[Congressional Record Volume 149, Number 63 (Wednesday, April 30, 2003)]
[House]
[Pages H3545-H3551]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE PRINCIPLES OF RESPONSIBILITY, INTEGRITY AND COMMON SENSE APPLIED TO
FEDERAL BUDGET AND TAX POLICY
The SPEAKER pro tempore (Mr. Burns). Under the Speaker's announced
policy of January 7, 2003, the gentleman from Washington (Mr. Baird) is
recognized for 60 minutes as the designee of the minority leader.
Mr. BAIRD. Mr. Speaker, we are here today to talk about fundamental
principles, principles of responsibility, integrity and common sense as
they apply to the Federal budget and to tax policy. Over the past 2
weeks, we had the opportunity to go home and hear from our
constituents, and we hosted an event with the Concord Coalition. We had
people in several of my communities get together to try to balance the
Federal budget, and we learned some very interesting things from that
process.
We learned, among other things, that in spite of the majority's
recent claims that deficits do not matter, the American people say that
common sense says deficits do matter. We cannot, year after year, run
enormous deficits, pass those on to our kids and not expect somebody to
have to pay the piper. With several of my colleagues tonight, we are
going to talk about how we got into that deficit, how we ought to get
out of it, and how the policies put forward by the majority and this
administration will actually make the situation far worse rather than
better.
The first speaker this evening is the gentleman from Texas (Mr.
Edwards). He said to me tonight he has to speak first because he has to
go home and tuck the kids in. It occurred to me that is really why most
of us serve here, we want to create a better America for our kids. And
part of that way we create a better world is facing up to fiscal
responsibility and not passing on an enormous burden of debt to those
children in order to gain easy election or political advantage in the
short term.
Mr. Speaker, I yield to the gentleman from Texas (Mr. Edwards).
Mr. EDWARDS. Mr. Speaker, I thank the gentleman for yielding to me,
and for his outspoken and consistent leadership in fighting for fiscal
responsibility, not just for this generation of Americans, but for our
children and their children, future generations of Americans.
Mr. Speaker, more and more Americans, and certainly central Texans
when I go home, are asking a very important question: Why has the
Republican leadership in Washington, D.C. abandoned the values of
fiscal responsibility and balanced budgets? That is a good question.
Frankly, the party that used to pride itself and the party that fought
for balanced budgets, led a fight for a balanced budget constitutional
amendment has now become the party that is proposing the largest
deficits in American history. Let me discuss some facts.
Fact number one, it is true that the administration in Congress this
year are proposing the largest deficit in American history. Let me
repeat that one more time because a lot of people do not believe it,
but it is true. The White House, President Bush and Republican leaders
have endorsed the largest deficit in our Nation's 200-year-plus
history. $292 billion used to be the record for deficit spending. This
year it could be well over $307 billion. That is more of a deficit than
we had during World War I, World War II, the Vietnam War or the Korean
War.
Fact number two, this proposed Republican historically high deficit
does not include one dime for the cost of the Iraqi war or building a
national health care system for Iraq which they propose, or helping
build new schools for Iraqi families.
Fact three, if we do not count the billions of dollars being taken
out of the Medicare and Social Security trust funds to fund this huge
deficit, the real deficit to the American people is actually this year
going to be over $400 billion if Washington Republicans get their way.
Fact number four, the House-passed Republican budget supports
deficits not just this year, but for as far as the eye can see. In
fact, over 214 Members of this House, Republicans, voted to increase
the national debt by $6 trillion by the year 2013.
Mr. Speaker, let me put this in perspective. It took two centuries,
in fact, over 200 years for America to build up a $1 trillion national
debt. Yet in 10 years, Republicans will have been successful in
increasing that national debt 6 times more than the amount that it took
two centuries to create. $6 trillion in additional national debt in the
next 10 years under their economic plans and schemes, versus $1
trillion developed over the first 200 years of American history. That
is the kind of history we do not hear Republicans in this Chamber and
across Washington talking about very much.
Mr. Speaker, I think it is fair to ask the question who in America
should worry about these Republican deficits? Do they really matter? Do
they affect the average American citizen? I think
[[Page H3546]]
the answer is we should all care and be concerned about the
historically high deficits for several reasons.
First, let us look at taxpayers. Taxpayers, according to Republican
estimates, will have to pay $1 trillion in extra taxes over the next
decade just to pay the extra interest on the national debt. That is
money that could have been saved for our children and grandchildren's
homes and cars, for building their futures, educating their children.
That is money that could have been used to provide college student
loans and grants through Federal programs.
Family businesses and farms ought to be concerned about the deficit
because as thousands of economists and well-respected business leaders
have said, once the economy gets back on its feet, having 3 and $400
billion deficits will increase the cost of doing business for family
businesses and farms. When a farmer goes to borrow money to plant his
crop or buy seed or fertilizer, that farmer is going to have to pay
more in loans for interest back to the bank for loans. Small businesses
wanting to create new jobs are going to have to pay more interest on
the money that they have to borrow to expand their businesses. Deficits
are bad for American taxpayers and American farmers, and they are bad
for American family businesses.
How about American family workers, should they care about these
deficits? Well, most workers are struggling to support their families,
provide a decent home and quality education for their children. So now
when American workers, under the new Republican Babe Ruths of deficits,
go to borrow money to buy homes, they will pay thousands of dollars
more for the cost of that home because of higher interest rates.
{time} 1800
They will pay more when they have to borrow money to buy a car; and
they ought to be concerned because according to many economists,
including Alan Greenspan, if we were to have hundreds of billions of
dollars of additionally proposed tax cuts despite our historically high
deficits this year, then we are going to potentially hurt economic
growth. That means fewer jobs for American workers. American seniors
ought to be worried about deficit spending because that deficit is
being underwritten by being borrowing money from the Social Security
and Medicare trust funds. Baby boomers, our future seniors in the next
few years, ought to be gravely concerned about undermining the fiscal
integrity of the Social Security and Medicare trust funds just as they
begin to retire in the next 7 or 8 years.
How about parents? Parents certainly should be concerned about
deficit spending because they do not want, I do not want, we should not
want to drown our children in a sea of national debt. It is morally
wrong to do so. And as we Americans stand so proudly behind our
soldiers and servicemen and women who fought in Iraq so courageously,
as we honor our veterans with resolutions of words here on this floor
in order to pay for some of this dividend tax cut and other proposed
tax cuts, Republicans from the White House to Congress have proposed
the following just this year, in the last few weeks, in fact: $28
billion in veterans cuts over the next 10 years, $1.5 billion in cuts
this year for military construction programs that help train our
servicemen and women and provide better quality of life, day care,
housing for those servicemen and women; $175 million Republicans have
proposed cutting in Impact Aid education that provides a better
education for military children while Mom and Dad are fighting for our
country in Iraq; and $172 billion Republicans have voted for in this
House to cut Medicare and Medicaid. That means fewer seniors getting
nursing home care, fewer seniors getting medical care that they need.
Mr. Speaker, 2 years ago, not that long ago, Republicans in Congress
passed, over my objection, a $1.3 trillion tax cut; and when they did
it, every Member, every Republican who spoke in the well of this House
said we can have it both ways, we can have our cake and eat it too. We
like the free-lunch philosophy. We can cut taxes by a massive amount
and still balance the budget. These same economic gurus are now
proposing $1 trillion more in tax cuts.
And let me clarify this point. The public debate is between $350
billion and $500 billion in tax cuts, but somebody needs to recognize
that there are about six or seven or eight or nine other tax cuts that
the administration and congressional Republican leaders have proposed.
We add them all up and we are talking about more than $1 trillion of
extra tax cuts despite the fact that we have got the largest deficit by
far in American history.
I think before we buy into the next round of proposed trillion dollar
free-lunch tax cuts, it is fair to ask how accurate were our Republican
colleagues and leaders in predicting just 2 years ago we could cut
taxes by over $1 trillion and balance the budget. Fact: Republican
leaders were off by $12 trillion. Not million, not billion. $12
trillion, because just 2 years ago they were predicting we would have
no national debt by the year 2013. The budget that they just voted on
in the House, that they have passed in the House, suggests we will have
$12 trillion in national debt.
Mr. Speaker, I would suggest that if a business had an economist that
was $12 trillion off, not to mention the 2.5 million jobs we have lost
in the last couple of years, $12 trillion off, 2 million jobs off in
the economic growth projections, most companies would fire those
economists summarily. They certainly would not be rehired to make more
proposals and more economic suggestions.
Finally, I hope we could examine two assertions we are hearing from
our Republican colleagues. The first is this massive new tax cut is
really a growth plan. That is not what the Congressional Budget Office
said recently after an extensive report; and by the way, the CBO,
Congressional Budget Office, is headed by a former top economist in
this Bush administration's White House. What that report said was
basically that whatever short-term stimulative effect any tax cut might
have would probably be offset by the massive deficits that would result
from that.
In fact, the report says: ``The overall macroeconomic effect of the
proposals in the President's budget is not obvious.'' Is not obvious.
That is bad news for the free-lunch crowd that believes we can promise
everything to the American people and they will be gullible enough to
believe it. We could have massive tax cuts, fight a war in Iraq,
rebuild Iraq, increase our defense spending significantly, provide
prescription drugs for seniors, and, by the way, we will balance the
budget for our children. Just trust us. The last time the American
people trusted them with their predictions of that free-lunch
philosophy, they were off $12 trillion. Our children and grandchildren
cannot afford another $12 trillion mistake.
Mr. Speaker, I would point out that in today's Washington Post, Alan
Greenspan was basically quoted as saying that unless we offset these
newest Republican tax cuts with spending cuts, it could well harm
economic growth. The article in The Post said: ``Greenspan endorsed the
view of a recent study by Federal economists that rising budget
deficits put upward pressure on long-term interest rates, which act as
a drag on economic growth by raising the cost of borrowing for
businesses and consumers.''
The fact is that in yesterday's Washington Post there was a
fascinating article. The article was entitled, ``Bush Offers New
Argument for His Tax-Cut Proposal.'' It talks about the immediate
short-term growth this might create. But it is interesting that the
article goes on and says this: ``Beyond 2007, the tax package would
actually do more harm than good, warned Joel Prakken of Macroeconomic
Advisers, LLC, which developed the computer model the White House
used.'' So the very economists that the White House depended upon to
develop computer models to try to sell their tax cut admits that the
administration's growth plan could actually be an antigrowth plan, a
job depressant in the years ahead because of the massive deficit
spending.
Finally, the Republicans say that we will pay for those tax cuts with
tough new spending cuts. We have heard some proposals cutting Medicare
and Medicaid by $172 billion, veterans by $28 billion, Impact Aid for
military kids by $175 million; but once pressured by the public, it
took about 2 weeks for Republicans to back off from some of those cuts.
[[Page H3547]]
But let me just state for the record, and I will finish with this:
when Republicans talk about courageous spending cuts, look at what they
do, not what they say, because if we look at the five programs that
represent about three-fourths of all Federal spending, Social Security,
Medicare, Medicaid, defense, and interest on the national debt, the
administration and the Republicans in Congress are wanting to increase,
increase, spending on three of those five programs. Massive increase,
$1 trillion more over the next decade on interest in the national debt;
massive increase in defense spending, which I support, but I am willing
to pay for; and they are proposing a $400 billion Medicare plan for
prescription drugs, which I am afraid seniors will probably never see.
Mr. Speaker, through fiscal responsibility and balanced budgets, we
can create the economic foundation for America to have tremendous
growth. That is what we did in the 1990s. The proof is in the pudding.
That plan led to 22 million new jobs in America. The latest growth plan
resulted in 2.5 million lost jobs. Let us look at the track record of
these economic gurus before we sell our children and grandchildren into
a lifetime of paying taxes just to pay interest on the national debt.
Mr. Speaker, I thank the gentleman for yielding.
Mr. BAIRD. Mr. Speaker, I commend my colleague from Texas (Mr.
Edwards) for such an articulate presentation and a clear-cut
explanation of what is wrong with the tax proposals and the budget
plans of the majority party and the administration. The gentleman was,
I think, astute in observing that when the Democrats controlled the
White House and the House of Representatives, it was literally about 10
years ago, almost 10 years ago today, they had the courage to step
forward and confront budget deficits, not to pooh-pooh them, not to say
this does not matter, but to confront budget deficits and say we must
enact fiscally responsible policies.
The other party, the majority party, claimed that if we did that, we
would lose jobs, we would see interest rates skyrocket, we would see
inflation go through the roof. What in fact happened? The longest
economic expansion in the history of this country. More jobs were
created. Unemployment went down. Healthcare was improved. Our education
system was improved.
If my colleagues want to make a judgment by history, look at the
recent history. When the Democrats set the fiscal policy of this
country, we saw sustained economic growth. In the Republican
administration, we have seen sustained unemployment and economic
decline.
The gentleman from Virginia (Mr. Scott) is a member of the Committee
on the Budget and will address precisely those issues now. I yield to
the gentleman from Virginia.
Mr. SCOTT of Virginia. Mr. Speaker, I thank the gentleman for
yielding so we can continue to discuss the budget situation we are in.
I like to use charts because one uses a lot of adjectives and uses a
lot of spin. One cannot spin charts because they just show us what the
numbers are. This chart, for example, shows the deficit year by year
over the years. Johnson, Nixon, Ford, Carter. We all remember that
deficits ran up under Reagan and Bush; and we also remember that when
President Clinton came in with a Democratic majority, we cast the tough
votes to create a surplus for the first time in decades. We also know
that during this administration, the Republican Congress, after they
took over Congress, passed huge tax cuts that were vetoed time and time
again. The Republicans passed the tax cuts; President Clinton vetoed
them. They threatened to close down the government. He vetoed it
anyway. They shut down the government. He vetoed it anyway, and we were
able to have a straight line right up to surplus. Unfortunately,
President Bush did not veto those irresponsible tax cuts, and we see
what happened all of a sudden.
If anybody asks what is the Democratic plan now, we just point to the
green. When the Democrats had control of the budget with Clinton and
enough Democrats in Congress to sustain his vetoes, this was the
Democratic plan. This is the Republican plan. Once we run up all those
deficits, we have to pay interest on the national debt. This chart
shows what the interest on the national debt would have been had we not
messed up the budget. That is the green line showing what the interest
on the national debt would have been. The red line is what the interest
on the national debt will be as a result of messing up the budget. To
put this in perspective, the blue line is the defense budget. By 2013
we will be paying almost as much interest on the national debt as we
pay for defending the United States of America.
We also can make this personal. This is what we call the debt tax. A
family of four, take all the interest on the national debt, divide it
by population, multiply it by four. Right now a family of four's
proportional share of the interest on the national debt, about $4,400,
$4,500. It was going to zero. But by 2013, $8,500 and rising. And how
did we get in this mess? The tax cuts. And who got the tax cuts? We can
say who got it, but let us look at the chart. The bottom 20 percent,
the blue is the 2001 tax cut, the green is the proposed 2003 tax cut,
and we see who got a little of the tax cut. There is a line right here
that is hard to see, but it shows that one half of the tax cut went to
the top 1 percent of the population.
As a result of these tax cuts, we also have to consider the effect
that they had on Social Security. This is a chart of the Social
Security trust fund.
{time} 1815
We are bringing in more money in Social Security than we are paying
out right now because the baby-boomers are retiring shortly, and we
need to save the money for Social Security. We cannot balance the
budget with a $150 billion surplus in Medicare and Social Security. In
2017 it is going to change. Look at what we are going to have to come
up with as we go along.
Now, the interesting thing is it is challenging, and this is the $900
billion, over $1 trillion a year we are going to have to come up with
in cash to pay this.
The embarrassing thing about this is if you go back to the tax cut,
one-half of the tax cut of 2001, one-half, that is what the upper 1
percent got, had we, instead of giving a tax cut, allocated that amount
of money to Social Security, we could have paid Social Security without
reducing any benefits for 75 years. But, instead, we did the tax cut.
So we have jeopardized Social Security, we have ruined the budget in
terms of deficits, we have run up the debt tax. And, why? To create
jobs? Let us see how we did.
This is a job growth in the last 50-some years, going back to the
Truman administration, Eisenhower-Nixon, Kennedy-Johnson, Johnson,
Nixon, all the way through the worst job creation in over 50 years.
Now, we say, well, what do you expect? 9/11. That is why we could not
create any jobs. But as you think of it, we were fighting the Korean
War, we created jobs. We fought the Vietnam War, we created jobs. We
had our hostages taken in Iran, we created jobs. We fought the Cold War
all the way through. We fought in Grenada and in Panama. The Persian
Gulf, we created jobs. Somalia, Kosovo, we created jobs. 9/11, why can
we not create jobs?
We passed their plan. The worst investment growth since World War II.
We had investment growth every year through the Korean War, Vietnam
War, Cold War, all the way through, but not in this administration
after we have wrecked the budget.
When we talk about sending people's money back on tax cuts, we are
not sending their money back. As we pointed out, we are spending all of
their money. What we are sending them back is their children's money
that they will have to pay off.
My question is, how bad does this situation have to get? How much
debt do you have to run up before you acknowledge that the plan did not
work? How many jobs do you have to lose? We have lost almost 2.6
million jobs since this administration came. Unemployment is up. Long-
term unemployment has tripled. How bad does it have to get before you
acknowledge that it did not work?
We need fiscal responsibility. We need the Democratic plan and need
to reject the plan offered by the Republicans that we are passing now.
I thank the gentleman for yielding so we could offer these graphs
which show in numbers exactly how bad it is.
[[Page H3548]]
Mr. BAIRD. Mr. Speaker, I thank my colleague. What a clear-cut
explanation of the situation we are in.
When I had those forums and town hall meetings back home, people
asked me precisely the kind of questions the gentleman was addressing.
What does this tax cut do for jobs? What does it do to provide
prescription benefits for our senior citizens?
When I asked people, which would you rather do, a tax cut for the
wealthiest people in this country, or invest in our transportation
infrastructure and put people back to work? They said put people back
to work.
When I asked which would you rather do, a tax cut for the wealthiest
people in this country or invest in a prescription drug program so our
seniors can stay healthy and actually lower the cost of health care in
the long run, they said take care of our seniors.
One of the Members of this body who has done as much as anyone to
keep the cost of prescription drugs down is my good friend and
colleague the gentleman from Maine (Mr. Allen). I yield to the
gentleman, who will not only talk about job growth and the tax cuts,
but also about the fundamental principles of values and how those are
manifested through the decisions we are making, and, unfortunately,
through the decisions this body is not making.
Mr. ALLEN. Mr. Speaker, I thank the gentleman for yielding, and I
want to commend him and all of my colleagues for being here tonight to
try to present some factual evidence about what the Republican tax cuts
are really all about.
One can see what is going on in part just by looking at the state of
the economy under the Bush administration. This chart shows that with
net growth of 1.5 percent, the Bush administration has now the worst
real GDP growth since World War II. Every other administration has done
better at creating jobs and growing the economy than the Bush
administration has.
For example, the gentleman from Virginia (Mr. Scott) was just showing
this other chart, which shows that it is the worst private sector job
growth since World War II.
In fact, if you look at this chart again, what you see is that since
President Bush took office, we have lost almost 2.6 million private
sector jobs in this country. No wonder the administration is concerned.
In every other administration, except only the second term of the
Eisenhower administration, there has been job growth in this country.
This has been a country where the economy has been strong, where it has
been growing, even when we have had difficulty. But not in this
administration.
Mr. BAIRD. If the gentleman will yield, when I look at that chart,
you look at the graph where the numbers are going up, that is putting
people back to work. That is helping people take care of their
families, buy homes, invest in this economy.
When you see that chart going down, which has happened in this
administration, that is people losing their jobs, losing hope, losing
health care, losing the ability to take care of their families.
These are not just numbers. As the gentleman knows, these are real
life stories of people whose lives are being ruined by the economy.
Mr. ALLEN. That is exactly right. Like the gentleman, I have been in
my home State of Maine doing community meetings and talking to people
throughout my district, and these are not very good times for many,
many people. We are suffering losses in agriculture, we are suffering
losses in manufacturing, and, for more and more people, it is
difficult.
I sat with a group of people at one company which is doing okay right
now, but she was talking about the cost of her health care, trying to
raise her daughter, she is a single mom, trying to take care of a
daughter, and she said what a lot of people are echoing: ``I never
thought it would be this hard.''
This is a difficult economy. Young people coming out of college
today, coming out of graduate school, are having a very tough time
finding jobs, and many people are being laid off and losing their
health care along with their employment.
Mr. BAIRD. When I talk to those folks, they do not tell me, ``What I
would like the President and Congress to do is give me a tax cut.''
What they say is, ``We want jobs and we want health care.''
Mr. ALLEN. Well, that is a different priority than the Republicans in
Congress have. This is what the majority leader, the gentleman from
Texas (Mr. DeLay), said just a few weeks ago: ``Nothing is more
important in the face of war than cutting taxes.'' ``Nothing is more
important in the face of war than cutting taxes.''
What he meant by that is we are not going to ask anyone to sacrifice.
We are certainly not going to ask anyone to sacrifice to improve the
lives of their children and grandchildren.
So it is worth looking at what taxes he is actually talking about and
who benefits.
This chart says how much of the 2003 proposed tax cuts do you get?
Well, look at the chart. Let us leave off all of those earning less
than $46,000 a year. Let us just talk about the group earning between
$46,000 and $77,000 a year. That group, under the President's proposal,
would get $657 on average per year. It is something, but the price to
be paid for that is less money for schools, less money for health care,
no prescription drugs for seniors and so on.
For those earning between $77,000 and $154,000 the average tax break
is $1,800.
If you are much wealthier than that, if you are in the upper 5
percent in this country and you are earning between the 95th and 99th
percentile, $154,000 to $374,000, you get $3,500 a year. I can tell
you, that is not going to change the lives of many people in that
income category.
But it is only when you get to the upper 1 percent that you strike
megabucks. Only then do you strike the jackpot, because if you are
earning over $374,000 a year on average, you get $30,000 a year in tax
reductions. That is who is benefiting from these tax cuts that the
President is talking about.
He is saying this is a plan for economic growth. You have to ask, is
this about growth, or is it just about greed? Is it about those people
who benefited most in the 1990s, who saw their incomes soar, who are
now getting the benefit of more economic growth, more money just
funneled to them by the Republicans in Congress, the people who are the
richest people in this country getting the benefits of this tax package
if it goes through?
Mr. PRICE of North Carolina. Mr. Speaker, if I can interrupt for one
second, I wonder if the gentleman could talk about the effect of these
tax cuts on the economy.
It is often said this is the way to stimulate the economy and that
particularly the President's new round of tax cuts is going to be the
key to turning the economy around. I just saw some figures released
today by the Center on Budget and Policy Priorities, and they talk
about how different measures would stimulate the economy.
If you extended emergency Federal unemployment benefits, for example,
for every dollar that you use for that purpose you get $1.73 of
economic stimulus, because these folks are going to use that extra
money for the necessities of life and they are going to pour it right
back into the economy.
If you help State governments, for example, with their Medicaid
expenses, for every dollar you put into that you get $1.24 worth of
stimulus.
But what about dividend tax reduction? For every dollar of revenue
you lose to dividend tax reduction, the stimulative effect on the
economy is all of 9 cents. Nine cents.
So would the gentleman say these upper bracket tax cuts do very much
to improve our economic situation?
Mr. ALLEN. I thank the gentleman for his comments, and clearly not.
Clearly, when you look at the economists, the bulk of the economists
who have commented on these proposals, this is not about economic
growth at all. The President can travel across the country and say over
and over again that we are trying to grow the economy, and the truth is
it is not true. It is just not true. It is about something else.
I want to just conclude by saying a few things about what I believe
that something else is.
The President's proposal, the proposal of the Republicans in
Congress, is essentially saying to the American people, think of
yourself first. These are ``me first'' policies.
[[Page H3549]]
When the President said that after taking office, that it is not the
government's money, it is your money, he was encouraging every person
in this country to think of themselves first; not to think about the
children in this country who are going to public schools and need some
funds in order to have the quality of schools that they should have.
Not to think about those people who have lost their jobs and need some
job training assistance to get back to work. Not to think about those
seniors who have to choose between prescription drugs and their food or
their rent or their heating fuel. What he was saying to America was
think of yourselves first.
When Republicans stand up and say we want people to keep more of
their money, they are making the same pitch. Do not think about those
things we have in common. Do not think about what it takes to build a
strong country. Do not think about the resources that we need to put
into transportation, into health care, into education, into those
things that will lift the country and make it strong. They want people
to think of themselves first.
That is not what this country is about. This country is better than
that. We have invested in ourselves before, since the Second World War.
We need to keep investing in the American people, and, if we do that,
we will be a stronger and better country in the future than we are in
the past.
I have great hope that we will get there, but these Republican tax
cut plans for the richest people in the country are leading us down the
wrong path. We need to get back to a policy of investing in people and
making sure that the government plays its role in strengthening this
economy.
Mr. Speaker, I thank the gentleman for his time.
Mr. BAIRD. I thank the gentleman. The gentleman has summarized it so
well. The irony is, and let me just ask the gentleman to respond to
this for second. You had that chart up there that showed that the vast
bulk of the tax breaks go to the very wealthiest. The majority party,
the Republicans, say we are engaging in class warfare. Not at all. I
admire and respect people who have made wealth in this country.
But it is interesting, when I talk to those folks, they often say to
me, ``You know what? We are not asking for the tax cut.'' This
assumption that everyone is venal and self-serving and does not put the
country before their own immediate needs, I am not sure I buy it for
most Americans.
{time} 1830
I do not think so. I think most Americans say, we have to invest. I
do not know about my colleagues, but I hear small business people
saying, give me a little break so I can make ends meet, take care of my
family and provide health care. I hear Mom saying, make sure that I
have a job that pays a decent wage. I hear Dad saying, make sure that I
can provide for my family and give my kids an education. I do not hear
most Americans saying, let us make sure the people who have the most in
this country get the most in the tax cuts. Is the gentleman hearing
that from his constituents?
Mr. ALLEN. Mr. Speaker, I am really not. I do know some people in
this upper 1 percent and none of them so far have said to me that we
really need to have a tax cut of this magnitude. They are better than
that.
So one has to wonder, what really is the underlying motivation. It
seems to me that it is clearly not economic growth, because this is a
plan that will not grow the economy. What is it? Mr. Speaker, that old
hostility that so many Republicans have for Medicare and Social
Security, we have to wonder whether or not something is going on here.
If they succeed in stripping out revenues, billions, even trillions, of
dollars from the Federal Government in the next few years, then there
will not be money to take care of the baby boom generation when we
enter Medicare and Social Security. We cannot let that happen. It is
the wrong thing.
But I absolutely agree with the gentleman from Washington. Nobody,
not one person in the 2 weeks I was back in Maine, not one person said
to me, what we really need in this country is a tax cut weighted
primarily to people earning $1 million a year. Nobody is for it.
Mr. BAIRD. Mr. Speaker, I agree. When the President asked
rhetorically in his speeches, if a little bit of a tax cut is a good
thing, what about a big tax cut, well, the answer is we have already
had a pretty big darn tax cut; and the second answer is, most people
are not going to get that tax cut. And the third answer is, that big
tax cut comes with an awfully big debt, and there is something
desperately wrong with an awfully big debt.
I would like to yield to the gentlewoman from Wisconsin (Ms.
Baldwin), a member of the Committee on the Budget, and an individual
who has led efforts in this body on education, on health care, on
social justice, making sure that all Americans share in the American
dream and have an opportunity to benefit from the economic policies of
this Congress.
Ms. BALDWIN. Mr. Speaker, in the spring of 2001, the President and
some Members of Congress told the American people that we could afford
a $1.6 trillion tax cut that was custom designed by, and primarily for,
our wealthiest citizens, and still we would have money left over to
shore up Social Security and Medicare, make investments in our
education system, so that no child would be left behind. And still, we
would have enough money left over beyond that to pay down our national
debt.
Well, today we know that that was not true. Except for the passage of
the tax cut, none of the rest of those things happened. And to make
matters worse, the tax cut left no room for unexpected events like the
terrorist attacks on September 11 or the economic downturn that our
country is still experiencing. Projected surpluses have been replaced
by deficits as far as the eye can see.
Fast forward 2 years to today and this Congress is debating yet
another tax cut. President Bush has made ending double taxation of
corporate dividends the centerpiece of his $1.4 trillion package,
because he says that this tax is contraindicated by certain economic
models.
Well, since January of 2001, our country has lost more than 2.3
million jobs, an average of 73,000 jobs per month. And the long-term
unemployment level is the same as it was during the recession under the
first Bush administration.
Now is not the time to have philosophical debates about economic
models. Now is the time for this President and Congress to be acting on
measures that would truly put America back to work.
The President said in an April 15 speech that Congress needed to take
quick action on his plan to get the economy back on track. Well, I
agree with the President that we must act quickly on a plan; but not
the President's plan, because it is not a stimulus plan. His package
provides no immediate stimulus and fails to create jobs. Studies
predict that in the year 2003, the President's plan would only restore
a small number of the jobs recently lost in our economy. Moreover, only
about 5.5 percent of the President's plan would go into effect in
calendar year 2003, while nearly 80 percent of the plan would be phased
in in the future during the years 2005 through 2013. Well, people need
jobs now. They cannot wait 2 weeks, let alone 2 years.
There is good reason why Americans are not sold on the President's
tax cut. They realize that it is cast in the same mold as the first
one, which was too much for too few. The President is proposing to
accelerate the reduction of the 4 top income tax rates that was part of
his original tax package.
Well, if you are a policeman, a forest ranger, an average service or
retail sector employee, or one of our Nation's 400,000 enlisted
servicemen or women, you would receive no tax relief from any sort of
acceleration of these marginal tax rates. But consider yourself blessed
if you are a professional athlete, for example, playing football,
basketball, or hockey. Combined, these particular 4,000 professional
athletes would get approximately $240 million in tax relief if this
plan were signed into law.
The democratic economic stimulus plan is fast-acting, it is fair, and
it is fiscally responsible. The entire $136 billion stimulus package
would be injected into the economy right away, this year. It would also
extend benefits for unemployed Americans whose emergency benefits right
now are going
[[Page H3550]]
to expire on May 31. Most importantly, it would provide tax relief to
all Americans. It was designed for average working families, not just
the wealthiest investors.
Congress just had a 2-week break where most of us could spend
extended time meeting with our constituents. I like to ask my
colleagues after a recess if their constituents are concerned about the
same issues that mine care about in Wisconsin. Most of the time, our
constituents' concerns are very similar. That is why it is hard for me
to believe now that Congress can fathom this fiscally irresponsible and
misguided tax cut.
When I have talked to unemployed workers in my district, they
certainly have not come up to me pleading for accelerated tax cuts.
They have asked how Congress plans to help put them and the rest of
America back to work. They have asked for help in getting temporary
health care coverage for their kids and their families in case they get
sick. My constituents wonder if Medicare is going to be able to provide
their parents health care or when their kids grow up, if they will be
able to find a job that pays a livable wage. They are worried, and they
should be. They should worry, because this budget places tax cuts for
the wealthy ahead of job creation for families. They should worry,
because this budget adds over $5 trillion to the national debt over the
next 10 years.
This budget takes our country down the wrong path. While some Members
of Congress complain about how long our budget and fiscal process is
every year, I believe it is a good thing. It means we still have time
to craft a better plan, one that does not put the fiscal health of our
economy and the livelihood of our communities and our families and the
ability of our children to have a better life in jeopardy. We must
tackle that task.
Mr. BAIRD. Mr. Speaker, I thank the gentlewoman for her comments.
One of the issues this budget does not address that I know is
important to the people of Wisconsin, as it is to my own State of
Washington and, in fact, to the Committee on the Budget chairman's
State of Iowa, is Medicare fairness. Many of our States are desperately
underfunded in terms of Medicare compensation rates. This budget does
nothing to fix that. My own State of Washington faces a terrible
injustice, that we cannot deduct our sales taxes like other States can
deduct their income tax. This budget does nothing to fix that. There
are a host of problems with this budget. It was passed at 2 a.m. in the
morning. The majority of the Members of this body who voted for it had
never read it. They had seen summaries perhaps, but I guarantee they
had not read it because there was not time. When you pass a budget that
spends $2.2 trillion, that takes 24 hours to debate it and you have not
read it, we have a problem on our hands and, unfortunately, our country
has a much bigger problem.
We have heard from people from Maine tonight, from Texas, from my own
State of Washington, Wisconsin, and Virginia. The distinguished ranking
member of the Committee on the Budget hails from South Carolina. I
think it is arguable that very few people, if anyone, in this Congress
have more knowledge about the intricacies and the importance of the
budget process than my dear friend and colleague, the distinguished
ranking member of the Committee on the Budget, the gentleman from South
Carolina (Mr. Spratt).
Mr. SPRATT. Mr. Speaker, as my colleagues can surmise, we are here
tonight because my Republican colleagues have put another round of tax
cuts on a fast track. In fact, by next week, early next week there may
be what we call a markup of a bill we have yet to see in the Committee
on Ways and Means. Within 24 hours after that markup, that bill may be
on the House floor for fast track consideration, probably not
amendable. And, in the blink of an eye, we could very well adopt
another round of tax reduction equal to $500 billion to $600 billion
even more, a reduction in the budget rammed through this House.
We have already seen taxes cut by $1.35 trillion. That happened in
June of 2001. That was a historic tax cut, given its size. Let us just
ask, what are the results of that tax cut?
Well, let us look at the economy today, barely eking out positive
growth at 1 percent to 1.3 percent annual growth, barely growing, 2.5
million jobs in the private sector lost since January of 2001, 4
million Americans have literally quit looking for jobs, the
unemployment rate is between 5.8 and 6 percent; but that is only
because 4 million people since 2001 have dropped out of the job pool,
quit looking for a job. All of this, and we had a tax cut which the
administration said we needed to boost the economy. Where is the boost?
Where is the economy? What were the effects?
The main effect was on the bottom line of the budget. We had the
budget, when President Bush came to office, in the best shape in a
generation. In 2000, the year 2000, the budget ran a surplus of $236
billion. It is hard to imagine today, 3 short years later, 2003,
because today, all we have are debts as far as the eye can see. In
2001, when President Bush came to office, his Office of Management and
Budget, his budget shop said we foresee surpluses equaling $5.6
trillion over the next 10 years. And on the basis of that estimate,
despite our warnings that it was an inflated estimate, that there were
storm clouds gathering over the economy that made us a blue sky
estimate at best, he went ahead with a tax cut of $1.35 trillion; and
today, the surplus is gone.
Do not take my word for it. When the President sent his budget up
this year, this year, OMB, the Office of Management and Budget said,
the surplus over the same period that we projected 2 years ago, 2002 to
2011, the cumulative surplus over that period is no longer $5.6
trillion as we thought back in 2001. Today, it is $2.4 trillion. Now,
that is still a big number, $2.4 trillion; but here is the bad news.
OMB went on to say, and of that $2.4 trillion, Congress and the
President have already committed $2.5 trillion. So we start the year in
the hole, despite the fact that we had a budget surplus in 2000, the
year 2000 for the first time in 30 years, we are now back in the soup,
back in the red, deep in deficit; and the deficits are getting worse.
So what does the administration order up for these dire
circumstances? In the face of rising deficits, we no longer have a
surplus. There is nothing that will mitigate tax cuts that may be
offered now. In the face of these circumstances, the President is
proposing more of the same: additional tax cuts, tax cuts in his
proposal with his budget this year of $1.45 trillion and a budget, as I
said, that is in deficit.
{time} 1845
There is no surplus anymore out of which to offset or mitigate those
tax cuts.
Mr. PRICE of North Carolina. Mr. Speaker, will the gentleman yield?
Mr. SPRATT. I yield to the gentleman from North Carolina.
Mr. PRICE of North Carolina. The situation the gentleman is
describing reminds one of the old saying: if you find yourself in a
hole, the first thing to do is to stop digging.
Mr. SPRATT. Well, this administration is digging deeper and deeper
and deeper. As I said, do not take my word for it. We have our own
budget shop. As someone earlier said, it is now run by a very able
economist who came from the Bush administration.
According to their projection of the President's budget, every year,
if the President's budget is implemented, every year from 2003 through
2013 there will be a deficit. If we do not include the surplus in
Social Security, there will be a deficit of over $400 billion.
The cumulative deficit over that 10-year period of time, 2003 to
2013, if Social Security is not included, is $4.398 trillion. That is
the Congressional Budget Office speaking, a neutral, nonpartisan
agency.
Mr. PRICE of North Carolina. Mr. Speaker, if the gentleman will again
yield, that is simply an unprecedented situation. If we look back at
previous Republican administrations, what is striking is that when they
found themselves at a certain point in a deep enough hole, they did
stop digging.
In the Reagan administration in 1982 under Senator Robert Dole's
leadership, some of the tax cuts of earlier times were reversed and
some spending was cut, and the fiscal erosion was halted.
Then in 1990, under the first President Bush, despite his ``read my
lips''
[[Page H3551]]
pledge of no new taxes, when the fiscal hole got deep enough and the
economy was in a severe downturn, the President, in a considerable act
of statesmanship, worked with congressional Democrats and came up with
a 5-year budget plan that set us on the path to more sensible fiscal
policy.
So in those past Republican administrations, when the hole got deep
enough, some leadership was exerted and they stopped digging. In this
administration, it seems there is no limit to the fiscal folly.
Mr. SPRATT. The gentleman will search the budget the President sent
us in vain for any such direction or inclination. There is no plan and
no process for ridding ourselves of these perpetual deficits. Back out
Social Security, as I think we must, and we will find, according to the
Congressional Budget Office, that every year from 2003 through 2013
there is a deficit over $400 billion a year.
When the Republicans brought their budget resolution to the House
floor the night before we adjourned for the Easter break, 2 o'clock in
the morning, we scrambled to go through it and understand it as much as
we could.
I never will forget finally coming upon page 93, page 93. It was a
table summing up in their own figures the impact of the budget they
were about to ram through the House in the early hours of that morning.
It showed that the gross Federal debt this year will be $6.4 trillion.
That is what it is today, because it is limited by statute at that
level.
By voting for that particular budget resolution, they voted
automatically to raise the debt ceiling by $893 billion, and they voted
to put in train a budget with tax cuts that will lead to a debt
accumulation of $6 trillion over the next 10 years.
The national debt, the gross national debt, subject to statutory
limit, will grow from $6.4 trillion this year to $12.40 trillion in the
year 2013. That is absolutely astounding, absolutely frightening, in my
opinion, because I do not think the economy can possibly sustain that
kind of increase in debt.
Not only do we see additional tax cuts proposed in the face of rising
deficits, deficits, once again, as far as the eye can see. But if the
White House would simply call next door to the Treasury, they would
find that we are right now at this moment experiencing a tax cut, a
revenue reduction. Let me give the numbers, because last year we had
one of the biggest fall-offs in revenues we have seen in recent
history. This year we are seeing that trend repeated.
Our budget office, the Congressional Budget Office, which is neutral
and nonpartisan, projected the budget over the next year, next 10
years. They said this year in fiscal year 2003 they expected income
taxes to be about $38 billion over last year, 2002. If we look at where
we are thus far since April 15, or if we look at just until March 1,
excuse me, we do not know April yet, we will find that the total tax
take thus far this year is running $54 billion below last year, which
means it is $92 billion below what CBO, the Congressional Budget
Office, is projecting.
Even though we are having this follow-up of another year on the heels
of last year where we have a natural reduction due to the economy and
the Tax Code, a realignment of revenues, the administration is still
ignoring that and pushing ahead with a mammoth tax cut which can do
only one thing: it will make the budget deficits that we see here
projected on paper virtually engraved in stone. They will become so
difficult to unwind, resolve, work out, that they will become all but
intractable. I have seen that happen.
I came here in 1983 when we were deep in deficits. The deficits were
getting worse and worse and worse. But there is one factor now that is
dramatically different from the 1980s. That is something called the
baby boomers' retirement. Seventy-seven million baby boomers are
marching to their retirement as we speak tonight. The first of them
retires in 2008. By the time the peak retirement period is reached, the
number of baby boomers on Social Security and Medicare will swell to 80
million, twice today's level of beneficiaries. It will change the
budget demographically in ways we have only begun to imagine.
What we should be doing now is saving, not dissaving. That is what
deficits are, it is dissaving, reaching into the private capital pool
and spending that money that should be saved in preparation for facts,
demographic facts that are going to occur when the baby boomers retire.
We have a package which we have presented since January and will
present again next week which would stimulate the economy. If there is
any case to be made now for cutting taxes, it would be to try to give
this economy, this sluggish, slumping economy, some kind of a kick,
some kind of a boost so we can put people back to work. Once they go
back to work, it will make it easier for us to deal with some of these
budget problems.
We have put forth a proposal which does that. But we do not need
long-term, permanent tax cuts that have out-year consequences that
mortgage the future. We can simply have a tax cut that is focused on
2003, the here and now, when we have the problem.
We have proposed such a tax cut: rebates to individual taxpayers, an
immediate write-off of plant and equipment for businesses large and
small, going after all sectors of the economy, trying to give the
economy a boost. For one-seventh the cost we get, according to well-
established economic models, twice the effect in resulting jobs in the
first year from our economic proposal, and we do not have any out-year
consequences. We simply do something on a one-time basis. We give the
economy a boost, get it going again; and we do not have any out-year
consequences. As a result, we accumulate about $1 trillion, 400 billion
less in debt in the budget we propose than the Republicans propose.
What they are proposing is not necessary, by any means. It worsens
our problem. That is why we are here tonight, to talk about a problem
that very much needs to be understood by the American public.
Mr. BAIRD. Mr. Speaker, this has been an exciting discussion. We have
talked about responsibility, common sense, about jobs, about health
care, and about getting this budget back on balance.
____________________