000 jobs per
year over the next 5 years. That is an immediate and wonderful economic
stimulus. Federal Reserve Chairman Alan Greenspan recently testified
before Congress in support of the elimination of the double taxation of
dividends as ``a benefit to virtually everyone in the economy over the
long run.''
Some in this body disagree with Mr. Greenspan and will attempt to
wheel out their tired old incredible rhetoric by labeling this a tax
cut for the rich. A half million more jobs is not a tax cut for the
rich. I hope our dialog will be sophisticated enough to recognize this.
Let me talk a little bit about our domestic priorities. I am pleased
to share President Bush's commitment to a number of domestic priorities
reflected in this budget. As a long-time advocate of a Medicare
prescription drug benefit, I am glad to see an investment of $400
billion over 10 years to strengthen Medicare. This unprecedented
investment includes a prescription drug benefit for our Nation's
seniors, allowing equity and access to the latest and most beneficial
drugs on the market. The $400 billion will also be available for the
improvement and modernization of Medicare, catastrophic coverage, and
assistance to low-income beneficiaries. The President has made clear
this is not simply another step in the expansion of the Medicare
Program but a call for reform and enhanced efficiency.
With the pending retirement of the baby boom generation, it is more
important than ever that Medicare be built on a strong foundation and
offer the most effective treatments possible. This budget follows in
the bold footsteps of the No Child Left Behind Act, continuing the
commitment made with that landmark legislation. This budget resolution
offers the single largest ever financial support for education in
America, going above and beyond the President's request. Title I grants
to local education agencies will increase by $1 billion. The
Individuals with Disabilities Education Act will see a $1 billion
increase in part (B) grants to States, with additional funds available
if a reauthorization bill is enacted that authorizes those additional
funds.
Now to enforcing our budget discipline. Last September, the historic
Budget Enforcement Act expired. This lapse, along with the inability of
the Senate to pass a budget resolution and 11 of 13 appropriations
bills, meant the loss of significant controls on Federal spending. The
resolution before the Senate today seeks to correct this failure and
restores some budget discipline to the process. The resolution contains
enforceable, discretionary budget caps for fiscal years 2003, 2004, and
2005 consistent with the funding levels outlined by President Bush.
This resolution also reinstates the 60-vote point of order against
advanced appropriations as well as targeting nondefense emergency
appropriations with a similar point of order. Perhaps the most
important of all, the budget contains an extension of the pay-go point
of order to limit unbudgeted mandatory spending increases over revenue
decreases.
Budget discipline has long been an area of keen interest to me, and I
have to say I appreciate Chairman Nickles' commitment to enforcement,
although I hope we will continue to work toward establishing greater
controls in spending.
Then a word about dynamic scoring: From a process standpoint, I am
also very interested in expanding this discussion to include dynamic
scoring. As my colleagues are aware, the Congressional Budget Office,
various committees, and the administration generally rely on what is
referred to as static scoring. That is, that legislation and revenue
decreases are scored in terms of costs to the Federal Government,
without factoring in the yield to the Government of the economic
stimulus generated by that policy change.
There are a number of States that have implemented dynamic scoring,
including the State of California; and 40 States incorporate the
principles of dynamic scoring in their budget calculation because they
understand that it truly reflects what happens in the real world. That
is why I am such an advocate of dynamic scoring, a process which I
think reflects what will happen in the real world as a consequence of
our budget.
Earlier, I spoke of the dynamic benefit of the elimination of double
taxation of dividends by quoting the Wall Street Journal and Chairman
Greenspan. Mr. Greenspan, the Journal, the Heritage Foundation, and
others have vociferously asserted that this proposal will lead to more
jobs and, thus, the generation of more wage hours and taxes paid. Even
the Clinton administration Director of OMB agrees there is some
stimulus effect. Despite this highly credible choir of proponents, I
cannot as yet, to date, propose a dynamic scoring for this proposal
produced by this Congress because it doesn't reflect what happens in
the real world. The proposed growth package is a perfect example of the
need for dynamic scoring to be incorporated into this process.
Is it so ridiculous to think that we could calculate the impact this
package would have on job creation, increases in disposable income and
savings, and even a return on Federal revenues due to economic
activity?
Let me go to the chart to reemphasize my point. I have here a chart
which reflects what will happen to additional job creation with the
President's stimulus package.
The blue part of the bars on this chart reflects what would happen to
our economy if we did not change the law at all, if we stayed just the
way we are. On top of that, you will see the orange part of the bar,
which reflects additional jobs that would be created with the
President's economic growth package. An important part of that package
is eliminating the double taxation on dividends.
So, after 2004, 2005, as we move on out to 2008, we see that there is
a substantial increase in the number of additional jobs.
It is nice to talk about additional jobs. What does it do as far as
money in Americans' pockets, in order to help the economy grow? The
next chart shows the additional disposable income. This is the total
amount of disposable income that would be available to Americans as we
create these jobs through the President's job stimulus package, his
economic stimulus package.
The blue line again reflects what would happen if we did not change
any of the current law. The orange part of those bars reflects the
additional growth that would happen as a result of us passing the
President's stimulus package. I think this is significant additional
disposable income. That means Americans will have more money in their
pockets to spend, businesses would have more money in their checkbooks
in order to buy new equipment and create jobs. It is a job stimulus
package that we need today. We don't need it 3 years from now; we need
it today, and I do hope we can move ahead.
Using the dynamic scoring model generated by the Heritage Foundation
Center for Data Analysis, we can see the President's proposal generates
a significant amount of growth in the economy and, in fact, gets far
more bang for the buck than any increase in spending or Government
handout. Current baseline projections for total employment forecast an
unemployment rate of 5.4 percent in 2004. Incorporating the dynamic
scoring method of measurement, we can see that would lower the rate to
4.9 percent, or an addition of 997,000 jobs to the economy.
In my home State of Colorado, more than 16,000 more jobs would be
created in 2004 alone. I have a piece of paper here with me that
reflects the amount of job growth we can expect in each State
individually. For example, we can go to Alabama, the State of Senator
Sessions. We heard his comments. There is a growth in 2004 of 15,100
jobs. Over the 5-year period, it is going to be an average growth of
13,840 jobs per
[[Page S3813]]
year, based on the President's economic growth plan. If we look at the
President's stimulus package, what effect will it have?
We can look to Kentucky, for example. The Presiding Officer
understands Kentucky. With the President's growth package we can
expect, in 2004, 13,900 new jobs with an average over the years up to
2008 of 12,720 new jobs each year.
I have how this will impact each individual State as we move through
the years. It is important that we pass the President's job stimulus
plan.
I have been in Washington long enough to know better than to take job
forecasts and predictions as gospel, but I also know that any policy
that can potentially increase employment by almost a million jobs in 1
year simply must be considered.
I believe it is expected we at least try. There are individuals who
say we should not do anything on economic growth and stimulus. I think
that is the wrong approach. I think the American people expect some
action to happen out of the Senate.
There are those who say maybe we ought to just do increased spending.
Many of my friends on the other side of the aisle are promoting an
economic growth stimulus package that puts emphasis on more spending.
My response to that is, if spending is the answer, with all the
spending that has happened in the last 4 years, why isn't our economy
growing?
I think we have one thing we could do, that we should try at least,
in order to stimulate that economy. I think we need to cut taxes. We
need to cut taxes to stimulate the part of the economy that is most
adversely affected, and that is the business sector of our economy, the
small business sector--the double taxation of dividends. I have had one
accountant tell me if we eliminate the double taxation on dividends,
they are going to be recommending changes in the way that small
business is organized and how they can do it in a way that will save
money and bring money into the small business sector.
I believe we must do more than just complain and criticize but come
up with a plan of action. I see no plan of action from my colleagues
opposing this proposal. Americans deserve to hear alternative plans and
not just suggestions of negativity without action.
I will bring my comments to a conclusion by simply stating I think
this is a good budget proposal that is before us. I think it accounts
for the President's economic stimulus package. Considering the
condition of the Nation today, we need to pass an economic stimulus
package. It addresses the immediate needs of defending this country as
we are on the brink of moving into conflict. I think it is a reasonable
budget. So standing here on the floor of the Senate, I express my
support and hope the Members of the Senate will pass this budget
because we need to have a budget this year.
Having concluded my remarks, I yield back my time.
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