[Congressional Record Volume 150, Number 10 (Monday, February 2, 2004)]
[Senate]
[Pages S363-S365]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           THE FEDERAL BUDGET

  Mr. VOINOVICH. Mr. President, I rise today to discuss an issue that I 
have been known to have some thoughts on from time to time and that is 
our Nation's fiscal situation and this body's approach to its budget 
responsibilities.
  First, I would like to congratulate my colleagues for passing the 
Omnibus Appropriations bill. In this bill, we funded all of the 
President's priority items requested in the fiscal year 2004 budget and 
still restricted discretionary spending to $876 billion.
  I recognize that many people were dissatisfied with this legislation. 
Some people believe Congress spends too little and last year my 
colleagues on the other side of the aisle offered amendments that would 
have added over $87 billion to total spending in fiscal year 2004. 
Other people believe Congress spends too much and asked President Bush 
to veto the Omnibus Appropriations bill because it contains too much 
``pork''. It seems that neither extreme was pleased by the fiscal 
result, which may be the best indication we did the right thing. I will 
not claim the fiscal year omnibus is perfect. Nevertheless, this bill 
represents the best possible compromise between true fiscal discipline 
and Congress' desire to spend.
  Unfortunately, this is our eighth consecutive year of compromising 
fiscal discipline and the American people are beginning to wonder when 
we will ever get our act together. The last time discretionary outlays 
authorized by Congress were lower than spending requested by the 
President was in 1996. According to the Cato Institute, real 
discretionary spending increases in fiscal years 2002, 2003 and 2004 
are three of the 10 largest annual increases in the last 40 years. 
Also, the Congressional Budget Office reports that if current 
appropriations maintain the same rate of growth we have given them 
since 1999, we will increase discretionary spending by $2.7 trillion 
over 10 years and every penny of added spending will be reflected in 
the Federal deficit and debt.
  Some people may take comfort in CBO's baseline projections that show 
the budget reaching surplus in 2013. Let me tell my colleagues these 
projections should not lull us into a false sense of complacency.
  First, CBO itself explains the baseline projections must estimate the 
future paths of Federal revenues and spending under current laws and 
policies. The baseline is therefore not intended to be a prediction of 
future budgetary outcomes. Simply put, the CBO baseline projection 
assumes Congress will restrict the growth of spending to the rate of 
inflation, less than 3 percent a year and less than half its current 
rate of 7 percent. CBO also estimates that Congress will allow Federal 
revenues as a percentage of GDP to increase from 15.9 percent to 20.1 
percent, almost a one-third increase.
  Does anyone seriously believe Congress will restrict spending or 
increase taxes by the amounts required to meet the CBO projections? I 
wish I could say that I believed these projections but I outgrew fairy 
tales a long time ago.
  Second, if we are honest with ourselves, many people just do not 
think deficits are important anymore. the commonly heard refrain from 
some of my colleagues is that Ronald Reagan proved deficits don't 
matter. Meanwhile, some people only seem to care about deficits when 
they get in the way of increased spending.
  In 1995, the first year Republicans controlled Congress, spending 
grew by $25 billion. In 2004, with Republicans still in control of 
Congress, spending will increase by $224 billion. Essentially, the 
amount we increase spending each year has grown tenfold in just 9 
years.
  Well, I am here to tell you deficits are important. After 10 years as 
Mayor of Cleveland and 8 years as Governor of Ohio, I can tell you 
exactly why deficits are important. When a local or State government 
allows its finances to become dangerously unbalanced, creditors demand 
higher and higher premiums on municipal bonds until interest rates 
become unsustainable. Contractors withhold goods and services or demand 
strict payment terms as a condition of doing business. Taxes are often 
raised, which has a serious impact on businesses and families. Finally, 
government leaders are forced to make draconian cuts in public 
services.

[[Page S364]]

 Families and businesses often seek better opportunities elsewhere, 
because their local government leaders cannot solve the problems or 
provide government services such as school maintenance, fire and police 
protection and hospital services.
  This downward spiral is not limited to state or local governments. 
Entire nations in South America, Eastern Europe, Southeastern Asia and 
elsewhere around the globe have followed this well worn path to fiscal 
demise. As much as we may like to think our Nation enjoys special 
protection from the laws of economics, the fact is that sooner or later 
our own fiscal irresponsibility and indebtedness will catch up to us. 
No government is immune to the consequences of deficit spending. Every 
government, State, local or national, that steadily increases spending 
with no means to pay the bill sooner or later pays a terrible penalty.
  I know full well the penalty governments pay for fiscal foolishness. 
I took over as Mayor of Cleveland just after the city had gone into 
default and it took us 7 years to dig out of that hole. The, when I 
became Governor of Ohio, I inherited a $1.5 billion debt and had to 
immediately make over 700 emergency spending cuts by executive order 
and cut spending four more times during my administration.
  I am here to tell my colleagues that for the United States, that time 
is close at hand. Our Federal budget is in dire condition. We face a 
sea of red ink as far as the eye can see. And perhaps the worst thing 
about it is that few people in this body appear to recognize how bad 
our predicament is.
  Since I came to the Senate in 1999, this body has increased Federal 
spending an average of 7 percent per year. If we maintain this pace, 
Federal spending will double every 10 years. Just 3 years ago, we 
enjoyed a Federal surplus and we now will suffer from major deficits 
for at least the next 5 years.
  From the time I first arrived in Washington, I have worked hard to 
return the Federal Government to a balanced budget. For a short time, 
after hand-to-hand combat, we met our goal and for 2 years, fiscal 
years 1999-2000, we balanced the budget without raiding the Social 
Security surplus. Unfortunately, our success in balancing the budget 
was short-lived. In the blink of an eye we returned to spending the 
Social Security surplus and running large budget deficits. Today, 
instead of reducing our $6 trillion national debt, we are expanding it.
  In 2003, this past fiscal year, we suffered a budget deficit of $375 
billion. This means that we spent the entire $161 billion Social 
Security surplus, and on top of that we had to issue $375 billion in 
new debt. And, if we are honest about the numbers, next year, and the 
next decade, look even worse.
  Thankfully, in the omnibus bill, we avoided adopting many of the 
irresponsible spending amendments offered by some members of this body. 
So many of my friends on the other side of the aisle keep talking about 
how bad the deficits are, while at the same time, they keep supporting 
proposals to spend more money which would require borrowing even more 
next year. Since I joined the Senate in January 1999, there have been 
190 attempts to waive the Budget Act, 67 last year alone. It defies 
logic for any group of Senators to complain about the deficit when they 
are making 67 attempts to waive the budget act and increase spending. I 
shutter to think what our deficit would look like if all 67 attempts 
had been successful. I find it troubling that many of my friends on the 
other side of the aisle cry crocodile tears about the size of the 
deficit while making 67 attempts to waive the budget act.
  The proposals we did not pass total $87 billion for fiscal year 2004 
alone and would have cost over $494 billion over the next 10 years, all 
of which would have added to the deficit. In other words, if these 
amendments had been approved, next year's deficit would be $564 billion 
instead of $477 billion. Even at today's very low interest rates of 
less than 5 percent, these amendments would have added $1.7 billion in 
additional annual interest payments every year. Apparently some people 
see very little difference between paying $200 billion a year in 
interest and $202 billion; but where does it end? How much of our 
children's future and even our own secure retirement can we mortgage 
away?
  Nevertheless, there is an optimistic message in these numbers. There 
may have been 67 efforts to waive the Budget Act in 2003 but only three 
were successful. For all its well publicized problems, the budget 
process is working. The super majority points of order, established to 
exert at least a small level of fiscal discipline, effectively 
prevented 64 of 67 efforts to increase spending.
  I believe it is time to make the Budget Act even more effective. 
Therefore I will be working to include new points of order in the 
upcoming fiscal year 2005 budget resolution. These points of order will 
help end one of the most dishonest budget practices in Washington: the 
use of Social Security Trust Fund revenues to finance general 
government expenses.
  One of the biggest problems here in Washington when it comes to the 
budget is getting the facts straight. For example, it is commonly 
thought--and reported in the media--that we only suffered a $375 
billion budget deficit last year. However, this figure ignores the fact 
that we borrowed and spent $161 billion from Social Security surplus on 
top of the $375 billion we had to borrow from the private markets.
  We spend the Social Security surplus and leave the so-called Social 
Security trust fund full of government IOUs. Then, we pretend the money 
just dropped from the sky, and ignore the fact that we borrowed more 
money--not from the private markets, but from future Social Security 
beneficiaries. Like most Americans, I think it is wrong to use this 
money to fund the day-to-day operations of the government. This is no 
way to manage the finances of our Nation. We must adopt budget process 
mechanisms that encourage fiscal responsibility, highlight the future 
consequences of our current decisions and limit the potential for 
bookkeeping chicanery that would make an Enron accountant blush.
  But I am not under any illusions that simply tinkering with the 
budget rules will restore fiscal discipline. Congress has made an art 
form out of skirting the budget rules it sets for itself, and I have no 
doubt that we could come up with a number of creative ways to avoid 
these rules as well.
  Instead, we need to give the American people the full picture about 
the budget outlook so that the political pressure will be created for 
Congress to play by the rules and restore fiscal discipline. Last year 
I worked closely with Chairman Nickles and we were able to restore 
several important budget enforcement mechanisms such as: extension of 
supermajority enforcement of budget points of order; extension of 
discretionary spending limits in the Senate; extension of restriction 
on advance appropriations in the Senate; tighter restrictions on 
emergency spending legislation; and restoration of pay-as-you-go point 
of order in the Senate.
  Also, as many of you know, last year I offered an amendment to the 
budget resolution requesting the CBO prepare a report describing the 
long term unfunded liabilities of the U.S. government. This amendment 
was approved by unanimous consent and CBO will shortly be providing us 
with this valuable information. I look forward to sharing this 
information with my colleagues. This year, I will go further and work 
to include a provision in the budget resolution directing CBO to 
include interest costs in its cost estimates for legislation. Many 
Members are surprised to learn that CBO does not factor in additional 
interest expense when it reports the cost of proposed legislation. It 
is as if we went to buy a house or car and completely ignored the 
financing costs and amortization schedule.
  Today, our national debt stands at $6.8 trillion. If our new CBO 
figures come to fruition, we will add a cumulative deficit of $6.1 
trillion from fiscal years 2004-2014, which would bring our debt up to 
a whopping $12.9 trillion. At this level, the interest payments on the 
national debt would exceed $600 billion, which is nearly twice as much 
as we currently spend on non-defense discretionary spending.
  And who is going to end up paying for this debt? It won't be members 
of this body--no, instead it will land squarely in the lap of our 
children and grandchildren. I don't know any parents or grandparents 
who would think it was a good idea to run up huge personal debts

[[Page S365]]

that their children or grandchildren would have to pay at the time of 
their death, but that is exactly what we are doing with out Federal 
budget.
  It is immoral to bequeath nearly $13 trillion of debt to our children 
and grandchildren. And most of the American people agree with me. I 
know this, because when people come into my office asking for money for 
a particular project, I always ask them the same question. That 
question is: is this particular priority worth putting your children 
and grandchildren further into debt? And it's remarkable, their 
attitudes immediately change, and many of them reconsider.
  So the problem isn't that the American people aren't willing to 
sacrifice and make hard choices. The problem is that Congress hasn't 
had the guts to tell the truth about what we can and can't afford. We 
in Congress don't want to say no to anything. We want to have it all.
  Over the past 10 years, Congress has increased spending at rates that 
would stagger the average family. Between 1995 and 2004 the growth in 
median income for wage earners in our Nation was 6 percent. There is 
not a single department in the entire Federal government that has been 
asked to restrict its growth in spending to less than 10 percent. The 
most frugal department, the Treasury, increased its spending by 10 
percent or more than 1.5 times the level enjoyed by median income 
earners. The Department of Labor, guardian of the interests of the 
average workers, grew its spending by more than 99 percent or 16 times 
the increase earned by the workers it represents.
  Those are the facts. Congress needs to wake up and smell the coffee. 
Unless we change course, start prioritizing, making hard choices, and 
stop spending like drunken sailors, we are going to saddle our children 
and grandchildren with a debt so large it boggles the mind.
  I have no illusions about the enormity of the task at hand to restore 
fiscal discipline. It's a big job, but it is nothing short of a moral 
imperative. In order to avoid a total breakdown of the budget and 
appropriations process, President Bush will need to work very closely 
with Congress. Given the competing priorities in this body, it could be 
very difficult to increase Defense and Homeland Security by 9 percent 
while limiting the growth in domestic spending to only 1 percent. I am 
prayerful the Budget Committee will recognize the reality of these 
numbers and allocate sufficient funding to domestic budget function 
areas to gain the support of an overwhelming majority of Senators. To 
fail to do so would invite considerably more than 67 attempts to waive 
the budget act and if the budget is enacted with an arrow margin, I am 
not sure we will have the votes to defeat all of them.
  And on top of all the pressure we face to increase spending, many of 
my colleagues would like to permanently extend the temporary tax 
reforms enacted last year, which would mean even less revenue than CBO 
has assumed in its most recent budget projections. So if we make these 
tax reforms permanent, we will need to either cut most of the spending 
in the discretionary portion of the budget or dig ourselves into an 
even deeper deficit hole.
  Nor has anyone in the administration or in Congress seriously address 
the need to control mandatory spending. More than 55 percent of Federal 
spending consists of so called ``off budget'' mandatory entitlements. 
These mandatory programs may be off budget when we vote on 
appropriations bill but their costs weigh heavily on the budgets of 
future generations.
  We have to recognize that everything we do this year will be measured 
against the backdrop of ever increasing deficits. It is time to take 
them seriously and begin to make the difficult choices needed to 
restore fiscal responsibility.
  This will not be politically easy and I understand that. There is no 
shortage of important things the Federal Government could be doing 
across the Nation. And, I support many of those spending ideas.
  But the simple, undeniable fact is that we can't have it all. We have 
to make hard choices.

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