[Congressional Record Volume 151, Number 17 (Wednesday, February 16, 2005)]
[House]
[Pages H691-H699]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE FEDERAL DEFICIT
The SPEAKER pro tempore (Mr. Jindal). Under the Speaker's announced
policy of January 4, 2005, the gentleman from South Carolina (Mr.
Spratt) is recognized for 60 minutes as the designee of the minority
leader.
Mr. SPRATT. Mr. Speaker, we received last week the budget of the
United States, as requested by President Bush, for fiscal year 2006.
And having looked at it to some extent, I have to say we regret that it
continues the same bad choices that have led to huge deficits and
mounting debt during the last 4 years.
For the third year in a row, the Bush administration's budget sets a
record level deficit, $415 billion, and offers no plan to put the
budget back in the black again.
Unfazed by these deficits, the Bush administration proposes tax cuts
on
[[Page H692]]
top of them which can only go to the bottom line and make the budget's
bottom line worse. To offset a small portion of these plans, the Bush
administration calls for cuts in services to students and veterans,
small business and law enforcement, environmental protection and urban
and rural development. And although most of these cuts are significant
to those who will be taking the hit, they barely make a dent in the
bottom line of the budget.
Let us start and look at where we have been in order to appreciate
where we are today. Just to show the Members that the budget can be
balanced, this chart shows that in the year 1992, the United States had
a deficit of $290 billion. This was the deficit inherited by President
Clinton when he came to office January 20, 1993. By February 17 he had
on the doorstep of Congress a plan to cut that deficit by more than
half over the next 5 years. That plan was ridiculed here on the House
floor, only passed by one vote here, only passed by the Vice
President's vote in the Senate, but look at the results. Just to show
that it can be done, the budget can be balanced, under the
administration of President Clinton over 8 years, the bottom line of
the budget got better year after year after year.
Starting with a deficit the year before of $290 billion, the
President lowered that to $255 billion; $164 billion a couple of years
later; then $22 billion; and, finally, in the year 2000, due to the
Clinton budget passed in 1993 and the Balanced Budget Act of 1997, the
budget was in surplus by $236 billion, 5 short years ago. The year
before President Bush came to office, the budget was in surplus by $236
billion.
President Bush came to office committed to substantial tax cuts. We
warned him at the time to be careful about assuming that these
surpluses would continue indefinitely and keep rising. He nevertheless
pushed through his substantial tax cuts and his other spending
policies, and we can see what has happened every year since. The bottom
line of the budget has gotten worse and worse to the point where 3
years ago, it was $378 billion in deficit, a record amount. That was
2003. In 2004 it was $412 billion in deficit, another record level. And
this year the Office of Management and Budget, the President's budget
shop, tells us recently that they expect a deficit this year of $427
billion. A dubious record, but that will be the third year in a row
that the bottom line of the budget has registered a worse deficit than
the year before, $427 billion.
{time} 1645
Now, the President set a goal last year looking at these dismal
results for improving the bottom line of the budget. He said over 5
years we are going to cut that deficit in half. In my book, 5 years is
not good enough. Nevertheless, that was the goal he set for himself,
and he claims that the budget he submitted this year will achieve that
result. But in truth, the budget he submitted this year is more notable
for what it omits, excludes, than for what it includes.
The President has not included in his budget for 2006 sent up last
week any reasonable allocation of likely expense for the deployment of
our troops in Iraq and Afghanistan in 2006. I would like to think they
would not be there, but we have to be realistic. We know from 3 years'
experience approximately what it has cost to maintain those
deployments. They should be recognized in the budget, but they are not.
The President proposes to privatize or partially privatize Social
Security and he gives us a likely cost for the first few years of
implementation of those privatization plans between 2009 and 2015. His
cost, OMB's cost for that time period, is $749 billion. That is nowhere
to be found in these numbers. Even though it falls within the 10-year
time frame of the budget, it is not included in the numbering.
The President asks for additional tax cuts. He asks for the tax cuts
that he passed in 2001, 2002, and 2003 that expire for the most part on
December 31, 2010, to be renewed and made permanent. Even though we now
know that given the bottom line of the budget, the red condition, the
fact it is a historic deficit, $427 billion, the bottom line can only
get worse if those tax cuts are extended and made permanent. The
President says, ``I want to do that.'' In addition, there is another
$383 billion of expiring tax cuts that will have to be handled as well.
But there is one big item called the Alternative Minimum Tax. Over
the next several years, this tax will affect more and more tax filers.
Last year, to buy us a little time so we could repair that particular
formula of the Tax Code so that it does not hit middle-income
taxpayers, for whom it was never intended but is hitting now because it
is not indexed to inflation, we built a little patch in last year's
budget to at least leave the effect of it in constant status for 1
year.
Mr. KIND. Mr. Speaker, if the gentleman will yield, I thank the
gentleman for highlighting the huge budget shortfalls we are facing,
but one other item that seems to be masked in the budget numbers on the
previous chart, does that include the amount of money that is currently
being borrowed from the Social Security and Medicare trust funds? Is
that amount also reflected in those figures showing deficits?
Mr. SPRATT. Mr. Speaker, reclaiming my time, the deficit is worse,
and the gentleman makes an excellent point. When the surplus, and
Social Security is running a surplus next year and this of $150 billion
to $160 billion, that amount is actually offset against the gross
deficit in the regular budget of the United States. So if you remove
that offset, the surplus in Social Security, which is netted out
against the deficit, that number becomes $687 billion instead of $427
billion.
Mr. KIND. If the gentleman will yield further, the current raid on
both the Social Security and Medicare trust funds makes those budget
deficit numbers much worse?
Mr. SPRATT. That is correct. I had another chart up which the
gentleman is familiar with which shows you on the back of an envelope
in a simple form the net effect of the three Bush budgets sent up in
2002, 2003, and 2004.
When the President sold his tax cuts to the Congress, his Treasury
Secretary and his Director of OMB both said, We will not need to come
back to you until 2008 to ask for the debt ceiling of the United States
to be increased. They were back the next year, 2002. They said, We have
incurred so much debt, despite our intentions, that we need to raise
the legal ceiling on the debt of the United States by $450 billion.
The next year, 2003, they were back again. The tax cuts were
beginning to be fully implemented, taking a toll on the bottom line,
with other effects like a recession, like increased military expenses.
But all of this added up to a need to increase the debt ceiling by $984
billion.
Let me put that in context. The entire national debt of the United
States before Ronald Reagan took office was less than $984 billion
accumulated since the beginning of the Republic. Then last November,
before we could adjourn, Treasury was back, the administration was
back, and they said, Before you can leave here, unless the government
is going to shut down, the ceiling on the debt of the United States has
to be raised again by $800 billion.
That means that this $984 billion increase made on May 26, 2003,
lasted only 16 months. We are in effect adding $1 trillion to our
national debt every 18 months. Nobody in his right mind thinks that
that course can be continued.
This is the net total by which Congress had to raise, Republicans for
the most part voting for it, had to raise the debt ceiling of the
United States in order to accommodate Mr. Bush's budgets for the first
4 years, $2.234 trillion. That was the amount we had to raise the debt
ceiling over 3 years in order to accommodate his budget.
Let me go back to the things that were left out of the President's
budget, because, as I said, it is more notable for what it excludes
than what it includes. As I said, there was nothing in the calculation
of the taxes that he wanted to make permanent to fix the AMT, though
all know this is a looming problem that politically has to be addressed
in the next several years. There was not even money to patch it over
for another year to study how to fix it.
Secondly, there was not a dime for Social Security privatization. Ten
years of budget, not a dime for Social Security privatization, even
though the President has made it his number one agenda initiative.
[[Page H693]]
Thirdly, there was nothing for the cost of the war in Afghanistan,
the insurgency there, nothing for the cost of our deployment in
Afghanistan or Iraq or enhanced security in North America. The
Congressional Budget Office, recognizing that that is a number that is
there and has to be somehow or another estimated and included in the
budget, captured, in order to have the budget be a complete and full
account of what we are likely to spend, did a model.
They said, assume we can reduce our forces beginning in 2006, between
2006 and 2010, down to 40,000 troops in the theater, the CENTCOM
theater, not necessarily Iraq, but in the CENTCOM theater, with 18,000
troops remaining in Afghanistan. What is the cost over the 10-year
period of this budget? The cost to do that is $384 billion. Let us hope
we do not have to incur that, but some significant number has to be
included in this budget to make it a realistic budget.
Finally, when you add those three items, then we have less surplus.
When you have less surplus, you have a bigger deficit, you have more
debt service, because you borrowed more principal on which you have to
pay interest. You add all of those items together, you get a $2
trillion adjustment to the budget.
This, therefore, is what we see, adjusting for the four items that I
have just outlined, the budget path that the Bush budget will take over
the next 10 years. $427 billion, third year in a row, it sets a record
level, a deficit of $427 billion for the year 2005. It goes up the next
year and levels off in the range of $400 billion, and then comes out at
the end of 10 years at $566 billion.
We are not reaching to make this point; we are simply putting back in
the budget costs we think are realistic and need to be captured in
order to have a truthful portrayal of what the budget looks like.
This is the course that the Bush administration is plotting for us in
the budget they have just submitted, and most people think that this is
not a sustainable course.
I yield to the gentleman from Virginia (Mr. Scott).
Mr. SCOTT of Virginia. Mr. Speaker, I thank the gentleman for
yielding.
Mr. Speaker, on this chart the gentleman shows the blue line as to
the President's promise to cut the deficit in half within 5 years.
Cutting the deficit in half within 5 years is certainly a modest goal.
Is it not true that the projected surpluses that we started off this
administration with would have created $5 trillion in surplus? Yet
according to the first chart you had, we are very much in debt, and we
come up with a promise to cut the deficit in half in 5 years. What kind
of goal is that? Why are we not talking about returning to surplus,
where we were, and not having all of these deficits? Is cutting the
deficit in half not somewhat of a bizarre goal?
Mr. SPRATT. Mr. Speaker, reclaiming my time, first of all, the
gentleman is absolutely correct. When the President came to office, he
had an advantage that no President in recent times had enjoyed, a
surplus projected to be $5.6 trillion between 2002 and 2011, over a 10-
year period of time; $5.6 trillion. That surplus is now gone, vanished.
In its place there is a deficit over the same time period of $3
trillion to $4 trillion. This shows you how the $3 trillion to $4
trillion accumulates over that period of time.
We have had a swing of $8.5 trillion to $9 trillion in the budget
over a 4- to 5-year period of time, a swing in the wrong direction of
$8 trillion to $9 trillion.
Mr. SCOTT of Virginia. Mr. Speaker, I would say to the gentleman that
one of the things when you run up all this deficit, you have to pay
interest on the national debt every year. The interest on the national
debt, you have a chart that shows what we spent in 2004, what we are
going to have to spend.
Mr. SPRATT. The big red bar is the amount of interest, or debt
service, that we pay, first in 2004, and then to its right, 2010.
Mr. SCOTT of Virginia. Mr. Speaker, if the gentleman will yield
further, interestingly enough, I remember when President Clinton left
office that we expected to pay off the national debt held by the public
by 2008, in which case we would be paying zero interest on the national
debt. Here you show in 2010 a $300 billion interest expense.
Is it not true that with $300 billion at $30,000 each, you could hire
10 million Americans? That is even more than the number of people
unemployed today.
Mr. SPRATT. The gentleman is correct. When the President came to
office, we had before us in Congress a novel idea, which would have
been truly a conservative fiscal proposal, namely, that we would take
the surplus in Social Security alone and instead of buying up new debt
and funding new spending, we would use that surplus to buy old debt,
retire that debt. We would add that money, $3 trillion-plus, to net
national savings, bringing down the cost of capital, boosting the
growth of our economy; and then in 2020, when the Social Security
beneficiaries, the baby boomers, begin to press their claims for
benefits, Treasury would be more solvent than ever to meet those
obligations.
That would have been the first long step we could have taken toward
Social Security solvency. There was support for it on both sides of the
aisle. The President rejected that in preference for his own budget,
which has led us to the deficit which appears there now.
Mr. SCOTT of Virginia. Mr. Speaker, if the gentleman will yield
further, when we have all that interest on the national debt, that
means that NASA will not have any money. NASA-Langley in my district is
suffering cutbacks, laying off people. Shipbuilding, we would not be
able to build the number of Navy ships, we are particularly trying to
cut back on aircraft carriers. Pell grants are not going up with
inflation. We are cutting back veterans health care. We are not keeping
up with inflation to maintain present services and veterans health care
in the middle of the war.
Is that not the kind of thing that happens?
Mr. SPRATT. Mr. Speaker, reclaiming my time, the gentleman is right
on the mark. When you have an enormous increase in debt service like
this, what it does is crowd off, trade off, other things that would
normally be purchased, defense and non-defense goods and services.
Instead, the one thing that is truly obligatory in the budget is
interest on the national debt. We cannot fail to pay it, or the credit
of the United States collapses. So it takes precedence over everything
else. You can see it has become the big boy on the block. It eclipses
other non-defense spending priorities. From education to health care to
veterans health care, you name it, interest on the national debts will
be crowding out these other priorities, and the American people will
pay substantial taxes to service this debt and wonder why they get
nothing in return.
{time} 1700
Mr. SCOTT of Virginia. Mr. Speaker, I had just one other question. On
the first chart that the gentleman had up there, on the other side, the
first chart the gentleman had, I remember we had something called pay-
go during the Clinton years.
Can the gentleman explain how that helped us keep the trend up, and
then what happened?
Mr. SPRATT. Mr. Speaker, we had two rules in the 1990s that applied
from 1990 through the year 2000, really until 2002, and those rules
effectively said, number one, the pay-go rule, if you want to increase
an entitlement, liberalize the benefits of an entitlement program, you
have to pay for them with an identified new source of revenues, or you
have to cut some other entitlement somewhere else of the same amount.
Secondly, if you want to cut taxes, you have to have another tax to
offset the revenue loss, or you have to cut entitlements enough so the
bottom-line effect is neutral. Those two rules, with a discretionary
spending cap, those rules that helped us put the budget in surplus for
the first time in 30 years to a $236 billion surplus, what the Bush
administration did was let those rules lapse, expire.
Mr. SCOTT of Virginia. So during those years, we had fiscal
responsibility. We could not spend money unless we paid for it; we
could not cut taxes unless we cut spending; and maintaining that fiscal
responsibility kept that line going up. And, at the top of that line,
we stopped pay-go and we passed tax cuts without spending cuts, and we
passed spending increases without paying for them; is that right?
Mr. SPRATT. That is correct.
[[Page H694]]
Mr. SCOTT of Virginia. And that graph shows what happens.
Mr. KIND. Mr. Speaker, if the gentleman will yield for a question,
this is a little bit before my time, but correct me if I'm wrong; it
was really a Democratic Congress, working with the first Bush
administration, the current President's father, that first instituted
the pay-as-you-go rules back in the 1992 budget; is that correct?
Mr. SPRATT. That is correct. The Budget Enforcement Act of January
1991, President Bush.
Mr. KIND. It was President Clinton in his first budget that he
submitted during his first administration that asked for maintaining
and continuing the pay-as-you-go rules that Democrats had to pass
without one single Republican vote in the House of Representatives; is
that right?
Mr. SPRATT. That is correct; and in the Senate.
Mr. KIND. And, Mr. Speaker, not one Republican back then had
supported the pay-as-you-go rules that required tough political
decision-making, trade-offs, in essence, with the budget, which is
something that the Democrats in Congress today are advocating in the
alternative budget resolutions that were submitted, because it worked
so well in the 1990s, the pay-as-you-go rules, which are very simple.
If you are proposing a pay increase or a tax cut in one area, you have
to find an offset in the budget to pay for it in order to maintain
balance.
And it led to the 4 years of budget surpluses, as the gentleman
pointed out, 2 years of which the Social Security-Medicaid trust fund
was not even being raided but, instead, we could use that money for
important debt reduction, starting to pay off the national debt.
I was here during that first Bush tax-cut debate we had a few years
ago where the big concern, on the Republican side at least, was that we
were going to pay off the national debt too fast, if you could believe
those days, which never materialized. But now today, we are back into
chronic budget deficits, and one of the fastest growing areas in the
budget today is interest on the national debt.
I see two major problems with the huge budget deficits today that are
unprecedented and we did not face before. One is, who is owning that
debt? Who is paying for our deficit financing? Right now, Japan is the
number one purchaser of our government debt, soon to be surpassed by
China. I do not believe it is in our country's long-term economic
interests to be so dependent on foreign entities, let alone China, to
be the number one purchaser of our debt in financing these deficits.
The other big difference we have today is ever since those long-ago
years when the pound sterling was a viable currency, we have never had
a rival currency up against the dollar in the international
marketplace. That is changing today with the strength of the euro in
the European Union and in the common marketplace.
Now, if these countries that are currently investing in buying our
bonds decide to take their investment somewhere else, such as in the
euro, which is gaining in strength, and the dollar, which is declining
in value, we are going to get caught holding the bag in trying to
finance these deficits, and that could be the perfect financial storm
being created.
So again, I think it is a reason why we need to work together in a
bipartisan fashion and, at the very least, reach agreement in
reinstituting something that worked in the 1990s, the pay-as-you-go
rules.
I commend the gentleman from South Carolina (Mr. Spratt), our Ranking
Member on the Committee on the Budget, for the leadership and the
honesty that he has shown in presenting the figures so that we can, at
the very least, agree on the facts and the challenges that we are
facing, and then coming up with some commonsense solutions that have a
proven history of working in the past. I am going to continue to work
with the gentleman and the rest of my colleagues here in trying to put
together an honest and reasonable budget in order to get us back on
that glidepath of fiscal discipline and fiscal responsibility again.
Mr. SPRATT. Mr. Speaker, let me turn to the gentleman from Virginia,
but if I could briefly demonstrate, before I yield. This chart right
here shows something else that is left out of the budget for 2006. The
President, acknowledging that he has a deficit in 2005 of $427 billion,
and it is likely to be at least that large in 2006, nevertheless asked
for renewal and making permanent tax cuts that total 1 trillion, 7
billion dollars.
As for the effect of these tax cuts, this chart right here is pretty
simple, but pretty instructive. This blue line at the top indicates the
level that the administration told us projected the individual income
tax revenues would follow if their tax cuts were passed. As my
colleagues can see, it projected that revenues for last year would be 1
trillion, 118 billion dollars from the individual income tax. In truth,
they were $804 billion. That is more than $300 billion short of what
was projected. Do it on the back of an envelope. It is simplistic
accounting.
But we cannot avoid the conclusion: that is three-fourths of the
deficit in the year 2004. This is the effect, undeniable effect that
tax cuts have had on the bad bottom line that we are looking at now.
Mr. MORAN of Virginia. Mr. Speaker, I would like to ask the gentleman
if the revenue numbers also include the surplus that is coming in from
FICA taxes, from Social Security. Because what this administration has
been doing is really masking the seriousness of the deficit that they
have created, because they have been taking the Social Security
surpluses and offsetting it against the actual deficit to make the
deficit appear much smaller.
Mr. SPRATT. Mr. Speaker, we discussed this a bit earlier, and the
gentleman is absolutely right. The numbers we are talking about are the
unified deficit numbers. That is to say, we consolidate all of the
accounts of the budget. Social Security is actually in surplus now and
will be for some years to come, so the surplus of about $160 billion in
Social Security is offset against the deficit and the rest of the
budget, making that deficit appear smaller than it truly is.
Mr. MORAN of Virginia. Mr. Speaker, what I am getting at is, I
remember, as the gentleman does, when the Clinton administration
acquired a substantial surplus and was projecting at the end of the
year 2000 about $5.5 trillion of surplus. To meet the Social Security
obligations for the next 75 years, what they were going to do is to
take the Social Security surplus and put it back into the Social
Security trust funds, so we would not have this issue with regard to
supposedly bankrupting Social Security. All of that could have been
avoided if we had followed through on those policies. Unfortunately,
what this administration did was to promptly pay out that money in tax
cuts.
We have been talking about these high numbers, trillions and
billions; in fact, I wish the people, if there is anyone watching at
home, they might write down what $1.7 trillion represents. It is 1
comma 7, and then 11 zeroes.
Mr. Speaker, $1 trillion is a thousand billion; a billion is a
thousand million. This is an enormous amount of money that we have
reduced our revenue by as a result of tax cuts, most of which went to
the people who needed it the least.
Now, what is most troubling, I think to many people that we
represent, is the cuts that are going to occur in the lives of people
dependent upon programs. I want the gentleman to conclude his points,
but when we talk about cutting $60 billion out of Medicaid nursing home
costs and health costs for children and eliminating vocational
education, all of it relates back to this policy, and it seems almost
as though it is an excuse to cut domestic social programs that
represent only 16 percent of the deficit, and yet almost 100 percent of
the cuts are coming out of these domestic social programs.
But I would like to address that, and I would like to elaborate on
that in a bit. I know the gentleman wants to conclude his comments and
hear from our friend, the gentleman from Maine, as well.
Mr. ALLEN. Mr. Speaker, I thought I would say a few words about an
event I did not so long ago, just before the election, or right after
the election in my district in Maine. I went to Windham High School,
which is not so
[[Page H695]]
far outside of Portland, and talked to a group of students, civics
students and their teacher, Bruce Bowers. They had asked me to come and
talk to them about the Federal deficit, the Federal debt, the growing
national debt, and what it means to them, because I had said on
numerous occasions during the course of the campaign that the
Republican budgets which have been passed here are immoral. We are
passing on our current expenses, our current choices, to our children
and grandchildren.
Well, they had studied the issue. They knew more than people in this
House did, in many cases, I think, and they held up these signs. They
had these signs in back of where I was speaking, and believe me, I got
a grilling. But here were some of the signs: ``Pay as you go.'' ``No
taxation without representation.'' ``Fiscal mismanagement should not
tax our future.''
These kids understood what is not immediately obvious; that they were
going to pay the bills for tax cuts that had been passed today or in
the last 4 years, and for the war in Iraq, because essentially we are
borrowing money to do those things. And they know that 20 years from
now, when they want to be sending their kids to college, they will be
paying taxes to the Federal Government, and there will be less of that
money to pay for education, there will be less of that money to help
them get job training, there will be less of that money to help their
kids find the assistance they need to go to college, there will be less
of that money to pay for their own national defense, because they will
be paying exorbitant interest, levels of interest on the national debt;
much more of what our tax dollars pay for 20 and 30 years from now will
be just interest, interest on today's obligations.
Let us talk just about a couple of those. We are spending $1 billion
a week in Iraq. Remember Paul Wolfowitz, the Assistant Secretary of
Defense, who came before the committee and said, this is a case where
Iraq can pay for the cost of its reconstruction, and reasonably quickly
at that. Wrong. Not just wrong about weapons of mass destruction, not
just wrong about the connection to al Qaeda, but wrong about what we
would be paying. We are paying over and over again, and we are
borrowing that money and our kids will pay the bill, eventually.
But it is also true that in 2005, $89 billion would go to people in
tax cuts, $89 billion would go to people for tax cuts from households
earning $350,000 a year or more; $89 billion. And those kids in Windham
understand. They know that that is going straight to add to the annual
deficit, the overall Federal debt that they are going to pay interest
on that bill for years to come. Not just the $89 billion in 2005 that
go to tax cuts for the rich, but probably $100 billion in 2006 and on
and on and on.
The Republicans in the House and the Bush administration are
bankrupting this country. They are imposing a burden on our children
and grandchildren that is unconscionable, and they will sit and tell
us, oh, well, we will grow our way out of this. These revenues will
simply vanish. And the truth is, now, after all they have done to hurt
the American middle class in the last 4 years, they have now come up
with these cockamamie private accounts in Social Security idea that
will, by itself, double the national debt in 20 years.
Mr. SPRATT. Mr. Speaker, I have just put up a chart to show exactly
what the gentleman was just saying. Privatization means that tax funds
that are now put in a public trust fund will instead go into private
accounts that will cause the government to borrow more and more and
more over time. The Bush administration acknowledges that between 2009
and 2015, when it first implements this particular proposal, that the
cost will be $754 billion. We have obtained, using the Social Security
actuary numbers, the true impact for the first 10 years of
implementation and for the second 10 years of implementation, fully
implemented. The cost right there, that little blue bar chart, bar on
the graph there, the plan that the President is proposing adds $4.9
trillion to the unified deficit of the United States by 2028.
But we are only halfway up the slope at this point. The borrowing in
the trillions goes on and on and on until the year 2055 to the mid-
2050s, an enormous increase in the national debt.
{time} 1715
So we even if the budget were to be cut in half, the deficit were to
be cut in half by 2009, which it will not, the numbers simply will not
support that outcome, there is a huge change in the budget deficit
looming on the horizon at that point in time which means that the
deficit will not be balanced again or anywhere close to it in our
lifetime when this debt is added to it.
Mr. CASE. Mr. Speaker, I want to be clear that I understand exactly
what the gentleman is saying.
I appreciate very much the opportunity to have this opportunity to
learn from the gentleman. I want to go back to the context that we are
talking about for just a second because I did take the opportunity to
read the budget that came out of this administration.
More specifically, I took the opportunity to read the historical
tables because I think it is important for us to see what has been
before we can talk about what is coming up in the future. And we have
talked already quite a bit about the total debt, and I am very happy
that the gentleman is focusing on debt because we can talk about
deficits, annual deficits every single year, but it is not as if annual
deficits are static. If you have got deficits every year, you are
borrowing it from somewhere; that means that debt goes up. If you have
a deficit of $300 billion this year, that is borrowed money. Another
deficit the next year, $600 billion.
Mr. SPRATT. Your debt service goes up, too.
Mr. CASE. Yes, that is absolutely right. The gentleman has an
excellent chart that demonstrated that earlier, that under this
President's own budget the interest on the national debt will double or
more in the next 5 years while every other program is remaining
basically at the same level of funding.
So the question that I have got, I am looking here at the President's
own budget, noting that in 2004 we had a total national debt of $7.3
trillion. That was just a year ago and that was up, as the gentleman
pointed out earlier, by $2 trillion just over a few years. So we are
going up pretty darn fast.
I am looking here at the President's budget. This is the President
talking; this is not us talking. It shows here in 2010, just 5 short
years from now, we will have, according to this President's budget, a
national total debt of $11.1 trillion. So $7.3 trillion last year.
Under this budget, we are going to $11.1 trillion and, of course, that
is the aggregate, is it not?
Mr. SPRATT. In 4 years.
Mr. CASE. Absolutely, in 4 years. And the point that the gentleman is
making now, and by the way, that is a 60 percent increase in the total
national debt in just a few short years, so obviously something is out
of whack.
Now what the gentleman is pointing out in the chart that he is
pointing us to right now is that essentially when we talk about this
national debt, we are not talking, we are not including some very key
aspects here. We are not talking about the cost of the privatization
plan, right?
Mr. SPRATT. No, it is not included. And what I am saying here is this
additional debt will be stacked on top of what is already monumental
statutory debt of the United States growing every year because of the
deficit in our regular budget, growing every year.
Mr. CASE. In the same spirit, we are not talking in this budget about
any fix to the Alternative Minimum Tax, right?
Mr. SPRATT. No.
Mr. CASE. Nor are we talking about the costs of the war which are now
projected to be astronomical if we project out over a reasonable period
of time. That is additional debt.
Mr. SPRATT. When those adjustments are made, the numbers the
gentleman just gave will only get worse.
Mr. CASE. We are not talking about additional debt service on the
additional debt that will be incurred as a result of the first three.
Those do not enter into the additional interest payment.
So what we are really talking about, I guess the point I am trying to
make and trying to get clarity from the gentleman, is that when we are
talking
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even under the President's own budget of an increase of 60 percent in
the national debt, assuming we agree to this budget straight out, we
will assume if the President gets his way on privatization and on the
Alternative Minimum Tax which we all want to do on the reasonable costs
of the war, on other initiatives, not to mention further cuts in any
taxes or continuation of any tax reductions, we are talking about
trillions of dollars of additional debt during that same period.
Mr. SPRATT. No question about it. When you add this on top of it, it
becomes almost irreversible. I do not see how you can add this and ever
expect to see the budget close to balance again.
Mr. CASE. Let me conclude by making one other point that came out of
our Committee on the Budget hearings just a week ago when I asked
Office of Management and the Budget Director Bolton, hey, I have not
heard much about debt. I have heard plenty about deficits, but I have
not heard much about debt. Of course, frankly, I speculate that the
reason is it is a lot easier to talk about reducing the deficit in
half. But if we only reduce the deficit in half every year, we are
still talking about compounded total debt because that is borrowed
every single year. So it is not good enough to talk about reducing the
deficit in half. It is a matter of balancing our books.
Mr. SPRATT. Absolutely correct.
Mr. CASE. I thank the gentleman for his good work, and I am happy to
learn at his feet.
Mr. SPRATT. The gentlewoman from Pennsylvania (Ms. Schwartz).
Ms. SCHWARTZ of Pennsylvania. I would like to make a few comments,
and I ask for some of the gentleman's comments on some of my
observations as a new member of the Committee on the Budget. I really
sought to get on the Committee on the Budget. It is something I wanted
to do because I know that my constituents sent me here to speak up for
them, to look out for them and really to be an advocate for fiscal
discipline, fiscal responsibility and for wise Federal spending.
As a former State legislator, as a State senator for 14 years, I know
how important Federal Government investments are, that they do allow
our State and local governments to meet their obligations without
assuming the costs and responsibility for Federal shortfalls. They
allow for shared responsibility of new initiatives aimed at promoting
economic growth, quality education, access to health care, protecting
the environment, and providing for a safe and secure homeland.
To do this, I want to mention three principles; and I would
appreciate comments on it. I believe that we have to first recognize
our obligations. The gentleman has talked about this, a good bit about
our obligations that we already have. We have to work within our
budgetary limits to meet them, and we have to make smart investments
focused on the Nation's current and future fiscal well-being.
Unfortunately, as the gentleman has been pointing out with his
charts, the President's budget does not meet any of these three simple
rules.
Similar to his previous budgets, the President's fiscal year 2006
blueprint prioritizes the tax cuts for wealthiest Americans over
meeting our obligations to all Americans, failing to adequately invest
in keeping and creating new jobs, failing to expand affordable health
insurance, failing to meet the health care needs of our veterans, and
some of the other speakers talked about that, and failing to protect
those who were working on our front lines to keep our Nation safe from
terrorism.
As the gentleman's chart points out, one of the greatest failings of
this President's proposal is his intention to change our commitment to
older Americans.
Just last week, the President visited my district. He came to
Montgomery County to promote his plan to change Social Security. Now,
my constituents listened pretty carefully. Quite a few of them turned
out. And they were anxious to know some of the details, some of the
things the gentleman has on the charts, and what it would mean to them
and to their families.
I am going to just mention a few, and maybe the gentleman can help us
with some of the answers.
They wanted to know exactly what the term ``private account'' means.
They wanted to know how private accounts would affect the value of
their guaranteed benefit. They wanted to know whether it would provide
more or less security for their retirement. They wanted to know how
much they would really be able to control these accounts.
And they wanted to know how the proposal would impact disability and
survivor benefits. They wanted to know how this proposal could possibly
strengthen Social Security for the long term. And, moreover, they
wanted to know how we as a Nation could afford to pay that $4.9
trillion that it would cost to create these private accounts out of
Social Security.
I ask the gentleman to comment on some of these questions because
before we can begin to talk at all about some of the long-term fiscal
health of Social Security, we have to give the American people some of
the answers the President has not given.
What we do know, and I think the gentleman has some charts on this,
is that the President's proposal will do two things. It will
dramatically reduce guaranteed benefits, and it will significantly add
to the Nation's growing debt. So I ask the gentleman to confirm these,
and I will say one third thing that I know it does, and that is that it
does nothing to promote the long-term solvency of Social Security.
Mr. SPRATT. The gentlewoman has touched upon major impacts. One of
our problems is the President's budget is lacking in detail as to all
of the program, project and activity cuts that they would actually
propose in the years after 2006. It is hard to tell. We have a chart
here that shows what we know about the reduction in what is called
nondefense domestic discretionary spending. And we can see here that we
expect a reduction below purchasing power of about $180 billion over a
5-year period of time. That is education. That is veterans health care.
That is highways. That is the government as we know it. Everything that
people tend to identify the government with is included in these
accounts. They have only come all together to $350 billion.
So you can, of course, out of $350 billion achieve some cost
reduction, but there is only so much that can be achieved there. And
keep in mind, this is not the source of the problem. These accounts
have not increased in the last 3 years, but this is where the
administration is going to squeeze as much as they possibly can, but
there will never be enough in these accounts to eradicate a deficit of
$427 billion next year.
Nevertheless, there will be deep pits, student loans, Pell grants,
all of these things that matter to American families, kitchen-table
issues.
Ms. SCHWARTZ of Pennsylvania. I have heard from many of my
constituents, just some of the initiatives and some of the deep cuts
that the President is talking about, even though they are not going to
affect the savings that we need to provide these private accounts. It
does not equate. I have nurses asking me about loan forgiveness
programs, teachers asking me about education.
Mr. SPRATT. This is before the private accounts. When the private
accounts are layered on top of this, they add so much to the deficit it
is hard to predict what will be left of the accounts and items and
projects that were just referenced.
Ms. SCHWARTZ of Pennsylvania. It is true the private accounts really
do not have the details from the President about how they would work,
what they would really mean; and it is true that they do not strengthen
the fiscal viability of Social Security unless what we are really
talking about is deeply cutting benefits. Is that right?
Mr. SPRATT. Exactly.
Ms. SCHWARTZ of Pennsylvania. Mr. Speaker, I can say as someone new
to the Committee on the Budget, I appreciate the gentleman's wisdom on
this. If we are going to meet some of our obligations to families and
communities and to local governments, we have to be able to correct
this budget, work together. I think the President has suggested that. I
know that the gentleman has always worked closely with Republican
counterparts.
As a new member of the Committee on the Budget, I know that we as
Democrats and Republicans want to be honest with the American people,
tell them the real consequences of what we
[[Page H697]]
are doing, and come to a budget resolution that will meet the
obligations of the American people.
I thank the gentleman very much for his detailed information. I look
forward to working with him to accomplish that goal.
Mr. SPRATT. Mr. Speaker, I yield to the gentleman from Texas (Mr.
Cuellar).
Mr. CUELLAR. Mr. Speaker, I appreciate the leadership the gentleman
has shown in the Committee on the Budget.
I want to focus on one part of the administration budget and that
deals with education. When I looked at this 3,000-page budget proposal
the other day, I was quickly struck by the fact that out of the 150
programs that are slated for elimination, 48 of them, that is one out
of three, were in education.
Education has the power to break the cycle of poverty. Education has
the power to change lives. As millions of Americans have proven,
education has the power to change the future. It has changed mine.
I think the gentleman will agree with me that if we would call, or
any Member would call, any economic development foundation in their
district and ask them about the importance of a broad-based
comprehensive education system, I think they would get the answer, an
answer that we all know, that is, there is no greater resource today in
our great Nation to attract better jobs with better wages to our
communities than a strong education program that we have.
Mr. SPRATT. There is no other individual in the Congress I could
point to who is a better testament to that principle than the gentleman
from Texas (Mr. Cuellar), who I believe has four degrees. Am I correct?
Mr. CUELLAR. I thank the gentleman very much.
I think the gentleman agrees with me that educational programs alone
are no guarantee. These programs are successful only with the
inspiration of our parents, the support of our community, and the hard
work of our students. Many educational programs are threatened by this
budget which includes the Upward Bound Program, the Talent Search, the
GEAR UP among other programs. But I think today, if the gentleman would
allow me just a few minutes to talk about one program, and that program
exemplifies what it means to offer opportunity to an individual, what
it means to offer opportunity to a family, a community and a country.
I think the gentleman is familiar with this program called Even
Start. The budget calls for a $225 million cut from the Even Start
program. That is a cut that would basically eliminate this program. In
my own State, there are 90 Even Start programs in the State of Texas
serving more than 5,500 families. In my part of the district, Seguin,
Texas, there are 60 families that depend on this.
This is a very remarkable program that allows the parents to learn
along with the children, where they are able to get their GED, where
they are able to pull themselves up and not only educate their children
but also to get trained, educated so they can get a job. It provides a
sense of pride that makes them better parents, and that is what we are
trying to do through our educational system.
{time} 1730
I think the gentleman from South Carolina (Mr. Spratt) would agree
that if we have these budget cuts in education, as is proposed, this
will not make our families stronger, this education will not make our
Nation stronger, and I believe these cuts in education will make it
very hard on thousands of families that are working hard, playing by
the rules to make this transition from poverty to prosperity.
You know, now as we are talking about providing the tools to break
this cycle of poverty and provide more home and opportunity for the
children, I think we need to talk about something you have been talking
about, Mr. Spratt, and I would ask you this particular question. We
agree that we need to have budget discipline. And, yes, we need to
preserve educational programs like the Even Start program. So how do we
do both?
And I think, just like you have said before, in order for us to do
this, just do it just like we do the budget at home, we set priorities.
We set priorities. We need to decide in Congress what are those
priorities? Is it spending $280 million to study the icy moons of
Jupiter, or do we educate our children? Is it spending $480 million to
support the states of the former Soviet Union, or are we going to save
America's farms?
I think, like you have been saying, Mr. Spratt, it is a time to set
priorities for our Nation, and now it is the time to make sure that we
set those priorities, not only for our Nation, but for our own
individual districts. And I ask you to continue the efforts and the
endeavor to make sure that the American public understands that we can
have a budget, balance the budget, but at the same time, the way we
lower the deficit is to set the priorities, the priorities in education
and health care, and economic development.
Mr. SPRATT. We can balance the budget and also balance our
priorities. In 1997 when we did the Balanced Budget Agreement of 1997,
we had the biggest plus-up in education in 15 or 20 years. We will have
a budget resolution, a Democratic budget resolution on the floor, and
it will adequately fund education. That will be the last thing that we
will cut. Certainly we will not have 38 educational programs eliminated
in our budget.
Now, in the time remaining let me recognize the gentlewoman from
Georgia.
Ms. McKINNEY. Mr. Speaker, to continue the discussion about the
budget, let me just say that the purpose of a budget, the budget is the
most important legislative document that the Congress will produce; and
in fact, all legislative bodies produce a budget, be it the school
board, city council, county commission, the legislature, and of course
us here in Washington, D.C., in the Congress.
And the budget is our statement of values. It is a statement of
values, because we look at the definition of politics, and it is the
authoritative allocation of values in a society; and how are those
values authoritatively allocated? They are reflected in the decisions
that we make with respect to how we are going to spend our money.
And so when the President sends his budget to the Congress, the
budget of the President then reflects the values of the President. And
so this President has talked about an American prosperity, an America
of prosperity and opportunity. But the America that the President seems
to value is a very narrow America indeed.
In other words, our mantra ought to be leave no American behind in
our quest for opportunity and prosperity for all. But, sadly, many
Americans have indeed been left behind. And the situation is not
getting better, it is getting worse.
A very few Americans are doing extremely well. But many of us are
being left behind, and, in fact, too many of us are being left behind.
For the latest statistics available, it takes 100 million Americans at
the bottom to equal the share of national income received by the top
2.7 million Americans.
And this budget does not even begin to address the widening income
gulf in our country. In fact, it exacerbates it. The employment and
income picture has gotten worse for people of color, in particular,
since 2000, eroding the tremendous progress that was made during the
decade of the 1990s.
And in fact, since 2000 more than one-third of the progress made in
reducing poverty among African American families has been completely,
totally, absolutely 100 percent erased, as 300,000 African American
families fell below the poverty line just from the year 2000 to the
year 2003.
I would like to bring your attention to the product of an
organization, a product that I have become dependent on as I try and
travel around the country and educate folks about the true conditions
faced by people in this country.
It is the State of the Dream from United for a Fair Economy. And
every year they produce a report, ``The State of the Dream 2004,''
``The State of the Dream 2005,'' about the inequalities, the
disparities that exist in our country along the racial divide.
Now, I have got a couple of charts here that I would just like to
show. Now, on the index of income, can you imagine that from 1968 to
2001, the average black income was 55 cents compared to that for white
income, and 57 cents in 2001?
[[Page H698]]
What United For a Fair Economy has found is that since the murder of
Dr. Martin Luther King, Junior, on some of those most important
indices, the situation has gotten worse, not better, for people in our
country.
And here over the span of 33 years, we have only increased the well-
being by 2 cents. And at the current rate, it would take 581 years to
even out the black-white gap in income.
Or we can look at poverty. Overall poverty to close the gap, 150
years to close the gap, the poverty gap as experienced by black
Americans and white Americans.
Or we can look at child poverty. The President says he wants to leave
no child behind, but sadly, if we look at the numbers, and these
numbers represent real children, it will take us 210 years to close the
child poverty gap.
The President talked about housing, and we all know that
homeownership is the cornerstone for the beginning of the accumulation
of wealth, and look here at homeownership. It will take us 1,664 years
to close the homeownership gap. Is that not incredible?
What does that tell us about our country's values and priorities? Our
President talks about making this an opportunity, making this a
prosperity society for all Americans, but if the President's budget
does not deal with these very real differences in the way real
Americans live, then the President has talked to us but he has not
really backed his words with a policy statement that will change the
way the bulk of Americans live in this country. The President cannot
create an ownership society without addressing these disparities, and
sadly, his budget proposal falls short of even his stated goals.
I look forward to actually being able to call the gentleman from
South Carolina (Mr. Spratt) Mr. Chairman and have folks on the other
side of the aisle call him Mr. Chairman, too.
Ms. EDDIE BERNICE JOHNSON of Texas. Mr. Speaker, I rise today to
vehemently state my disappointment, frustration, and objection to the
FY 2006 budget submitted by President Bush.
When President Bush submitted his 2006 budget to Congress recently,
he said, ``The taxpayers of America don't want us spending our money
into something that's not achieving results.'' I couldn't agree more.
The President's 2006 budget cuts money from America's veterans,
America's first responders, students, small businesses, health, urban
and rural development, and environmental protection.
Is the President saying our veterans, first responders, students, and
small businesses are not achieving results?
The unnecessary tax cuts for the rich and an optional war with Iraq
are not producing results.
The President's budget does not contain a single dime of money for
war effort in Iraq or his proposed reforms to privatize Social
Security.
How is this possible? How can the budget for the country omit the two
most important issues mentioned during the President's address to the
Nation on the State of the Union?
Instead, those costs are hidden from the American people in the form
of an $80 billion emergency supplemental request to Congress. A request
that was not mentioned during prime time coverage on national
television.
This budget continues the same bad choices of this administration and
will lead to the same bad results--huge deficits and increasing debt.
This President and this administration has squandered an inheritance
of a 10-year surplus of $5.6 trillion and has replaced it with deficits
that our children may have as their responsibility.
This budget will severely impact Texas citizens negatively as well as
other American citizens. They deserve better.
Never before has America faced such an array of issues that demand
creative, competent leadership.
But the Bush administration has pursued solutions that serve only to
escalate the problems we are facing.
We should be making progress, but in too many areas we are either
backsliding or simply holding the line.
Programs and policies that not only provide assistance for the poor
but for a large portion of the American people who need help to keep
their heads above water are under attack.
To cut the Medicaid program for the poor of $60 billion over 10
years, to cut the Small Business Administration's technical assistance
program to small businesses by 37.9 percent, and to cut community
policing programs up to 95.6 percent is not only immoral but
irresponsible.
Eight million Americans are unemployed. But Republicans passed a new
set of tax breaks that reward corporations who send jobs overseas.
About 45 million Americans have no health insurance. But Republicans
have proposed Health Savings Accounts that benefit a wealthy few,
encourage employers to drop insurance coverage and will increase the
number of uninsured by 350,000.
Over 8 million children nationwide are struggliing to meet new
national education standards. But Republicans refused to provide
promised help to our schools, leaving millions of children without the
help they need in reading and math.
America needs a budget that reflects the morals of this country, a
budget the American people can trust and support, one that supports the
national security policy that is as strong and brave and as decent as
the heroes who serve to protect us.
America needs a budget that includes all its citizens and a budget
that is fair and balanced.
The President needs to do for all of America what he is asking the
rest of the world to do--to treat all its people with decency and
respect.
Mr. BISHOP of New York. Mr. Speaker, I rise today to express my
opposition to the President's FY06 budget--a budget that I believe goes
against our values as a society. If the proposed budget passes, it
would be a disaster for constituents in my home district on Long Island
and districts nationwide, forcing working families to make up for many
of the cuts in the form of higher State and local taxes.
The American people deserve honesty, and this budget is dishonest by
omission, and dishonest in how it portrays the overall budget
projections. The President claims that the steep budget cuts he
advocates are necessary to cut the deficit in half in 5 years. This is
simply not true, and the budget the President proposes fails to
accomplish his stated goal.
First, the budget is dishonest by omission. Nowhere in the FY06
budget does the President account for significant costs, including:
Fails to account for the enormous costs of privatizing Social
Security as proposed by the President; a whopping $6 trillion over the
next 20 years; $754 billion over the period from 2009-2015;
Fails to account for the continuing presence of our troops in Iraq--
the administration knows we are going to approve an Iraq supplemental
upward of $80 billion for the first part of this year alone--and an
estimated $384 billion over 10 years--yet still omits it in the budget;
Fails to account for growth in interest costs;
Fails to reform the Alternative Minimum Tax that is
disproportionately burdening middle income families in my district on
Long Island.
As troubling as the glaring budget omissions is the knowledge that
the deficit is largely a self-inflicted wound. The President inherited
a record annual surplus of $236 billion--which now, 4 years later, has
tanked into a deficit in excess of $400 billion. Any attempt at honest
accounting suggests that we are looking at a decade or more of similar
deficits.
The reason we are faced with an unethical budget is because the
President refuses to acknowledge the fiscal irresponsibility of his
choices, and will not entertain even the most moderate suggestions,
such as repealing only the portion of the tax cuts that benefit the top
1 percent of taxpayers.
Unfortunately this budget builds on a disturbing trend. This
administration and the leadership in Congress appear to be intent on
valuing wealth over work, thereby placing working families at a
distinct disadvantage. The tax policies the President advocates
disproportionately advantage the wealthiest to the detriment of working
Americans, and working families will continue to bear the brunt of the
rising inflation spurred by the rising interest rates.
The Bill Gates' of the world pocketed their tax cut at the insistence
of the President. However, this President sees no problem eliminating
funding for Perkins Loans in his budget, even though the cost of
tuition is rising and will continue to rise as the administration's
policies force inflation. As a result of the decision to eliminate
Perkins, this year more than 670,000 student borrowers could lose out
on loan forgiveness if they become teachers, law enforcement officers
or if they serve in the military. This is just one of many examples of
valuing wealth over work.
In my district, the budget scales back and eliminates several long-
term shore protection projects important to the safety and economic
security of Long Island.
The President has no problem zeroing out the Fire Island to Montauk
Point Study, just as it nears completion.
The President eliminates funding to dredge the Patchogue River, even
though this creates a huge safety hazard for boaters.
The President does not hesitate to slash funding for the Long Island
Sound Study Office from $7 million to less than $500,000, even though
this is vital to the livelihoods and economy of the east end of Long
Island.
[[Page H699]]
The President falls far short of his promise under the No Child Left
Behind bill, even though this means that taxpayers will have to foot
the bill at the local level to pay for education.
Finally, the President does not seem to mind taxing veterans' health
care at $250 per year, and doubling copayments for veterans'
prescription drugs, at a time when we should be saluting our veterans.
Our values as a society are not reflected in this budget. We must ban
together in Congress to force an honest accounting, and insist upon the
restoration of long-term fiscal responsibility to our Nation. It's not
enough to talk about compassion--it is high time that we refocus our
priorities and show some compassion.
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