[Congressional Record Volume 150, Number 105 (Wednesday, September 8, 2004)]
[Senate]
[Pages S8929-S8930]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              CONGRESSIONAL BUDGET OFFICE SEPTEMBER UPDATE

  Mr. NICKLES. Mr. President, yesterday the CBO, the Congressional 
Budget Office, issued their September update. It just came out. I heard 
my colleague and counterpart on the Budget Committee allude to it on 
the floor of the Senate yesterday, and he did that with great talent 
but maybe with a little different analysis than what I might give. So I 
thought I might give a little different presentation.
  I think there is a lot of good news in this report. It also shows we 
have some big challenges before us. CBO estimates for this year we are 
going to have a deficit of $422 billion. That is a record in nominal 
terms. But it is an improvement. CBO was just predicting 6 months ago 
it was going to be $470-something, so it is down $56 billion. The 
deficits are moving down. That is good news. OMB projected earlier this 
year the deficit was going to be $521 billion. Now they are down around 
the $441 billion, so they project significant improvement. As a matter 
of fact, the number CBO just came up with is about $100 billion less 
than what OMB, the Office of Management and Budget, had predicted at 
the beginning of this year. So deficits are coming down. They are 
coming down dramatically.
  I think the good news is the budget we passed last year and the tax 
package we passed, the economic growth package we passed last year, is 
working. We should be proud of it. I have been in the Senate now for 24 
years. We pass a lot of different bills sometimes to stimulate growth 
or try to help the economy or try to do something that will have 
significant economic results. The bill we passed last year, the 2003 
tax bill that President Bush signed in January, the tax bill that cut 
the tax rate on capital gains and dividends to 15 percent, the tax bill 
that accelerated the 2001 tax cuts and actually made them effective--
that bill worked. Most of those cuts had not actually gone into effect. 
Some did for lower rates, but upper incomes had not received a rate 
reduction. Middle-income people had not received but a 1-point 
reduction. We accelerated the 28 percent to a 25-percent rate, the 
maximum rate to 35 percent, cut cap gains to 15 percent, and cut the 
rate on dividends to 15 percent. And guess what. It has worked. It has 
worked.
  Since the President signed that bill, we have 1.75 million new jobs. 
That is 1,750,000 new jobs created. We have had 12 months in a row 
where we have had new jobs created every month. We really did reverse a 
downward trend, a decline.
  We had a real chilling event on 9/11: our economy was hit. The 
financial structure of the United States was hit. We had a stock market 
that burst, frankly, in March of the year 2000. The NASDAQ declined by 
about 50 percent in the year 2000. Revenues to the Federal Government 
had been declining dramatically. You add 9/11, to that you add the war 
on terrorism.
  Deficits are high. This Senator has spent the majority of my career 
trying to rein in Federal spending and hold down deficits. These 
deficits are very high. The good news is the deficit is coming down. 
Before one can criticize, they have to understand what caused the 
deficits. The deficits were caused by the market crash. When 
Alan Greenspan mentioned this a few years ago, he called it irrational 
exuberance in the stock market. That crashed. As a result, a lot of 
money, actually trillions of dollars of market value, was lost in the 
stock markets. That reduction applied to money coming into the Federal 
Government.

  The money we received in the Federal Government, total receipts, was 
over $2 trillion in the year 2000. Last year it was about $1.78 
trillion. That was not because of the tax cuts we passed. It was 
because of the very soft economy, and it was because of 9/11. A lot 
concurred at that time. President Bush realized that, this Congress 
realized that, and I compliment my colleagues, especially Zell Miller 
for that because he helped me cosponsor that bill we passed last year 
that helped make this economic recovery happen.
  The other good news in this report is CBO projected real economic 
growth this year of 4.8 percent. That is great. They project 4.2 
percent for next year. That is super. That is real economic growth over 
and above inflation.
  So the budget has worked. The tax bill we passed last year worked. 
New jobs are being created, almost 2 million jobs in the last 12 months 
alone. So we have a lot of good news. The good news is the budget we 
passed last year has worked. We defeated over $800 billion worth of 
additional spending, most of which was offered by my colleagues on the 
other side of the aisle. We defeated that. The budget worked. The good 
news is when we passed the Department of Defense appropriations bill 
before we adjourned for the August recess, we put in a budget provision 
that caps domestic discretionary spending. That was part of the DOD 
appropriations bill. So we passed that part of our budget this year. 
That is now the law of the land. Now we can pass our appropriations 
bills. We are going to take up the Homeland Security bill later this 
afternoon, and hopefully we will be able to pass it. We have budget 
rules that will work to enforce limitations on that bill and all other 
appropriations bills. So maybe now we can go ahead and complete our 
appropriations process.
  I mention these things to point out that there is some good news in 
this report. The report is also distorted because it says you have to 
use present base lines. Present base lines assume that all spending 
will continue to grow basically with inflation. This year alone, in the 
year 2004, we are spending about $115 billion in Iraq and Afghanistan 
in the war on terror. We did that through supplementals. We will not 
continue doing that year after year, not at those levels. In that 
period of time we have been fighting a war. We have hundreds of 
thousands of troops who are engaged in that effort.
  I was in Iraq a couple of months ago. We are training 210,000 Iraqis 
to take our place. I was in Afghanistan. We are training thousands and 
thousands of Afghanis, and we have 20-some thousand troops in 
Afghanistan. They will be taking our place so we will not have

[[Page S8930]]

to continue. We will not have supplementals near in this range. We had 
a $87 billion supplemental last year, and $28 billion included in the 
DOD appropriations bill. We will not have that large an amount of 
additional money to be used primarily to fight wars against terrorism 
in Iraq and Afghanistan. I am sure we will be spending some money. I am 
sure there will be some, but it will not be anywhere near that over a 
10-year timeframe. CBO assumes we will spend $114 billion inflated for 
the next 10 years. That is over $1.3 trillion. Then, if you add 
inflation to that, in addition to that, and interest expense that they 
also assume, that assumes about half of their negative projections.
  I might mention, too, my colleague said we have to fix the AMT, and 
if you add that in and extend every tax cut out there, the deficits 
will be terrible. I have a couple of comments.
  No. 1, the President made a speech at the Republican Convention and 
said we need to reform the Tax Code. I will not be here, but I hope the 
next Congress will take the President up on that.
  The Tax Code needs to be reformed. AMT is living proof that the Tax 
Code needs to be reformed. I look at the Tax Code as about a foot tall. 
I always compare it to the Bible. The Bible is about an inch. Unlike 
the Bible, the Tax Code contains no good news. I look at the Tax Code 
and it is complicated. It needs to be reformed. The President 
challenged Congress to do it. The next Congress should take the 
President up on that. You can fix AMT. There are an awful lot of 
anomalies and so many inconsistencies in the Tax Code. You can't fix it 
a paragraph at a time. You need to rewrite the entire thing. I think 
that can be done.
  You don't have to get in this debate--well, if we continue this or 
that.
  We have to extend the family tax provisions that expire at the end of 
this year. There are three of them. There is a $1,000 tax credit per 
child. That would revert to $700 per child if it is not extended. We 
need to extend the marriage penalty relief to allow married couples who 
have taxable incomes up to $58,000 so they will pay a 15-percent rate 
on taxable income up to $58,000. If you do not do it, it will revert 
back to some $40,000. That is about a $900 tax increase on married 
couples. Also, the expansion of the 10-percent bracket.
  Those need to be done this year. They need to be done this month. 
Hopefully this Congress will get that done. I expect we will. I am a 
conferee of that particular bill which is in conference. I am 
optimistic we will get that extended.
  We need to reform the Tax Code. Some people say we need a higher 
personal rate; we want to sock it to the wealthier people who are 
paying a 35-percent rate. That is the same rate General Motors pays. I 
don't think wealthy people should have to pay more than the largest 
corporations in the world.
  I am in favor of reforming the Tax Code. I think the President is 
right on in that effort. Instead of trying to paint the most negative 
picture possible with a doomsday scenario of the deficit getting bad, 
assuming we are going to a war in Iraq every year, which is not going 
to happen, and assuming a lot of negatives that, frankly, I do not 
agree with, I think future Congresses can reform the Tax Code and do it 
without ``having higher tax rates'' on individuals than you have on 
General Motors and other corporations.
  The good news is CBO says deficits are falling. That is good. The tax 
cuts we passed last year, frankly, are raising more revenues than 
people anticipated. That is good. CBO overestimated revenue. They kept 
telling us we think it is going to be better. Revenue crashed when the 
stock market crashed. It took a lot of economic viability out of the 
economy. When we introduced the tax bill last year, the Dow Jones was 
at 7,700. Because of the tax cut we passed last year, today the Dow 
Jones is 10,300. The Nasdaq is up over 40 or 50 percent more than it 
was when we introduced the bill a little over a year ago--almost 2 
years ago in January. We passed the bill in June of last year. We have 
seen very positive results in the stock market. We have seen very 
positive results in the economy with 4.8 percent growth. Now we have 
seen very positive results in employment with almost 2 million new jobs 
created, including in the manufacturing sector which has been on a 1-
year decline. We now see an uplift in the manufacturing sector as well. 
The good news is the economy is growing. The bill we passed last year 
has had a positive impact.

  With the cooperation of Senator Stevens, we were able to put in a cap 
on discretionary spending in the DOD appropriations bill. Now Congress 
can move forward. That is half of our budget.
  If somebody wants to know, the budget basically deals with how much 
money you are going to spend and how much money you are going to tax. 
This takes care of the spending side of it and puts the cap on 
spending, replacing the cap we passed in the previous budget. It 
supersedes that. Now we have a new cap on domestic discretionary 
spending of $821 billion. That is what we passed on the floor of the 
Senate. That is what we agreed to and that is what is now the law of 
the land. I think that is good news as well. That will constrain 
spending. We will probably find out later this afternoon.
  I think we have some good news on the economy. We have good news 
because the future deficits are falling. The economy is growing, and we 
have a little work to do to finish the appropriations bills and to 
finish action on a couple of tax bills this year.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Wyoming is 
recognized.

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