[Congressional Record Volume 151, Number 28 (Thursday, March 10, 2005)]
[Senate]
[Pages S2422-S2424]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     OUR NATION'S FISCAL SITUATION

  Mr. VOINOVICH. Mr. President, I rise to tell my colleagues that our 
Nation's fiscal situation is bad and likely to get worse. On an apples-
to-apples basis, today's projected 10-year deficit is $500 billion 
deeper than CBO's September 2004 report.
  When plausible assumptions about the path of current tax and spending 
policies are used, the official baseline deficit of $855 billion 
balloons to a deficit of $5.8 trillion. Even with a strong economy, 
annual deficits are likely to hover between $400 and $500 billion for 
the next 5 years. After that, the combination of tax cut extensions and 
growing entitlement costs threatens an upward spiral of deficits and 
debt that cannot be sustained.
  But even this sobering assessment of Federal finances may be overly 
optimistic. Assuming continued, but declining, spending for the global 
war on terrorism increases the 10-year deficit by $418 billion--we read 
yesterday where the Secretary of Defense and General Myers said there 
is no real prediction about how long we are going to have to spend 
money in Iraq--assuming that discretionary spending keeps pace with 
economic growth (rather than inflation) increases the 10-year deficit 
by $1.4 trillion; even assuming that expiring tax cuts are only 
extended for 5 years increases the deficit by $306 billion; assuming 
continuation of recent adjustments in the alternative minimum tax (AMT) 
increases the deficit by $642 billion, freezing appropriations, 
including defense, the war on terrorism and homeland security, would 
save $1.3 trillion. However, if combined with the extension of tax cuts 
and continued AMT relief, the budget would still remain in deficit 
every year, totaling $2.2 trillion over the next decade.
  We must also remember that current Medicare payment increases for 
doctors and hospital expire at the end of 2005. The American Medical 
Association, AMA, reports that physicians would see a 31 percent 
decrease in payments from 2006-2013. If we do not act, senior citizens 
will face serious problems obtaining health care; but it will cost tens 
of billions to continue reimbursing doctors and hospitals at the 
current rate.
  The fiscal policy decisions we make in the 109th Congress will 
largely determine whether the U.S. economy and the Federal Government 
will generate the financial resources to meet these challenges or 
whether we will force our children to choose between massive tax 
increases or draconian cuts in public services.
  I am not exaggerating when I use the term ``draconian cuts in public 
services.'' President Bush submitted a budget that proposes to 
substantially reduce or eliminate more than 150 government programs. In 
its annual ``Budget Options'' report, the Congressional Budget Office 
identifies 285 government programs that may need to be reduced, 
eliminated or substantially modified in order to control future 
spending. Federal budget analysts are already warning that current 
trends in Federal spending for health care, education, income security 
and even national defense simply cannot be sustained for much longer.
  I will never forget meeting with Dan Crippen before he left CBO, and 
him telling me that by 2030, almost all of the GDP we are now spending 
at this time will be used to pay for Medicare, Medicaid, and Social 
Security, leaving no money for anything else but that.
  I recognize that some of my colleagues consider any government 
program wasteful spending and would willingly enact all the proposals 
suggested by both President Bush and the CBO.
  Nevertheless, back on planet Earth, mayors, county commissioners, 
governors and yes, even Senators, are expected to provide at least 
basic public services, as well as maintain a social safety net, enhance 
economic development, promote civic improvements and even support 
cultural enrichment.
  Realistically, we are not going to eliminate economic development 
programs such as Community Development Block Grants as President Bush 
has proposed. Nor are we going to seriously consider CBO's suggestion 
to narrow the eligibility for VA disability compensation to only pay 
for disabilities related to military service. Everyone in this body 
knows that very few of these proposals are new. Some of them were first 
suggested by President Reagan 25 years ago. Congress has had ample 
opportunity to consider all of them and has never shown a willingness 
to enact any of them.
  The bitter truth is that regardless of which party is in control, 
Congress has never shown an appetite for fiscal restraint. We are 
always much more likely to spend like drunken sailors than to save our 
constituents' money the way we would save our own.
  I believe the reason we have never been able to control our appetite 
for spending is that most Members of Congress and the public simply do 
not understand the long term implications of short term spending 
decisions. Our constituents consistently ask for increased spending on 
existing programs as well as money for new programs. Congress almost 
always says yes to these requests because the true cost of these is so 
well hidden, they seem like minor investments for major public 
benefits. Unfortunately, the truth is that long after any public 
benefit has faded, our

[[Page S2423]]

children and grandchildren will still be paying the bills for our 
generosity.
  It is time to recognize that we are in a fiscal hole and to stop 
digging. The sooner we get started, the better. Prompt action will 
reduce the need for drastic steps and give individuals more time to 
adjust to any changes. It will also allow the miracle of compounding to 
start working for us rather than against us. Perhaps most important, 
prompt action will help us to avoid a dangerous upward spiral of debt 
and inflation that would ultimately harm every American.
  We can begin by insisting on truth and transparency in government 
financial reporting. More than 200 years ago, Thomas Jefferson wrote to 
his Secretary of the Treasury, ``We might hope to see the finances of 
the Union as clear and intelligible as a merchant's books so that every 
member of Congress, and every man of any mind in the Union, should be 
able to comprehend them, to investigate abuses, and consequently to 
control them.'' Today, consistent and accurate financial information 
can seem as elusive as it was in Jefferson's time. But these fiscal 
risks can be managed only if they are properly accounted for and 
publicly disclosed.

  That is why I have introduced the ``Truth in Budgeting Act.'' This 
bill has three simple goals.
  First, it will help guarantee that Congress, the President and the 
American people have the information necessary to make intelligent 
decisions regarding our long term financial commitments.
  Second, it will force Congress to focus more attention on the long 
term obligations instead of short term cash flows.
  Finally, it will provide Congress the time to make fiscal policy with 
due deliberation rather than unseemly haste.
  In order to guarantee that Congress, the President and the American 
people fully understand out long term liabilities, this legislation 
will require the Federal Government to gradually shift to accrual 
accounting for insurance programs; require CBO and the Joint Committee 
on Taxation to compute and report the change in Federal interest 
expense associated with any legislative action, and require the 
President to submit an annual report to Congress on the fiscal exposure 
the Federal Government faces including debt, financial liabilities, 
financial commitments, financial contingencies and other exposures. GAO 
would then be required to report to Congress on the extent and quality 
of the liability exposures presented by the administration.
  I sincerely believe this knowledge will fundamentally change 
attitudes about Government spending. When my constituents come to me 
asking for this or that new spending program, I always tell them how 
much we will have to borrow to pay for the program they want and as 
``Is this really worth imposing that kind of debt on our 
grandchildren?'' In almost every instance, their answer is ``NO.'' The 
American people do not want to saddle their children and grandchildren 
with unsustainable bills; but they do not always clearly recognize the 
long term costs of some very attractive programs. When we fully explain 
these costs, our constituents will usually choose fiscal prudence.
  My legislation will force Congress to focus more attention on long 
term obligations rather than short term cash flows by extending 
discretionary spending caps and the PAYGO rules for five years; 
creating a new Budget Act point of order requiring supermajority roll 
call votes to put Congress on record when it circumvents discretionary 
spending caps or PAYGO rules; putting more teeth in the annual budget 
resolution by directing the Budget Committee to set 302(b) levels and 
make efforts to exceed 302(b) levels subject to a 60-vote point of 
order--that will be a difficult one to get through with our 
appropriators, I am sure--and requiring CBO and the Joint Committee on 
Taxation to assess whether the budgetary consequences of legislation 
beyond the existing 10-year budget window are significantly greater 
than the cost inside the window. In other words, we pass things, and 
then we do not talk about what exposure we are going to have 10 years 
down the road. In the event that CBO or the Joint Committee on Taxation 
concludes the costs in real terms of legislation in the second decade 
after enactment would be more than 50 percent greater than in the first 
decade, it would be required to note this fact in cost estimates, and a 
point of order would lie against legislation causing these changes in 
outlays or revenues. This would mean Senators would have to acknowledge 
with a recorded vote the fact that they have been informed about 
outyear effects of their spending decisions.

  I recognize these provisions are no substitute for genuine commitment 
to fiscal discipline. Discretionary spending caps and pay-go rules were 
in place between 1997 and 2002, but Congress still managed to spend 
money, as I referred to earlier, like drunken sailors. Nevertheless, it 
is important to require rollcall votes when we attempt to bust the 
budget and, under the right circumstances, they can be very effective.
  Over the past 2 years, there have been 79 attempts to waive the 
Congressional Budget Act and increase spending. All but two of them 
were defeated. If these attempts at fiscal irresponsibility had been 
successful, Federal spending over the next 10 years could have 
increased by more than $1.5 trillion.
  Also, my bill will give Congress the time it needs to properly 
deliberate financial decisions by moving the Federal Government to a 
biennial budget process. There are 21 States, including my own, that 
use biennial budgeting. In Ohio, we supplemented the biennial budget 
with a second annual budget review. The biennial process provides time 
for deliberation and, more importantly, effective oversight.
  CBO reports that last year, Congress appropriated over $170 billion 
for 167 programs that had expired authorizations. Do you hear me: 167 
programs, $170 billion, and the authorizations had expired. This is not 
the fault of the appropriators. No one expects them not to fund 
veterans health care or other critical programs due to expired 
authorization. It is the fault of a process that simply does not leave 
us enough time to adequately review and reauthorize important 
Government programs. We need to give ourselves time to do the job 
right, and biennial budgeting will help get us there.
  According to the best information I have, our agencies today in the 
Federal Government spend about 60 percent of their time every year on 
the budget and appropriations. There is no time for congressional 
oversight because of the fact that we have these annual budget 
marathons we go through. I am hoping--working with Senator Domenici and 
other Members of this body--that we can bring the 2-year budget issue 
to the floor of the Senate and once and for all put it into law.
  The Truth in Budgeting Act I have introduced will provide Congress 
and the American people important financial management tools. Like any 
other set of tools, they are only as useful as the skill and dedication 
of the craftsman using them. However, just as a carpenter or auto 
mechanic is more productive when working with quality equipment, 
Congress can be more effective if we provide ourselves with better 
quality information.

  Finally, before I close, I want to share my concerns regarding 
Federal revenues. Many of my colleagues would like to extend until 2010 
all or some of the tax cuts enacted in 2001 and 2003. Moreover, they 
propose to extend these tax cuts without offsetting the revenues lost 
to the Federal Government. The various proposals could increase the 5-
year deficit by at least $90 billion and possibly as much as $306 
billion. This is unacceptable.
  Personally, I do not see a need to extend these tax cuts at this 
time. Now is the time for patience, not haste.
  Most of the current tax provisions do not expire until 2010, and even 
the reduced rates on dividends and capital gains do not expire until 
2008. I have consulted with experts such as Alan Greenspan and Pete 
Peterson who agree the stimulative effect of these cuts helped the 
economic recovery but also agreed we should pay for extending them with 
offsets. It is time to pay for them with offsets.
  We do not know yet the impact of Federal revenues if we do Social 
Security reform. We still do not know the full cost of the prescription 
drug benefits we approved in the 108th Congress. Nevertheless, all of 
us must concede that most experts agree that if we keep going the way 
we are, spending for

[[Page S2424]]

Medicare, Medicaid, and Social Security will greatly exceed 18 percent 
of GDP, as I mentioned, by the year 2030.
  We still do not know the full cost of the ongoing war on terror at 
home and particularly overseas. I predict we will be committed not just 
to Iraq and Afghanistan but to Kosovo and Bosnia for a long time, which 
will increase our national security costs dramatically.
  I have spent time with our reservists who have returned home, and 
many of them say their equipment is in bad shape because of the war. 
There are so many uncertainties in dealing with our national security 
that we ought to be careful about reducing our revenues.
  We will not know the strength of the duration of the current economic 
recovery for at least another year, but I will say this: We recently 
learned that last year we had GDP growth of 4.4 percent. That is the 
best we have had since 1999. There is no question that we are back on 
track. And the real issue is, do we need to continue to stimulate the 
economy with the tax reductions we passed in 2001 and 2003, 
particularly 2003 when we felt we needed to give the economy a front-
end loaded stimulus that would make sure we would see an upturn.
  We will not know until 2008 or 2009 how Federal revenues will be 
impacted by baby boomers becoming eligible for early retirement. Most 
experts expect slower economic growth and slower growth in Federal 
revenues. It is a real question, with the retirement of our baby 
boomers: Will we have the workforce we need to keep economic growth 
moving forward?
  Finally, and perhaps more important, the President's Commission on 
fundamental tax reform will not complete its work until July. Once they 
send their report to Treasury Secretary Snow, he may very well 
recommend sweeping tax reform proposals for us to consider in 2006. It 
makes little sense to me to rush into making current tax policy 
permanent only to redo all our work in less than 18 months.

  Under these circumstances, it seems more prudent to wait until next 
year before extending tax cuts enacted in the 2001 or 2003 tax reform 
bills. However, if my colleagues absolutely insist on extending these 
tax cuts, then we should at least offset their costs by reducing 
spending or increasing revenues elsewhere in the budget. In other 
words, the budget resolution is going to be calling for something like 
$70 billion or $80 billion of tax cuts that will be handled in 
reconciliation, which basically says they can be passed by the Senate 
with 51 votes.
  My suggestion is, just eliminate them from the budget resolution. If 
extending the lower tax on dividends or extending the lower tax on 
capital gains is something in the best interest of the American people, 
then let's require 60 votes to get that done, just as we did last year 
when we did not have the continuation of three tax cuts for marriage 
penalty, lower marginal rates, and for the child tax credit. We did not 
have a budget. We did not have reconciliation language, but we extended 
those three because it was the feeling of this body and the House that 
they were needed to continue to respond to the needs of the American 
people.
  My basic yardstick for Government spending, including tax cuts, has 
always been is it necessary and is it affordable? I believe the tax 
cuts in 2001, 2003, and 2004 were both. Nevertheless, we face a 
different situation today, and I will no longer support tax cuts until 
they are fully offset. The Nation's gross domestic product grew by over 
4 percent in 2003 and 2004. Unemployment has dropped from 6.6 percent 
to 5.2 percent, and new jobs have been created every month for the last 
21 months. Even Alan Greenspan at the Federal Reserve has noticed the 
turnaround and started to raise interest rates. The tax cut medicine 
worked, and it is time to stop before we overdose on too much of a good 
thing. I know some people want to make our recent tax cuts permanent, 
but I cannot support doing so at this time.
  Any additional tinkering with the Tax Code should only be done as 
part of a comprehensive reform package designed to return Federal 
revenues to their 60-year average of 18 percent of the economy.
  In closing, I tell my colleagues and constituents that I valued my 
status last year, while I was running for reelection, as a deficit 
hawk. I have always placed fiscal responsibility at the top of my 
agenda and never supported spending or tax cuts unless I thought they 
were necessary and affordable.
  The legislation I have introduced will help us more effectively 
determine what fiscal policies really are necessary and affordable. I 
encourage Senators to support this legislation. I also encourage them 
to show patience regarding making the tax cuts permanent. With all the 
uncertainties facing us, it does not make sense to deal with the issue 
now.
  I will finish with these words: One of the requirements I have used 
during my political career to decide whether we should do something is 
the issue of fairness. How in the world can we ask the American people 
to flat fund domestic discretionary spending, deal with the problem of 
Medicaid and many of these other issues, and at the same time say to 
them, and by the way, we are going to extend these tax cuts we have 
had? It does not make sense. It is not fair. It is not right. It is not 
acceptable.
  I am hoping that my colleagues understand that to put ourselves in 
the position where we are going to have probably one of the most stingy 
budgets we have had since I have been in the Senate, at the same time 
we cannot continue these tax cuts and extend them or, for that matter, 
make them permanent.
  I yield the floor, and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. VOINOVICH. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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