[Congressional Record Volume 149, Number 105 (Wednesday, July 16, 2003)]
[Senate]
[Pages S9489-S9490]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      2003 FEDERAL BUDGET DEFICIT

  Mrs. FEINSTEIN. Mr. President, I rise to address this year's Federal 
budget deficit, which is now expected to exceed $450 billion. This will 
be the largest Federal deficit on record.
  This is a staggering $680 billion increase from the $236 billion 
budget surplus the Federal Government ran 3 years ago.
  And who knows how much the true deficit may in fact be if, a few 
months from now, the projection increases again due to the ongoing 
costs of rebuilding Iraq and Afghanistan. Reconstruction costs are now 
running $4.8 billion per month, or $58 billion annually, which is well 
above what we have budgeted.
  According to the Concord Coalition, a nonpartisan group that 
advocates for balanced budgets, ``The first six months of the 108th 
Congress were the most fiscally irresponsible in recent memory.''
  The members of this Chamber and the American public should know the 
simple truth: putting our economy back on track is even more difficult 
in the face of deficits of this magnitude.
  And next year, the on-budget deficit will likely top $600 billion.
  In my 10-year career in the Senate, there has never been a greater 
need for fiscal discipline than there is now. The then-record $290 
billion deficit we faced in 1992 required some very tough choices to be 
made but the choices that lie ahead will be even harder.
  It is incumbent on the President and the House and Senate leadership 
to prepare the country for those choices. Instead, the President and 
the Republican leadership in Congress have cut taxes with abandon while 
increasing spending at a rate faster than at any point during the past 
10 years.
  Discretionary spending increased by 13.1 percent between 2002 and 
2001, and is expected to increase by 9.7 percent this year over 2002 
levels. Much of that spending has been necessary to fight the war on 
terror, recover from the attacks of September 11, and improve our 
homeland security.
  Nevertheless, such spending cannot be sustained if tax revenues 
plummet due to ill-timed tax cuts and a weakened economy. In fact, the 
Federal Government has now reached a point at which it could eliminate 
all nondefense discretionary spending and still not close the Federal 
budget deficit.
  That would mean eliminating all Federal spending on roads, schools, 
law enforcement, disease research, and the environment, among thousands 
of other programs.
  This structural imbalance between Federal revenues and outlays 
threatens to send us into a spiral of increasing debt and rapidly 
accelerating interest costs. As the Federal debt increases and public 
saving decreases, long-term interest rates will inevitably be pushed 
higher.
  That not only increases the amount that the Federal Government must 
pay to finance its obligations but also raises the cost of putting a 
mortgage on your home or financing a new car purchase. A conservative 
estimate puts the increase in long-term interest rates due to the 
budget deficit at 0.4 percent.
  An increase of that magnitude would add $800 per year to the cost of 
a $200,000 home mortgage, or more than the majority of American 
taxpayers will receive from the President's latest tax cut.
  Yet what is perhaps more threatening is the negative economic impact 
of these growing deficits.
  The hard truth is that even robust economic growth will not bring the 
budget back into balance. When preparing deficit projections, the CBO 
assumes average real GDP growth of 3.3 percent between now and 2008, 
which is well in excess of the 1.5 to 2 percent average growth of the 
past 3 years.
  Such moderately strong growth would still leave us with more than $2 
trillion in cumulative deficits over the next decade. And this does 
take into account the true cost of the tax cuts without the sunsets and 
other budgetary gimmicks, which is likely to add $1.8 trillion to those 
deficits if all existing tax cuts were extended.
  These fiscal problems are not intractable, but they require 
bipartisan cooperation and real fiscal discipline, both of which have 
been in short supply of late.
  One unfortunate consequence of the administration's approach to the 
recent tax cut has been a growing partisan divide between Democrats and 
Republicans on fiscal policy.
  That stands in sharp contrast to the atmosphere when I entered the 
Senate in 1992. At that time a group of moderate Senators from both 
parties joined forces to rein in spending and hold the line on new tax 
cuts.
  Those efforts came to fruition in 1998, when the first Federal budget 
surplus since the Johnson administration was recorded. Budget surpluses 
continued for an additional 2 years, coinciding with a period of robust 
economic growth.
  During the 108th Congress, I have worked to rekindle that spirit of 
bipartisanship because I fear for the consequences of maintaining our 
current course.
  This past January, I introduced bipartisan legislation with Senator 
Chafee to freeze further cuts to the top income tax rates, a move which 
would save over $150 billion over 10 years if enacted today.
  During debate on the fiscal year 2004 budget resolution, I 
cosponsored an alternate budget resolution with Senators Carper, 
Chafee, and Lincoln. That alternate resolution would have brought the 
budget back into balance 4 years earlier than the resolution which 
passed the Senate, and was revenue-neutral over the 10-year budget 
window.
  And yesterday I introduced legislation to upgrade our country's 
transportation and water infrastructure. Credit for this bill is due to 
Congressman Oberstar in the House, and I am pleased to introduce the 
Senate companion bill. This bill would create more than 2 million new 
jobs, at less than a tenth the cost of the latest tax cut.
  Moreover, the $34 billion cost of my bill is fully offset by closing 
Enron-related tax shelters, putting an end to corporate expatriation 
and extending customs user fees.
  This type of targeted, revenue-neutral stimulus promises to create 
more jobs than the President's tax cut, without digging us deeper into 
debt, and is precisely the sort of fiscally responsible approach to 
jump-starting the economy that we need.
  Just as the budget surpluses of the late 1990s had a positive ripple 
effect of increasing the feeling of economic certainty and security in 
this country, the current budget deficit is having a negative ripple 
effect and is contributing to the near-freeze on hiring and capital 
investment we are currently experiencing.
  We must break this cycle with bipartisan leadership or we will face 
an even greater crisis in the years ahead. We cannot afford to burden 
future generations with the debt resulting from our

[[Page S9490]]

fiscal mismanagement, and we cannot afford to defer tough choices to 
future leaders.

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