[Congressional Record Volume 149, Number 127 (Tuesday, September 16, 2003)]
[House]
[Pages H8270-H8276]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              THE DEFICIT

  The SPEAKER pro tempore (Mr. Kline). Under the Speaker's announced 
policy of January 7, 2003, the gentleman from Virginia (Mr. Scott) is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. SCOTT of Virginia. Mr. Speaker, I want to begin on something we 
can all agree on and that is what President Bush said in August at an 
August fund-raiser. He said, ``I ran for office to solve problems, not 
to pass them on to future Presidents and future generations.''
  We can all agree on that, but, unfortunately, the reality is that 
instead of paying off the public debt by 2011, as we had projected in 
2001, this administration will leave the future generations with a debt 
of almost $7 trillion as of 2011.
  Now, rather than get into rhetoric and everything, let us just use a 
chart so we know exactly what numbers we are talking about. This shows 
the deficit year by year from the Johnson administration, Nixon, Ford, 
Carter, the deficits that were run up in the Reagan and Bush years, and 
also shows the surplus that was generated by the time President Clinton 
left office.
  Mr. Speaker, in 1993 we passed a budget without any Republican votes. 
The Republicans, after those votes were cast, campaigned against that 
budget that was passed, and picked up 50 seats in the House and control 
of the Senate as a result.
  In 1995 after the 1994 election, the Republicans, with control of 
Congress, passed a budget with trillions of dollars in tax cuts. 
President Clinton vetoed that budget. They threatened to close down the 
government. He vetoed the next budget. They closed down the government, 
and he vetoed the budget again.
  Because he vetoed those budgets, this trend went up until we had a 
surplus of almost $100 billion projected for 2001. And that is on 
budget. That is without touching the Social Security or Medicare 
surplus.
  As soon as President Bush came in, he signed the trillion dollar tax 
cuts. And, wait a minute, this has $500 billion in deficits. This is 
the February

[[Page H8271]]

projection. This has been updated. It is no longer $500 billion. The 
latest figure is almost $700 billion in deficit that we will be running 
up.
  Now, it is important to put $700 billion in perspective because if 
you look at the Federal budget and look on the line item revenue, 
individual income tax, what we get from the individual income tax in 
the Federal budget, it is less than $800 billion. We are running 
deficits now of almost $700 billion.
  Now, when we run up deficits like this as far as the eye can see, one 
can understand how we got from where we were in 2001 to where we are 
now. In January 2001, we expected by 2011 to have run up a surplus of 
$5.6 trillion, enough to have paid off the national debt. By August of 
2001, we had lost over $2 trillion of that surplus, and the surplus was 
projected to be $3.4 trillion. Now, most of this is Social Security and 
Medicare, because in August of 2001, we had actually spent all of the 
cash surplus and most of the Medicare surplus, and were headed into 
Social Security by August of 2001, before September 11; by January of 
2002, the projected surplus, $1.6 trillion, almost all Social Security 
and Medicare surplus, or what was left of it, after we have dipped into 
it significantly.
  By August of 2002, there is almost no surplus at all, that is, we 
have spent the entire Social Security, the entire Medicare surplus for 
the entire 10 years. By March of 2003, we are down to an actual deficit 
where we have spent all of the Social Security, all of the Medicare, 
and then $377 billion. By August of this year, we have gotten into so 
much deficit spending that the projected deficit, not surplus, deficit 
is over $2 trillion in that same 10-year period.
  And what is the solution? The Republican agenda will run this up to 
$3.3 trillion unless that agenda is stopped. Mr. Speaker, a $5.6 
trillion surplus projected when this administration came in. If their 
policies are followed in the next couple of months, $3.3 trillion in 
deficit, an almost $9 trillion difference. That $9 trillion, remember, 
less than $800 billion a year comes in under individual income tax; $9 
trillion is $900 billion a year on average that we have deteriorated in 
our budget situation.
  Now, as bad as that is, it is actually going to get worse, because 
those projections do not include some things that we expect to happen, 
like the tax cuts have been sunsetted; the President is expecting us to 
remove the sunset so that those tax cuts can continue. Protecting the 
middle-class families from the alternative minimum tax, that is the tax 
where if you have tax preference, tax cuts for the upper, very high 
income, high income, about a couple of percent, about 3 percent of the 
public pays the alternative minimum tax. That is, you cannot reduce 
your tax that you need to pay but by so much before you have to pay an 
alternative minimum tax. The effect of not protecting middle-class 
families from this alternative minimum tax will mean that they will 
lose the benefit of their child tax credit and many other tax benefits 
that they enjoy now. So if we protect them from that, that will cost 
even more, going right to the bottom line.

  Providing a Medicare prescription drug benefit, all of those numbers, 
as bad as they look, do not include the prescription drug benefit that 
everybody is promising. It also assumes that we are not going to have 
any hurricanes or disasters or floods or earthquakes in the next few 
years. So it is going to get worse before it gets better. When we run 
up all of those deficits, we run up debt, and we have to pay interest 
on that national debt. Here is the interest on the national debt that 
we have projected to pay going down towards zero by 2011 or 2013, 
because there would be no debt; it would be paid off. Instead, this is 
the interest on the national debt that we are projected to pay. And if 
we look at the difference between what we have to pay and what we are 
going to end up paying, by 2010, that will be $1.6 trillion of 
additional interest on the national debt that we are going to have to 
spend because we have messed up the budget.
  Put another way, these green bars represent the interest on the 
national debt that we were going to pay going down towards zero. These 
red bars, interest on the national debt that we are going to have to 
pay because we have messed up the budget and we have been running up 
deficits. This blue bar puts it in perspective. This is the defense 
budget. We are going to be spending by 2013 almost as much money in 
interest on the national debt as we are going to be paying for national 
defense. We get nothing for interest on the national debt. We do not 
get a single school book, we do not get a rifle for the military, we 
get nothing for interest on the national debt. And instead of zero, we 
are going to be spending almost as much on interest on the national 
debt as we do for national defense.
  Now, to show how the interest on the national debt is affected, right 
now, if we take the entire interest on the national debt, divide it by 
the population and multiply by 4, we will see that the family of four's 
proportional share of interest on the national debt is now about 
$4,400. As the interest on the national debt goes up, by 2013, almost 
$8,500, a family of four's proportional share of interest on the 
national debt.
  Now, how did we get there? We got there with tax cuts. And who got 
the tax cuts? This is divided up by quintiles, the bottom 20 percent 
and what they got out of the tax cuts. The next 20 percent, the middle 
20 percent, what they got. The share of the fourth percentile, the top 
20 percent, this is what they got. Half of the tax cuts went to the 
upper 1 percent.
  To put it another way, if you are a millionaire, you got about 
$89,000 out of the 2003 tax cut. If you made $500,000 to $1 million, 
you get a little less than $20,000, and you can see what you got. Half 
the people get less than $100 a year out of the 2003 tax cut.
  Now, we were told that we needed to cut taxes to create jobs. The 
millionaires got their tax cut; we ran the budget into a deficit in 
order to create jobs. And here is the job creation math. Mr. Speaker, 
$374 billion in tax cuts through 2003 only, and we are expected, if the 
plan works, to create 1.5 million maximum new jobs. That is the 
Treasury Department's estimates. We pass all of this stuff, give $374 
billion in tax cuts, we can create 1.5 million jobs. That divides out 
to almost $250,000 for every job that they are trying to create. Mr. 
Speaker, $250,000 they have to work with to create jobs, if it works.
  This chart shows the jobs created by administrations going back to 
the Truman administration, and it shows that it did not work. This 
actually needs to be updated because it says 2.5 million jobs lost. It 
is actually closer to 3 million now. If we go back to the Truman 
administration, every President is creating jobs. Eisenhower lost 
200,000 jobs in his second administration, but he gained 1.9 million in 
his first administration. So every President since Truman, more jobs 
when they leave office after each administration than when they came 
in, except after this administration's budget was adopted.
  Now, as we talk about 9-11, let us remember that back to the Truman 
administration includes the Korean War, it includes the Vietnam War, 
jobs are being created; hostages in Iran, jobs are being created; 
Somalia, the entire Cold War, Kosovo, everybody is creating jobs until 
this tax plan is adopted.
  Now, actually, we should have known, because the Joint Committee on 
Taxation evaluated the 2003 tax cut and showed that if you cut those 
taxes, now some taxes stimulate the economy better than others. Some 
tax cuts stimulate the economy better than others. According to their 
analysis, the taxes cut in 2003 would show a short-term spike in jobs; 
but depending on which economic model we use, at best, we are going to 
end up right back where we started.

                              {time}  2145

  You will probably end up with fewer jobs than you started off with. 
This analysis was presented by the Joint Committee on Taxation. It has 
a Republican majority. And so we knew when we voted for the 2003 and 
2001 tax cuts that we were killing jobs.
  Now, when you have all of these deficits and you look at this chart, 
and the deficits that are going by, the deficits are the worst that we 
have had in American history. Now, there is one thing that the Social 
Security crisis is in front of us, and we need to make sure that we 
have money for the baby boomers when they retire for Social Security.
  Mr. Speaker, I yield to the gentleman from Texas (Mr. Stenholm), who 
has

[[Page H8272]]

been a stalwart on fighting for fiscal sanity.
  Mr. STENHOLM. Mr. Speaker, I thank the gentleman from Virginia (Mr. 
Scott) for yielding to me. I thank him for a very excellent 
presentation of the facts.
  I know as often we have stood in this floor that I will get calls 
from some that have been watching and they will have various different 
opinions of what has been said and what the facts are, but let us 
relate it to what we are facing tonight, at least many of our fellow 
citizens somewhere in the North Carolina area as Hurricane Isabel bears 
down on the United States, and we still hope and pray that something 
will cause it to veer back out into the ocean. But in the meantime 
folks are preparing because they know the devastation that can occur 
when a hurricane hits.
  In my opinion, we have the makings of the perfect storm in this 
country today, 500, now $600 billion deficit as far as the eye can see 
and we are ignoring it, $500 billion trade deficit as far as the eye 
can see and going up and we are ignoring it.
  The baby boomers are set to begin retiring in 2011, and everyone 
admits that that will put one of the biggest strains on the economy of 
the United States in our history. The gentleman's chart shows it today 
and no one argues with that, no one. From the AARP up and down all 
admit we have got a problem. And what have we done about that problem? 
Zero. Talk about it. But nothing. The makings of the perfect storm. And 
every time I make this speech somebody will say, and I have heard this 
said, people will stand up and say if only Congress would control 
spending.
  Well, the first thing I like to do is remind the American people that 
my friends on the other side of the aisle have been in charge for the 
last 8 years. I make no bones about it. I opposed this administration's 
economic game plan when they put it in place in 2001. I stood on the 
floor, I stood with the gentleman from Virginia (Mr. Scott) standing, 
looked at my friends on the other side and say, I hope you are right. I 
hope I am wrong. But I do not believe it has a chance of working. And 
in 2002 we said the same thing. In 2003 we say the same thing. But have 
we had a change in the economic direction for this country? No. The 
hole gets deeper and what do we do? We take another shovel and start 
digging. That makes no sense.
  Let me put it in proper perspective. Those who say if only we would 
control spending, let me give another fact, if we take defense, 
military construction off-budget, which we are, exempt from cuts, 
because we cannot cut in those areas when we are at war on three 
fronts, and we will not cut, and we should not cut. We have got young 
men and women's lives at stake tonight and, therefore, we do not wish 
to jeopardize them further. Interest on the national debt, we cannot 
cut that.
  The gentleman's chart shows the debt tax that is going up as the 
interest rates continue to spiral. We cannot cut the interest. So if 
you take defense and interest off-budget or off-cut it, we can cut 100 
percent of the other 11 appropriations bills, 100 percent, not waste, 
fraud and abuse, not 1 percent here, cut it all out, zero for the rest 
of the government, and we would still run $160 billion deficit next 
year.
  Now, that is the truth. That is how deeply we have dug the ditch for 
the American economy. Now, if it were working, as the gentleman shows 
the jobs charts, we have lost 2.7 million jobs. Nothing is working 
according to plan, and yet we have those who absolutely refuse to even 
consider changing the plan. In fact, they will stand on this floor and 
argue over the next several weeks, as they have for the last several 
weeks, that we just got to do more of it.
  The makings of the perfect storm. Anybody that ignores the power of a 
hurricane, anybody that ignores the power of the perfect storm of $500 
billion deficit, this next year I will predict based on the 
administration's own numbers, the deficit for this country will be 
closer to $1 trillion than it will $500 billion, and nobody cares. 
Nobody cares that is in charge. It is just more of the same.
  I am worried about that. I wish some others would get worried about 
that. I thank the gentleman for taking the time tonight. I appreciate 
the opportunity to share in it. And I hope that this chart that the 
gentleman has right behind him tonight, I hope people will take a look 
at that because we can talk about the fiscal deficit, we can talk about 
the trade deficit, and they are all real. This one is too. And our 
grandchildren will not hold us in very high stead because this Congress 
and this administration have refused to address the very real problem 
that is facing us. Instead, we keep on with some of the economic bunk 
that I saw in the Washington Post by the fellow that is running, 
running the economic policy for this country, Mr. Grover Norquist, the 
expert, it is his plan and he wants more of it.

  Mr. Speaker, I thank the gentleman for yielding to me.
  Mr. SCOTT of Virginia. Mr. Speaker, I thank the gentleman from Texas 
(Mr. Stenholm). This is the chart he was referring to. We are enjoying 
surpluses in Social Security and Medicare, $165 billion projected next 
year in surpluses. But by 2017, 2018, that surplus is going to end. The 
baby boomers are going to retire, and instead of enjoying a big fat 
surplus, in a few years, just a couple of decades, we will have $300 
billion deficit in the Social Security Trust Fund. We will be having to 
pay out $300 billion more than we are bringing in.
  Mr. STENHOLM. Mr. Speaker, remember in the last couple of years how 
many times we have stood on this floor and voted to put those numbers 
in a lock box, and that was laughed at. But if we would have just done 
it, and we did for a couple of years, but we need to be doing it today 
because those are obligated funds, those are obligated to the retirees 
beginning in 2011, our military retirees, our civil service retirees, 
this is money that is obligated that we are again spending on current 
operating expenses. And it was a valid criticism and it is still an 
accurate statement when our friends on the other side of the aisle will 
stand up and say, well, you Democrats did it for 40 years. Well, that 
may be true but that is not a reason for us to continue to do it, 
because 2011 is a lot closer today than it was 40 years ago, and that 
is the problem we face.
  Mr. SCOTT of Virginia. Mr. Speaker, I would want to point out as 
challenging as this chart looks, we are running up a little surplus, 
but we will shortly be into great deficit. And to put some of these 
other numbers into perspective, as we indicated, in 2001 we passed a 
tax cut that the top 1 percent got half of the value of that tax cut. 
Instead of giving the top 1 percent a tax cut, if we had directed that 
income flow into the Social Security Trust Fund, just what the top 1 
percent got, not what everybody else got, we would have had enough 
money to pay Social Security benefits without reducing benefits at all 
for 75 years, or the top 1 percent can get a tax cut.
  Guess what the majority in Congress voted for? They voted to leave 
this problem for another day and voted for a tax cut for the upper 1 
percent. Those are the kinds of decisions that are being made and the 
kind of decisions that have to be changed.
  Mr. Speaker, that is why I am delighted to recognize our friend from 
Hawaii who has been a stalwart new Member coming in fighting for budget 
sanity, the gentleman from Hawaii (Mr. Case).
  Mr. CASE. Mr. Speaker, I thank my colleague for giving me some time 
to talk tonight.
  Mr. Speaker, I have been privileged to serve in this great House for 
about 10 months now and I am thankful that as each day passes that is 
one day more of experience that I have under my belt to serve my 
constituents and to listen to people that have been through this for so 
many years such as the gentleman from Texas (Mr. Stenholm), the 
gentleman from Virginia (Mr. Scott) and so many others.
  But I have to state that the more time that goes by in terms of my 
service in Congress, the more I live in fear that in each one of those 
days I am taken a little bit farther away from what the person in my 
district thinks. When people sit around their kitchen table at night, 
not when they sit here in this Chamber among all of us in this closed 
atmosphere, but when they are back in my district of Hawaii, when they 
are back in Honoka'a and Ele'ele and Kahului, and when they look over 
those 5,000 miles of what is happening here in Washington, D.C. what do 
they

[[Page H8273]]

think? And I live in fear that I am falling out of touch with them the 
more time that I spend here. And that is really how I feel right now as 
I listen to this debate. Because I came into this Congress 10 months 
ago thinking, perhaps naively, that there were certain truths that our 
Federal Government played by, certain truths about how we handle the 
people's money, not just today but down the road. I thought we cared 
about decisions that had an impact, not just now, but down the road. I 
thought that despite great debate in this Chamber, we actually did care 
about being good stewards of the people's money. I thought we were all 
in this together, all of us, all of America, all trying to do the right 
thing.

  It did not occur to me that we were here just to do the bidding of 
some. And now as I have listened to my colleagues talk about taxes and 
the Federal budget and the deficit for these 10 months, colleagues on 
all sides of the aisle, people in the administration, great thinkers, I 
see indisputable evidence that what was once on the way to being a 
surplus is now a deficit this year in excess of $500 billion, including 
the Social Security surplus. We applied that $200 billion already.
  Now, I see public debt climbing through the roof, 3.6 and rising. And 
as I come to the very slow realization that there is no way whatsoever 
under this approach that we will be able to meet those obligations to 
Social Security and Medicare when my generation needs it, I have to ask 
myself what is going on here? What is really going on? How do I explain 
this? How do I go back into Hawaii and say to them this is what is 
going on.
  I can take disagreement, I can take policy disagreements as long as I 
know and understand it. I can go back and say, well, there is a dispute 
between us in Congress and they think this and we think that and this 
is why. And I can certainly go back and say this is the issue. We all 
agree and this is why. But this is the worst situation of all, not 
understanding why something is being pursued.
  A few months after we passed hundreds of millions of dollars of tax 
cuts, we get an obviously underestimated second bill for Iraq and 
Afghanistan, and there is no adjustment necessary from the 
administration's perspective, $87 billion on top of $60 billion just a 
few months ago. But we do not have to adjust our policy on tax cuts. In 
fact, we want to add more.
  The same week we get the bill I read, I hear that all of the sudden 
we have worked out another deal. This time we are going to cut 
corporate taxes for corporations that do their work overseas, overseas 
corporations. What is going on here?

                              {time}  2200

  I have been wracking my brain for the possibilities. I have heard 
that these tax cuts will regenerate the economy, and I think tax cuts 
can regenerate the economy under some degree if targeted, but across-
the-board deep tax cuts that deny us the basic ability to fund the core 
functions of government upon which an economy is based, do not help 
economies.
  I have heard the economy is picking up. I have heard in a couple of 
days we are all going to be told good news, the economy is picking up. 
Guess what? That is already in these figures. We have already assumed 3 
percent growth, and by the way, what economy would not pick up if you 
gave it a steroid infusion of hundreds of millions of dollars in 
government spending on war and domestically and in tax cuts? The 
question is not what is going to happen to the economy next week, the 
question is what is going to happen to the economy down the road when 
we most need it to balance the books on this terrible deficit?
  I have heard we have to reduce government. Of course, we have to 
reduce government, but by the way, this budget assumes a certain 
restriction on government. We are already putting it in, and to reduce 
government to the degree that would be necessary to balance the budget, 
under this scenario, would mean essentially wiping out all Federal 
spending other than military, defense-related, and I have heard the 
deficits do not matter. They are here to stay, let us just get used to 
them. Does anybody really believe that? People sitting around that 
kitchen table sure do not believe it, and I do not believe it.
  So what is going on here? Why are we doing what we are doing? I am 
forced to conclude what I do not want to. This is not subject to 
explanation anywhere in the realm of reasoned thought. There is no 
reasonable explanation for this policy, and we have got to cross a 
bridge. There is no reasoned explanation. We expect Congress to be 
reasoned. This is not reasonable. This is haphazard. This is reckless. 
This is not about fiscal responsibility. It is not about economic 
theory, and it is not about taking care of the next generation. This is 
about helping part of our country now and the heck with the rest of us 
and the heck with the future.
  It reminds me, just in conclusion, somehow I was thinking about this 
steroids thing, and I was remembering that back in the 1960s, when the 
Olympic movement suffered from an incredible abuse of substances and 
people would inject themselves with all kinds of stuff, and they knew 
at the time that by injecting themselves with these steroids and other 
substances they knew two things. They knew, number one, it would 
enhance their performance for the next 1 or 2 years, and they knew that 
down the road it would harm them and they would die early from these 
steroids, and some did it and some did not, and why did those people 
that do it do it? Because they wanted the gold medal next year, and 
they did not care and that is how I feel. That is what I think we are 
doing right now. Some people here just want to get through one next 
year, and they do not care what happens down the road, and that is 
wrong.
  We are all responsible. We can sit here and talk about partisan 
politics. We can talk about Republicans versus Dems. We can talk about 
executive versus legislative branch. We can talk about the States, the 
local counties, and by the way, I think that is a useful exercise 
because I have heard some State Governors and some local executives who 
want to defend these policies say, hey, this will help, and by the way, 
they turn around the next day and criticize the fact that we do not 
have enough Federal moneys. They are at a loss to figure out how they 
are going to balance their State budget, and they say, well, everything 
is okay and then they turn around and say on the other hand, it is not 
okay, we need your help.
  We cannot have it both ways, and I am telling people out there, this 
problem is all of ours. We cannot do this alone. We have sat here on 
this floor saying all of this for months now, and the Representative 
from Texas asked who is listening. I think people are listening, but it 
is going to take more than listening. It is going to take the people of 
this country saying this is wrong. It is going to take the people of 
this country saying, yes, we know, we cannot have it all.
  I wish our President would say one thing to me: We need another $87 
billion to get ourselves through the next couple of months in Iraq. We 
are in a pickle. We have got to get out of that pickle. I need your 
help but we all have to kick in. We cannot afford this next round of 
tax cuts. We have got to be able to provide for our foreign policy 
right now. We cannot have it both ways.
  I would believe him and I would support him, but I cannot buy the 
current approach of this administration, designed only to get through 
another 15 short months, through one more election. That is wrong. 
People need to wake up and start speaking out against it.
  I thank the gentleman for yielding and appreciate his time.
  Mr. SCOTT of Virginia. Mr. Speaker, I would like to ask a question 
since the gentleman brought up the issue of the $87 billion for Iraq. I 
remember back in the Persian Gulf War where the total cost of the war 
was about $60 billion, but because we had international cooperation, we 
only had to spend less than $10 billion, $7.4 billion out of that.
  We have already had one supplemental already that was supposed to 
cover the cost of the war. Now, we are coming back with $87 billion. If 
we had had the international cooperation, instead of 87 would we not be 
talking closer to 10, and that is a direct result of this foreign 
policy?
  Mr. CASE. There is no question about it. Certainly, when we did these 
budget assumptions just some short months ago, when the administration

[[Page H8274]]

said that the cost would be $60 billion, maybe a little bit more, the 
assumption was international cooperation. The assumption was 
contribution, military assistance, international monetary policy, all 
of those aspects. Those assumptions were shaky. Those assumptions are 
part of this $87 billion today and the $87 billion is too low, and the 
$87 billion is not in these figures that we are talking about. We are 
assuming more for the $87 billion. We are not even factoring in what 
might come in the future. This is all part of one ball of wax.
  When you run a family budget, you do not take the lowest estimate. 
When I project my expenses in my family, yeah, there is a temptation, 
sure, there is a tremendous temptation to take the lowest possible 
estimate. We all know that that is not responsible. You take a 
responsible estimate, you add yourselves a little safety factor, and 
then you go on into the future feeling that you have at least covered 
reasonable exigencies.
  We are not doing that in this budget. We are not doing it, and yet we 
are still in trouble. That is the dilemma here. We cannot have it both 
ways. We all know it. We just have to wake up to it.
  Mr. SCOTT of Virginia. Mr. Speaker, I thank the gentleman for 
fighting for fiscal sanity.
  At this point, I would yield to the gentleman from North Carolina 
(Mr. Price) who has been a stalwart, helping other Members every 
Wednesday morning, helps us with the seminar on budgeting and other 
important issues. The gentleman from North Carolina has been working 
diligently on fiscal sanity, helping us to learn about the budget, 
bringing in speakers from the outside and I am delight to yield to the 
gentleman from North Carolina (Mr. Price).
  Mr. PRICE of North Carolina. Mr. Speaker, I want to thank our 
colleague from Virginia for taking out this special order and for 
focusing attention again this evening, as he has so often in the past, 
on our country's economy and our fiscal meltdown which so threatens 
that economy in the future.
  I also want to commend the gentleman from Hawaii, who talked very 
persuasively about the need to wake up and to speak out and to confront 
the situation that we face.
  I am sure that I am not alone in the experience I had during the 
August work period in the town meetings I held in my District, and 
these meetings were held in some blue collar areas. They were held in 
some upscale, very affluent suburbs. They were held all over the 4th 
District of North Carolina, and I was struck at every one of those 
meetings, it was the economy that was the number one item on people's 
minds, and so many of those people were unemployed, and they often had 
very good training but they talked about having 100 or 200 people 
applying for every job they went after, and they talked about friends 
and family members and neighbors who are nearing desperation as they 
seek for work in this economy.
  They ask why are we not doing more to turn this economy around? Is 
that not why we count on government to have a sound fiscal policy and 
to intervene when the economy needs a boost?
  I said to my constituents, I don't have a single, simple answer to 
the economy's challenges, but I do know that this economy is in 
trouble, and I also know that we could be and should be doing a great 
deal more than we are doing to get this economy turned around.
  Mr. SCOTT of Virginia. I would ask the gentleman if he noticed that 
there is a problem, is the gentleman concerned that this administration 
does not even recognize that there is a problem?
  Mr. PRICE of North Carolina. Mr. Speaker, I am quite concerned that 
the administration does not recognize the problem, but when we look at 
the administration's record, we would think the economy would be agenda 
item number one with them as well.
  The private sector has shed 3.3 million jobs since January 2001 when 
President Bush took office. That is the worst record for any President 
since the Great Depression. Our long-term unemployment has 
almost tripled in this country. Real GDP growth, the growth of the 
economy has averaged 1.6 percent. That is the worst performance since 
World War II. Real business investment has fallen 10 percent since the 
President was inaugurated. That is the worst economic record for any 
President since World War II. Our trade gap has increased to almost 
$100 billion. Do we need anymore indications that this economy is in 
trouble?

  We are also running record deficits. The gentleman from Virginia and 
others tonight have talked in alarming terms, properly alarming terms, 
about the fiscal reversal we have suffered with a $5.6 trillion surplus 
in view when the President took office, now going way over $2 trillion 
in further debt. That is an almost $9 trillion reversal now, the 
largest in our country's history.
  We might ask ourself is there any justification for the kind of 
deficits that we are running, and I think the answer is no, but we 
could at least take some comfort if we thought that we were getting 
some economic stimulus for all that deficit spending and for those huge 
deficits and the mounting debt, and yet who can say that this medicine 
is working. In fact, the evidence is pretty clear that it is not 
working.
  In fact, the President has picked some of the measures that are least 
likely to stimulate the economy, such as the tax cut on dividends, for 
example. That produces a grand total of 11 cents for every dollar in 
lost revenue in terms of economic stimulus, and he has turned his back 
on some of the most effective measures such as the kind of extension of 
unemployment benefits that we have typically done in situations like 
this. This gives us $1.76 for every dollar we spend in terms of 
economic stimulus, and yet he turns his back on that. He champions 
these upper-bracket tax cuts. Yet all the analyses show that is one of 
the poorest ways to stimulate the economy. So we have the worst of both 
worlds.
  Mr. SCOTT of Virginia. Mr. Speaker, by that the gentleman means for 
every dollar in lost revenue, what effect does that have on the GDP, 
and whether or not you actually stimulated the economy, and what did 
you say for, if you extend unemployment compensation, for those that 
lost their jobs, as we usually do in a recession, end of 26 weeks, we 
extend it another 13 weeks just routinely, how much of a stimulus is 
that to the economy?
  Mr. PRICE of North Carolina. The figure I recall is about $1.76. That 
is because people who are in those straits are trying to support their 
families and tide themselves over until they can get work. So they are 
going to turn around and spend that money immediately.
  Mr. SCOTT of Virginia. For every dollar in lost revenue, you 
stimulate the economy about a dollar seventy?
  Mr. PRICE of North Carolina. That is right.
  Mr. SCOTT of Virginia. Mr. Speaker, what did you say about 
stimulating the economy by reducing the tax on dividends?
  Mr. PRICE of North Carolina. Eleven cents. Eleven cents. That is the 
stimulus you get for every dollar of lost revenue.
  So there must be some other reason, do you not think, for that tax 
cut on dividends and for those tax cuts on the wealthiest people in 
this country. For people making over $1 million, tax cuts that average 
about $88,000 a year, and yet that money is largely not going to be 
used as an economic stimulus.
  Mr. SCOTT of Virginia. When you fund the tax cuts with borrowed 
money, you have to pay interest on the national debt which is a drag to 
the economy.
  Mr. PRICE of North Carolina. Absolutely. That is money down a rat 
hole as the gentleman very convincingly, maybe did not use quite those 
elegant terms, but that is what the gentleman said earlier. That is 
money anybody in this body could think of better public and private 
uses for than simply interest on the national debt.
  So the economy is in sad shape, and we are getting the worst of both 
worlds. We are not getting an economic stimulus that is anything like 
what we should be getting, and yet we are over the cliff fiscally. We 
are undergoing a fiscal reversal that will take us and our children 
decades to grow out of.
  The unemployment numbers are graphically demonstrated here. The 
unemployment rate now from a very, very low figure in early 2001, now 
up in the range of 6 percent, hovering here

[[Page H8275]]

for months now, and there are a few scattered economic indicators that 
are looking somewhat better, but the term ``jobless recovery'' has 
entered the lexicon because there certainly are not many jobs being 
produced.
  What I heard at my district at every meeting I had in August was that 
this is not just an abstract economist estimate. This is something that 
is affecting the real lives of real people. They are nearing 
desperation, and this actually underestimates the problem because there 
are many, many people who have good training, good experience, and yet 
they are taking lower-end jobs now that really cut their standard of 
living. So it is a tremendous challenge for our country, and one that I 
believe this administration barely senses.

                              {time}  2215

  Mr. HOLT. Mr. Speaker, as the gentleman points out, economists are 
trying to pull this apart to understand how this perfect storm 
occurred. This will be the subject of economic studies for years to 
come, but one thing that is already apparent and will be apparent is 
this is not something that just happened to America; this was something 
that was created. It was created by the budget resolutions of 2001 and 
2002 and 2003 and the appropriations and the tax bills that fulfilled 
those budget resolutions.
  Mr. PRICE of North Carolina. The gentleman is absolutely correct. We 
have had an economic downturn that was more severe than expected, and 
9-11 and homeland security expenses and expenses associated with the 
war on terrorism. Those demands needed to be met, and they will 
continue to be met. But the large tax cuts aimed mainly at the upper-
bracket taxpayers, I think that counts as self-inflicted damage. It was 
justified 2 years ago because we had surplus money, supposedly, and now 
it is being repackaged as a stimulus even though it has very little 
stimulative effect. It mocks the idea of self-sacrifice, and that is 
the centerpiece of this President's economic policy.
  Mr. EMANUEL. Mr. Speaker, I think the deficit has now become the 
centerpiece of his economic policy.
  If we look at the administration's projection over the next 6 and 7 
years, on the deficit going out to the year 2011, they actually borrow 
money every year consistently regardless of how big or how small the 
deficit will be from the Social Security surplus. Every year that is 
done. To mask the size of the deficit, they must borrow from the Social 
Security trust fund.
  Mr. SCOTT of Virginia. They borrow the Social Security surplus and 
the Medicare surplus. And depending on which projections are used, they 
are spending substantially more money than that every year, creating 
huge deficits and a $9 trillion turnaround, paying off the entire 
national deficit, to massive deficits and new debt and new interest on 
the national debt for years to come.
  Mr. EMANUEL. And the irony is as these deficits mount, tuition costs 
are rising 11 to 15 percent annually, and the ability of college 
assistance like the Pell grants, which once represented two-thirds of 
college cost, today represents less than a third with no ability to 
increase that. Health care inflation is running at an average of 15 to 
25 percent, and there are no resources to deal with the two most 
important factors driving health care costs up, that is, we now have a 
record uninsured of 45 million, and we have prescription drug costs 
running 15 to 70 percent increases. Those are contributing factors to 
the increase in health care inflation. Those two factors in my view are 
creating tremendous pressure on the middle class of this country. We do 
not have the resources or the means nor a plan to deal with them. The 
deficit will tie our hands and tie the Nation's ability to address the 
very things that are squeezing on the middle class family's budget.
  Mr. HOLT. Mr. Speaker, the deficit ties our hands not in some 
theoretical way. This is very real money borrowed, mostly borrowed from 
other countries, from other governments and individuals overseas.
  I was talking with someone from my district who was proudly telling 
me about how much money he is saving for his children's college 
education. But what he was not thinking about was how quickly his share 
of the national debt was growing. In fact, it turns out it is growing 
faster than what he is saving for his children's college education. So 
in a very real sense, these self-inflicted wounds, as you described the 
budget policies of the past 3 years, are taking this family's college 
savings away from them.
  Mr. EMANUEL. Mr. Speaker, to add to that point, we have 45 million 
uninsured folks in this country with no health insurance. The bulk of 
them work. We have a pension crisis and retirement plan crisis where 
there are $330 billion in arrears in private retirement plans. We have 
college education where families face a choice, take a second mortgage 
on their home, or the child is guaranteed to graduate $30,000 to 
$40,000 in the hole because they borrowed to go to college. And then we 
have the Nation's deficit on top of that which ties our hands and our 
ability to meet the needs of middle class families, whether their 
parents are retiring, health care needs to their own families and 
children, as well as the education of their children.
  I believe that the deficit if we look at how it grows over a period 
of time is actually a ticking time bomb underneath Social Security and 
Medicare. In the immediate time, we are not able to afford the basic 
services and needs that our government provides in helping families 
meet the dreams that they have for their children, providing health 
care and education so they too can do what their parents have done and 
build a better future for their children.
  So the deficit, although sometimes we want to ridicule it and people 
call it an abstract thing, people understand the consequences of the 
deficit as they try to do what they try to do for their own family and 
children. They cannot afford their health care and college education; 
and they are scared out of their wits when they come to retire, neither 
Social Security nor the plan they thought they had through their 
employer will be there. I think people understand that the deficit is 
in fact damaging the ability of both their government today and their 
own plans for tomorrow to be met.
  Mr. PRICE of North Carolina. And people certainly understand when the 
claim is made that the deficit spending is for economic recovery. They 
are very quick to see the hollowness of that promise because it clearly 
is not having that effect. In fact, it is deepening our problems. It 
has an impact on long-term interest rates.
  Mr. EMANUEL. Mr. Speaker, in 2\1/2\ years, we have added $2.5 
trillion to the Nation's debt and 2.5 million Americans have lost their 
jobs. As Ronald Reagan used to say, facts are a stubborn thing, quoting 
former President John Adams. In the short order of 2\1/2\ years, 2.5 
million Americans have lost their jobs, 45 million Americans are 
without health insurance. $1 trillion worth of corporate assets have 
been foreclosed on, and 2 million Americans have come out of the middle 
class to poverty, and we have added $2.5 trillion to the Nation's 
deficit. A record like that is starting to give mismanagement a bad 
name.
  Mr. HOLT. Mr. Speaker, a newspaper article put this in perspective 
for me. The writer pointed out when the President went before the 
American public a week ago to say that he would be asking for $87 
billion this year to pay for rebuilding Iraq and Afghanistan, and that 
would require some sacrifice, the writer pointed out that those who are 
being asked to make the sacrifice did not hear the President because 
they had already been put to bed by their parents. It is those children 
who will bear that burden, who will be asked to make that sacrifice and 
not just for rebuilding Iraq and Afghanistan; it is for this multi-
trillion tax cut to one segment of our society.
  Mr. EMANUEL. It is interesting that the President's request for 
rebuilding Iraq has a $2 billion request for Iraq's electric grid, and 
it was America with the blackout. In our energy bill, we say we do not 
have the money to invest in our own electric grid.
  Mr. PRICE of North Carolina. Mr. Speaker, this did not have to be. 
There are historical examples of other kinds of leadership. This chart 
indicates where we have been with the deficit and for a brief couple of 
years the surplus in this country as a result of some courageous 
decisions that were taken

[[Page H8276]]

in this body and by the first President Bush who displayed leadership 
qualities which unfortunately seem to be missing at the White House 
right now.
  There was a budget agreement in 1990 concluded on bipartisan terms, 
and then a budget passed entirely with Democratic votes in 1993; the 
economy responded positively to that discipline and it thrived in the 
1990s, and we got out of deficit spending and ran $400 billion in 
surpluses and paid off a chunk of that national debt. Just think what 
would be the case if we could have continued on that path.
  Mr. SCOTT of Virginia. Mr. Speaker, the projection was by 2011 and 
2013, we would have paid off the entire national debt and had no 
interest on the national debt to pay year after year.
  Mr. HOLT. I seem to recall standing here on the floor with the 
gentleman from Virginia (Mr. Scott) and the gentleman from North 
Carolina (Mr. Price) 3 years ago saying that the majority should not be 
so quick to spend this surplus. They began salivating at the sight of 
this projected surplus. I recall my friends here saying number one, it 
is projected; number two, things happen. We should not spend it all 
down. We should not give it all back in tax cuts; there might be some 
unforeseen events. Well, indeed there were. It happened on September 
11; it happened with a stock market bubble popping. We were caught 
unprepared because the budget allowed absolutely no leeway. It was 
built on the most optimistic of circumstances and predictions, as well 
as, I would say, the greediest of ingredients.
  Mr. PRICE of North Carolina. Just to add to the gentleman's thought, 
we got off of a disciplined path toward debt reduction. Whatever else 
we did in the way of new investments or tax cuts, we certainly should 
have reserved a certain amount of that anticipated revenue to protect 
Social Security in the future and to protect ourselves against exactly 
the kind of eventuality we are now facing.
  I thank the gentleman from Virginia (Mr. Scott) for a helpful 
discussion. As we face this $87 billion supplemental appropriations 
request, of course, we will do the right thing by our troops in Iraq 
and Afghanistan and meet our international obligations, but we will and 
we should ask some tough questions of this administration for an 
accounting of where we have been thus far and where we are going, and 
above all, how we are going to pay for this and how this fits in with 
the overall fiscal health of the country we love.
  Mr. HOLT. The gentleman from Hawaii (Mr. Case) said it very well, it 
would be easier for us to deal with this with the $87 billion, with all 
of the economic problems facing us, if the leadership here and the 
leadership down the avenue would level with the American people about 
how this happened. I think that is what the American people ask, is 
that their leaders level with them and not just go on as we go further 
into debt have the leadership say and now we need tax cuts more than 
ever. I thank the gentleman from Virginia (Mr. Scott) for this very 
useful discussion.
  Mr. SCOTT of Virginia. Mr. Speaker, I want to end with this chart 
that reminds people of the hole that we have dug ourselves into. And 
when people ask what is the Democratic plan, I just point to the green 
because that was done without any Republican assistance, and here we 
are right now. As we look at how dire this situation is, we have to 
look forward to the Social Security situation where we will not enjoy a 
nice surplus year after year. We are going to have a challenge of 
deficits in the Social Security plan that we could have covered with 
just what the 1 percent got in the 2001, not the 2003, not what 
everybody got, but the top 1 percent got in 2001 would have been more 
than enough to cover all of this deficit. But we have a challenge with 
Social Security, and we are going in the wrong direction. I thank all 
Members that participated tonight because we have to remind people how 
bad a situation it is.

                              {time}  2230

  We can change directions as we did in 1993 and go back to fiscal 
sanity, go back and do a surplus, pay off the national debt, or we can 
continue in the direction we are going now. We will make those 
decisions in the upcoming weeks. I thank the gentlemen for 
participating.

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