[Congressional Record Volume 149, Number 47 (Monday, March 24, 2003)]
[Senate]
[Pages S4320-S4323]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                               THE BUDGET

  Mr. CONRAD. Mr. President, we are on the verge of completing action 
on the budget resolution for this year. The occupant of the chair knows 
well that tomorrow we will turn our attention to the final amendments. 
There will be 40 amendments in order on our side, some number on the 
other side, and we will complete action by 4 o'clock on Wednesday.
  These are momentous decisions that have very important long-term 
implications. So I thought I would take a moment today to review where 
we are, where we are headed, and to propose an alternative I will be 
asking my colleagues to vote on tomorrow, so that we have a chance to 
describe in some detail what the elements of the Democratic alternative 
are to the budget being proposed from the other side.
  Let me start by reviewing where we are and reminding colleagues that 
just 2 years ago we were told we had some $5.6 trillion in surpluses 
over the next decade. Now we know that if the President's tax and 
spending policies are adopted, instead of surpluses we will have $2.1 
trillion of deficits over the next 10 years. That is especially 
important, given the fact that the baby boom generation is poised to 
retire in this 10-year period. In fact, the baby boomers start to 
retire in 2008. This is an extraordinary reversal that has occurred, 
$5.6 trillion in surpluses 2 years ago, $2.1 trillion in deficits now. 
That is a $7.7 trillion reversal.
  Let's look at where the money went. This next chart shows where the 
money went. Obviously, some of it is because of the economic downturn, 
some of it is because of additional spending as a result of the attack 
on this country. The biggest reason for the disappearance of the 
surplus is the tax cuts that have been already passed and those that 
the President proposes. If you take those tax cuts and the associated 
interest costs, you see it is the biggest single reason for the 
disappearance of the surplus.

  The second biggest reason is labeled here ``other legislation.'' That 
is primarily spending--spending as a result of the increases for 
national defense and homeland security. That is where virtually all of 
the additional spending has gone.
  The third biggest reason is technical changes, primarily lower 
revenues--revenues being lower than anticipated, not as a result of the 
tax cut but because the economic models incorrectly predicted what 
revenue would be for various levels of economic activity.
  The smallest reason for the disappearance of the surplus is the 
economic downturn, although it has clearly played a role, at 9 percent.
  I think what is most sobering about where we are and where we are 
headed is this chart from the President's own budget. This is from page 
43 of his analytical perspectives. It takes the long view. It looks 
from 2002, going out to 2050, if the President's policies are adopted, 
his tax cuts, his spending. What it shows is we never escape from 
deficit--never. And these are the good times; these deficits are the 
smallest as a percentage of our gross domestic product, even though 
they are record deficits in dollar terms. These are the largest 
deficits we have ever had in dollar terms.
  This year, the deficit, not counting Social Security, will be over 
$500 billion on a $2.2 trillion budget. That is a very large deficit by 
any measure. But look at what happens if we adopt the President's plan. 
Those deficits get larger and larger and larger as we go forward 
because the cost of them explodes at the very time the cost of the 
Federal Government explodes and at the retirement of the baby boom 
generation.
  Some are saying deficits don't really matter. Somehow, even people 
who, for their whole careers, believed deficits matter and that we 
ought to combat deficits are now saying, well, deficits don't really 
matter, that these are relatively small deficits in the percentage of 
GDP terms, and that we need not really worry about that.
  Mr. President, I will say this. First of all, these are not small 
deficits: $500 billion deficit on a $2.2 trillion overall base is a 
deficit of over 25 percent. As a percentage of GDP, A $500 billion 
deficit on a GDP of $10.5 trillion is a deficit approaching 5 percent 
of GDP. That is in the range of the very large deficits we saw in the 
eighties.
  Again, what I hope will be remembered is that these are deficits that 
are right on the verge of the retirement of the baby boom generation. 
That is when the cost to the Federal Government explodes. That is why 
these deficits are especially dangerous for the long-term economic 
security of the country.
  For those who say deficits do not really matter, let's turn to Alan 
Greenspan who is the chairman of the Federal Reserve. He believes 
deficits matter. He said:

       There is no question that as deficits go up, contrary to 
     what some have said, it does affect long-term interest rates. 
     It does have a negative impact on the economy, unless 
     attended.

  This chart is especially important because it shows why this matters 
so much. This shows the moment in time we are in and why the previous 
chart from the President's analysis shows this could be the sweet spot. 
It is because the trust funds of Medicare and Social Security are right 
now producing hundreds of billions of dollars of surpluses. This year 
the Social Security trust fund alone will produce over a $160 billion 
surplus. That is the green bar on this chart. That is the Social 
Security trust fund. The blue bar, the smaller bar, is the Medicare 
trust fund. It is also producing surpluses, although substantially 
smaller than Social Security. One can see they are much larger in total 
than the tax cuts that are in place.
  Look what happens in the next year. Then the size of the tax cuts 
almost equal the trust fund surpluses. That is true the rest of this 
decade. Then look what happens. As the trust funds start to go cash 
negative in the next decade, the cost of the tax cuts explode. Let's 
reality test. We are already in record deficits now, the biggest 
deficits in dollar terms we have ever had. We are already in record 
deficit land. The biggest deficit on a unified basis--that means when 
we put everything into the pot, all spending, all expenditures, all 
revenue--the biggest deficit we ever had before was under the previous 
President Bush, $290 billion--$290 billion.
  This year the deficit on a unified basis is going to be over $400 
billion. Remember, that does not count the $160 billion that is being 
taken from Social Security trust fund surpluses. Put those together and 
we are over $560 billion.
  What is ominous about this is that as we go forward, when the trust 
funds turn cash negative, the cost of the President's tax cuts 
absolutely explodes, driving us right off the cliff, deeper and deeper 
deficits, deeper and deeper debt. That is going to present a future 
Congress and a future administration with extremely difficult choices.
  Here is what the CBO Director, the Congressional Budget Office, put 
in place by our friends on the other side of the aisle. It was their 
choice for the Director of CBO. CBO is nonpartisan, but they had the 
opportunity to pick him because they were in the majority. This is what 
he said:

       Put more starkly, Mr. Chairman, the extremes of what will 
     be required to address our retirement are these: We'll have 
     to increase borrowing by very large, likely unsustainable 
     amounts; raise taxes to 30 percent of GDP, obviously 
     unprecedented in our history; or eliminate most of the rest 
     of Government as we know it. That is the dilemma that faces 
     us in the long run, Mr. Chairman, and these next 10 years 
     will only be the beginning.

  That is what he is referring to there--only the beginning. This is 
going to get much more serious as the baby boom generation retires and 
as the cost of the President's tax cuts explode.
  Some are saying: But this is a growth package, and we are going to 
grow out of this problem by more and more tax cuts. The so-called 
growth part of the President's tax proposal costs $994 billion. The 
$726 billion that is advertised in the newspapers forgets about the 
associated interest costs. If you reduce your revenue or increase your 
spending, that adds to your interest cost. When you take the whole cost 
together, it is $994 billion in this 10-year period, but the first year 
stimulus is only $40 billion. The President only has 4 percent of his 
package in the year in which we know we need lift to the economy. We 
know we need stimulus. He is only providing 4 percent of his package in 
that year. It does not make

[[Page S4321]]

much sense really if we are trying to get the economy moving again and 
yet not add in the long term to the deficits and debt that will make 
our future choices more difficult and more dangerous.
  This is an analysis of what the President's plan does to economic 
growth. It was done by Macroeconomic Advisers. This firm is under 
contract to the White House to do their macroeconomic analysis. They 
are also under contract to our Congressional Budget Office. Here is 
what they say. They say that the President's plan crowds out investment 
and slows the economy after 2004. It is not a growth package at all. It 
is a package that will hurt growth, will retire growth, will reduce 
jobs, will reduce opportunity. Why? Because they have concluded the 
President's plan and the tax cuts in it are offset not by spending cuts 
but by borrowing the money. You cannot borrow your way to prosperity.
  What happens because of the President's plan? We go deeper into 
deficit--remember, we are already in record deficit now. You cut 
revenue and you raise spending, which is the President's plan; you go 
deeper into deficit. You go deeper into deficit and you reduce the pool 
of societal savings. That reduces the pool of funds that is necessary 
for investment. Less investment, less growth, that is their conclusion. 
But it is not just their conclusion.
  We also have an analysis by Economy.com, Mark Zandi, the noted 
economist there, on the economic impact of the President's plan, 
comparing it to the plan the Democrats have offered.
  What they concluded is the plan offered by the Democrats is about 
twice as strong, is about twice as stimulative as the President's plan. 
In 2003, the President's plan would increase growth by four-tenths of 1 
percent; the Democrats' plan by seven-tenths of 1 percent, almost twice 
as much. In 2004, the President's plan would increase growth by half of 
1 percent; the Democrats' plan by nine-tenths of 1 percent. But I think 
the most interesting conclusion is the conclusion for the entire 10-
year period. He has concluded that the President's plan actually hurts 
economic growth for the 10-year period. From 2003 to 2013, he finds 
that the President's plan is negative.
  Why? Well, he says because of this crowding-out effect. Because the 
President's plan creates more deficits. That means more borrowing; that 
means the Federal Government is in competition with the private sector 
to borrow money; that drives up interest rates. When interest rates go 
up, economic growth goes down. That is the fundamental problem with the 
President's plan.
  Again, it is not just Chairman Greenspan. It is not just 
macroeconomic advisers. It is not just economy.com. Two hundred fifty 
of the most prominent CEOs in America, who head the Committee for 
Economic Development, came out 2 weeks ago with a detailed report that 
found the following: No. 1, current budget projections seriously 
understate the problem. In other words, the problem of deficits and 
growing debt is much bigger than has been acknowledged. No. 2, while 
slower economic growth has caused much of the immediate deterioration 
of the deficit, the deficits in later years reflect our tax and 
spending choices. No. 3, deficits do matter. No. 4, the aging of our 
population compounds the problem.
  This is really a confirmation of everything I have been saying to my 
colleagues. Deficits do matter. Of course they matter, just like they 
matter to a family. A family cannot go out and spend more money than 
they have in income without it catching up to them at some point.
  By the way, it does not happen right away. Just like to a family, one 
can run up those charge cards, spend more money than they have got 
coming in for awhile, but at some point it catches up to them. So, too, 
with nations, even great nations such as ours. We can spend more than 
we take in for awhile, but at some point the chickens come home to 
roost. We cannot have deficits that are growing as a percentage of our 
gross domestic product. That is what every economist will say. We 
cannot have deficits that grow consistently above the size of the 
growth of our economy, and that is the problem with the President's 
plan.
  The deficits grow faster than the economy is growing--not just a 
little bit faster, a lot faster. That is what puts us in a very 
difficult circumstance.
  Again, that is not just the opinion of the sources I have cited. From 
the Virginian-Pilot, Norfolk, VA, editorial:

       Our challenge is to allow Americans to keep more of their 
     money, the President said in his speech Tuesday. That was a 
     sound argument when the Nation was building up a surplus year 
     after year. But our financial outlook has changed for the 
     worse. There is no money left over to give us back.

  Remember 2 years ago when the President had his plan for a big tax 
cut and he said, we are only giving back one out of every four surplus 
dollars. Remember, the surpluses are gone. There are no surpluses. Now 
all we see is deficits and red ink. There is no money to give back.
  They continue:

       So the government will borrow billions to make good the 
     President's IOU.
       Americans should be skeptical about the promise of 
     something for nothing. It is your tax cuts but it is also 
     your Social Security, health care, schools and roads. They 
     all suffer when the government has to borrow to meet its 
     daily expenses.

  It is not just the newspaper in Norfolk, VA. The Deseret News, Salt 
Lake City, UT, says:

       Now is not the time to cut taxes. War is unpredictable. . . 
     . A long protracted campaign that triggers counterattacks by 
     terrorists and Iraqi sympathizers could be hugely 
     expensive.

  Boy, were they prescient because today we learned the President is 
going to come up this week and ask for another $75 billion for this 
year alone to wage the war in Iraq, not a dime of which is in the 
budget. None of that is in the budget.

       Coupled with giant tax cuts, it could send the budget 
     deficit back into levels not seen in a decade or more, which 
     would stifle growth and hamper investment.

  Exactly the points I have been trying to make to our colleagues 
during this budget debate.

       Congress ought to put the President's tax plan on the shelf 
     for awhile until it knows better how the men and women in 
     uniform are going to be spending their year.

  Let's look at the budget that has been proposed on the other side, 
because here is what we see: This year alone, the deficit will be 
somewhat less than the President has proposed, but still nearly $500 
billion, and it never goes away. This is all red ink. This is all 
borrowed money. Not a single year is the deficit below $300 billion 
under the President's plan or under the plan that the Republicans are 
offering us in the Senate Chamber. It is truly stunning. Those are the 
biggest deficits we have ever seen.
  It is not just deficits, but it is also the debt of the country. Two 
years ago, the President promised that under his plan he would 
virtually eliminate the debt by 2008. Well, we see that is no longer 
operative. If we enact the Senate GOP budget plan, the total debt of $6 
trillion in 2002 will be $12 trillion in 2013, almost doubling in that 
period. Many of us think that would be a serious mistake.
  This is what we see. This line across the chart at zero is baseline. 
That is if we do not change the revenue policy of the Federal 
Government, we do not change the spending policy of the Federal 
Government. That is the so-called baseline. If we adopt President 
Bush's budget, we can see $2.8 trillion of added debt during this 
period. The Senate GOP plan would add $2.2 trillion of debt. What is 
critical is that we are on the verge of the retirement of the baby boom 
generation. This is a time we ought to be paying down debt or prepaying 
liability. Instead, they are talking about dramatically expanding debt, 
either under the President's plan or the Senate GOP plan.
  I am going to offer an alternative on behalf of Senate Democrats. 
These are the key elements of this plan: Instead of a $1.6 trillion tax 
cut, we will offer a tax cut much more modest, one that is at the front 
end to give stimulus to the economy, that would cost $61 billion. In 
terms of covering the costs of the Iraq war, there is no provision in 
the President's budget, no provision in the Senate Budget Committee's 
budget. We would provide the $80 billion the President calls for.
  On homeland security, the President and the Senate budget are in the 
$22 billion to $26 billion range for the 10 years. We would provide $80 
billion for homeland security, because we think it is necessary.

[[Page S4322]]

  On a prescription drug benefit, both of them would provide $400 
billion during this 10-year period. We would provide $594 billion for a 
fuller prescription drug benefit. Make no mistake, this is no Cadillac 
plan. To give the American people the plan that we as Members of 
Congress have over that period would cost not $594 billion but $1.8 
trillion. To give the plan to the American people that our military has 
would cost $2.2 trillion over that same period. So it is important to 
understand that while we are putting more money into prescription drugs 
than the President's plan or the Senate Republican plan, it is a long 
way from being generous. As I have indicated, $594 billion is about 
one-third of the cost of giving the plan that all Federal employees 
have to the American people.
  On education, there is no additional money for IDEA. That is the 
promise we made to States and local communities when we passed the 
Disabilities Act legislation for our schools. We said we would fund 40 
percent of the costs. We only do half as much. To keep the promise to 
phase it in over 10 years costs $73 billion. We provide for it. Neither 
the President nor the Senate GOP plan does.
  On transportation infrastructure, the President actually cuts $18 
billion below the baseline, below level funding. The Senate GOP plan 
also cuts, but now it has been amended by a floor amendment, so they 
bump it up $27 billion. We would provide $71 billion over 10 years 
above the baseline. Why? Because, No. 1, it is stimulative. You start 
building roads and bridges. Those are good-paying jobs.

  More than that, it increases the efficiency of our economy. If anyone 
doubts that, go to the Wilson Bridge tonight at 5:30 and see what is 
happening. Look at the people going nowhere. That has an economic cost 
to our society. Go out on Route 66 tonight and see what is happening 
there. Absolute gridlock. It is not just in the Washington metroplex, 
but all across America.
  In my State of North Dakota, which is not heavily populated, we have 
a substantial part of our road and bridge network that needs repair. 
Many of the bridges in this country, something like 40 percent, are 
substandard. That will cost money to fix. If a bridge goes out, that 
creates lockjaw in the whole economic system of that area. That is 
something we ought to tend to.
  There is no additional money in the President's budget or the Senate 
Republican budget for our Nation's veterans. We provide $13 billion 
over the baseline to say to our veterans: We honor what you do to 
defend this country, and we believe the promise that has been made to 
you on your health care and on your treatment ought to be kept. 
Virtually everyone knows the baseline budget for veterans is 
insufficient. We try to address that with those additions.
  The difference in deficits? The President adds $2.1 trillion to 
deficits; $1.6 trillion under the Senate GOP plan as amended; ours is 
$863 billion. The difference between our plan and the President's plan 
is over $1.2 trillion. We have $1.2 trillion less in deficits than the 
President's plan. Our plan has $750 billion less in deficits than the 
plan proposed by the Republican majority.
  The President's plan never balances the budget. The Senate Republican 
plan balances in 2012, perhaps 2013. We balance in 2011. That is a 
wiser course for America and what we should do.
  I very much hope that our colleagues give close consideration to this 
alternative budget when we vote. I will put more descriptions and 
detail of our alternative into the Congressional Record so it is 
available to our colleagues, so when we vote tomorrow on this 
alternative, Members will have a chance to make their own judgment and 
to compare very directly what we have proposed, what the President has 
proposed, and what the Senate majority has proposed. I hope very much 
that our colleagues will take a close look at what we are suggesting: 
$1.2 trillion less in deficits than the President's plan; over $750 
billion less in deficits than the majority has proposed.
  Yet we have also tried to address the war cost, which is not included 
in either the President's budget or the budget from the majority in the 
Senate. We have tried to address keeping the Federal Government's 
promise to local subdivisions on education funding.
  We have also tried to address the transportation gridlock in the 
country by providing more funds, and the health care needs of America, 
by some additional funding on prescription drugs. And, of course, the 
other difference, the additional funding for our Nation's veterans, 
something we believe is especially called for in this time when they 
are sacrificing so much, half a world away in the battle with Iraq. 
Again, a budget is about choices. That is what we are doing. We are 
making choices on behalf of the American people.
  What is the future going to look like? I believe the budgets proposed 
by the President and the Republican majority are dangerous for this 
country. I believe that deeply. They are pushing us deeper and deeper 
into deficit and debt right on the eve of the retirement of the baby 
boom generation. The cost of the President's tax cuts explode at the 
very time the cost to the Government explodes because of the retirement 
of the baby boom generation.

  Remember, we are already in record deficits, and the retirement of 
the baby boomers is not 20 years away, it is not 10 years away; the 
leading edge of the baby boom generation starts to retire in 5 years.
  I believe we will be condemned in history for failing to face up to 
our responsibilities and our obligations if we do not recognize what is 
right over the horizon. That is not a part of the projection. That is a 
matter of simple fact. The baby boomers have been born. They are alive 
today and they are going to be eligible for Social Security and 
Medicare. We know exactly what is going to happen.
  The cost to the Federal Government of having twice as many people 
eligible for Social Security and Medicare in the years ahead can only 
do one thing: It will drive up dramatically the cost of Social Security 
and Medicare. And at the very time those costs expand and explode, the 
cost of the President's tax cut will expand and explode and put this 
country in deep deficit, in deep debt, and fundamentally threaten the 
economic security of this country.
  I fear some of our colleagues actually intend to shred the programs 
of Social Security and Medicare. I don't know what other plan they can 
have in mind. These details, these projections of the spending and 
revenue of the Federal Government are very clear.
  Some have said, well, if the economy grows more strongly, won't that 
help? Yes, it will help. But understand that all of these numbers 
assume strong economic growth. They assume the kind of economic growth 
we have had in the past.
  Let me also say some will look at the plan that I have provided and 
say, gee, Senator, you have some more spending than the Republican 
plan. Yes, I do. I pay for this war. I increase funding for homeland 
security. I increase funding for our veterans. I increase funding for 
education and prescription drugs--just in those areas. The rest of the 
budget and domestic affairs we hold to a 4-percent increase. That means 
other parts of the budget are actually having to be cut in order to 
provide for the priorities for education and prescription drugs. Other 
parts of the budget are having to be cut.
  Let me show a final chart with the long-term spending of the Federal 
Government from 1981 through 2013. The peak of Federal spending as a 
percentage of gross domestic product occurred in the 1980s when we were 
at 23.5 percent of gross domestic product going to the Federal 
Government. That has come down markedly, to less than 20 percent. Now 
we have had a jump back up because of the increased defense spending 
and increased homeland security spending.
  Look at the difference between my budget and the Senate GOP plan. 
There is very little difference. We wind up at 19.3 percent of gross 
domestic product under the plan I am proposing, down from 23.5 percent 
in the early 1980s; the Republican plan goes to 18.8 percent, a one-
half of 1 percent difference. That one-half of 1 percent is important 
because it is a matter of priorities. It is a matter of choices.
  The budget I am proposing puts in the $80 billion to fund this war in 
Iraq. Our friends on the other side do not have any money to fund the 
war.
  No. 2, we provide additional funding for our Nation's veterans, $13 
billion,

[[Page S4323]]

not a lot of money over 10 years, but it is meaningful to them. It 
means we can keep promises we have made to them.

  In the other major areas of difference, I have provided some 
additional funding for prescription drugs--again, a plan that is very 
modest compared to what Members of Congress and Federal employees have. 
I have also suggested additional funding for transportation because we 
need it. We need to improve the efficiency of our transportation system 
in this country.
  Those are the choices that are going to be before our colleagues. The 
plan I have offered today is a plan that will produce, as I have 
indicated, $1.2 trillion less in deficits than the President's plan; 
over $750 billion less in deficits than the Senate GOP plan. That is 
important. That is critically important. I hope my colleagues will take 
a close look at this plan. I welcome their support. I urge them to give 
full consideration to it.
  Finally, the other major difference is on education. The plan I have 
offered would move us toward keeping the promise we made to States and 
local jurisdictions all across America when we passed the IDEA act. We 
promised we would provide 40 percent of the funding. We are doing half 
of it. That is not good enough. When the Federal Government makes a 
promise, it ought to be kept.
  Tomorrow, under the rules of the Senate, we will not have time to 
discuss these options. We will not have much time for debate at all. 
There will be a minute a side before the vote is called. But all of us 
will be held accountable for the choices we make tomorrow. They are 
choices not just for tomorrow and not just for this year, they are 
choices for the next decade.
  There has rarely been a more important decade in terms of the choices 
being made. What we are about to see is something that has never 
happened in this country before, a circumstance where we have this baby 
boom generation that almost overnight is going to double the number of 
people eligible for our retirement programs in this country. Nobody 
will be able to say 10 years from now, when the crunch really hits, 
gee, we had no idea this was going to happen. Our colleagues are on 
notice. They know.
  We have presented now, over and over, in great detail, where we are 
headed. The choice is ours to make. I hope we make it wisely.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. DASCHLE. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The minority leader is recognized.

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