[Congressional Record Volume 151, Number 137 (Tuesday, October 25, 2005)]
[House]
[Pages H9079-H9083]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            DEFICIT DANGERS

  The SPEAKER pro tempore. 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, last week I came to the well of this House 
to express my concern along with the concern of others in the Committee 
on the Budget who joined us that night about the direction that a 
process we call reconciliation was taking.
  This week my concerns have not been allayed. They have been 
aggravated because I see the course that reconciliation has taken, and 
it is coming home closer and closer to programs that matter to those 
that can least afford to take the hits that they are about to receive. 
As we speak, our colleagues, our Republican colleagues from across the 
aisle, are debating and considering and moving toward big cuts in 
Medicaid, student loans, child support enforcement, child foster care, 
and supplemental security income, farm conservation, the list goes on. 
About $50 billion in spending cuts spread over about a 5-year period of 
time.
  They have offered up these spending cuts as a way to offset, 
partially at least, the spending increases that the responses to 
hurricanes Katrina and Rita will require; but in actuality, these 
spending cuts will not go to offset the costs of Hurricane Katrina 
because the Republican budget calls for $106 billion in additional tax 
cuts. And when these additional tax cuts are passed, the spending cuts 
that are also being proposed will simply go to make up for the revenue 
losses to some extent caused by the tax cuts they are proposing.
  Since the spending cuts are $50 billion, as this chart here shows, 
and the tax cuts are $106 billion, none of the spending cuts will ever 
make it to the bottom line where they might otherwise be available and 
applied to the offset of the cost of Katrina and Rita.
  So the first problem that we as Democrats have, with what our 
Republican colleagues are pushing and pushing hard this week, is that 
it is not what approximate purports to be. It is not what it claims to 
be. It is not a plan to pay for Hurricane Katrina. It is a plan to 
facilitate $106 billion in additional tax cuts, notwithstanding the 
fact that we have last year, just a few weeks ago, we closed the books, 
and the deficit for the preceding fiscal year was the third largest in 
history, $320 billion; $106 billion in additional tax cuts at a time 
when we have a $320 billion deficit that is only likely to get worse 
this year because of the cost of the hurricane.
  The second problem that we as Democrats have with the plan that our 
colleagues are pushing is that we believe the cost to help one State 
sustain the catastrophic costs of a natural disaster, a disaster like 
Hurricane Katrina, should be borne by all the States and spread over 
the entire population, the whole country, but spread equitably, spread 
equitably. We do not believe that those least able to bear the costs 
should be burdened with the lion's share of the load, and yet that is 
exactly what is taking shape.
  That is exactly what they are doing, pushing a plan to pay for the 
cost of Hurricane Katrina, at least under that pretext that will come 
down on the backs of college students borrowing to pay for their 
education; on the backs of the sick whose only access to care is 
Medicaid; and on the backs of the very poor who depend on food stamps 
and foster care and child support enforcement, all of these things. 
These are the programs and the bore sights of the plan that are about 
to be brought to the floor.
  These are just some, a sampling of those on whom these cuts are going 
to fall.
  So what we have coming before the House this week, if it does indeed 
come forth, is a plan for spending cuts that does not serve its stated 
purpose because it does not go to pay for the cost of Hurricane 
Katrina, not a dime of it. And the spending cuts it selects, whether to 
offset more tax cuts or to pay for Katrina, come down on those, as I 
have said, who are least able to bear them.
  On our side we think it is fair to ask, Why this sudden interest in 
offsets? Why insist on offsets to pay for building or rebuilding 
Biloxi, but not insist on offsets for building or rebuilding or 
building back Baghdad for which we have appropriated so far more than 
$20 billion?
  One reason that our colleagues have suddenly seized on this issue is 
that the evidence of bad budgeting, of fiscal failure, of endless 
deficits is mounting and spreading and becoming undeniable is too much 
to sweep under the rug. On their watch, the Federal budget has 
descended from a surplus of $236 billion in the year 2000, the last 
full fiscal year of the Clinton administration, to a deficit of $320 
billion last year and $412 billion the year before.
  The deficit will only be worse this year, as I have said, this fiscal 
year, 2006, because this year is when most of the spending to fix up 
and respond to Katrina is going to be paid out. Here is

[[Page H9080]]

one simple, back-of-the-envelope way of looking at the budgets that we 
have had and the impact of these budgets that bottom-line over the last 
5 fiscal years.
  Our Republican colleagues have had to come to the floor four times 
and raise the debt ceiling, the legal limit to which the United States 
can borrow, incur debt, in order to make room for the budgets of the 
Bush administration. As a consequence, in June 2002 they had to vote to 
raise the debt ceiling by $450 billion. In May, just a year later, they 
had to raise it again by a record amount, $984 billion. You would think 
that $984 billion would give you plenty of room for additional deficits 
to be accommodated, but no.
  In November 2004, 15, 16 months later, $800 billion had to be added 
to the debt ceiling. In the budget resolution that will come to the 
floor this week, there is a contingent provision that when the Senate 
passes the provision, the debt ceiling will be raised one more time by 
$781 billion. Add up these four increases in the debt ceiling over the 
last 5 fiscal years, you get 3 trillion, 15 billion; $3 trillion, the 
amount by which they have had to raise the debt ceiling to accommodate 
their budget. That says it, as I said, on the back of the envelope, 
better than any way I could possibly put it.
  When the Bush administration closed the books on fiscal year 2005, 
just 3 weeks ago, they announced a bit better deficit, no doubt about 
it, a deficit of $320 billion. But that is still the third largest 
deficit in our Nation's history. And it shows you how sad the State of 
our fiscal affairs have become when the White House boasts about and 
brags about a $320 billion deficit as being good.
  Mr. Speaker, I yield to the gentleman from Virginia (Mr. Scott).
  Mr. SCOTT of Virginia. Mr. Speaker, the gentleman indicated that last 
year was the third largest deficit in the history of the United States. 
When were the other two?
  Mr. SPRATT. The year before it was 412, and the year before that it 
was 375. Those are the three worst over the last 3 years, three record 
deficits in a row.
  Here is the hard part. It would be bad enough if that were behind us 
and we are now having to live with this $3 trillion increase in the 
debt ceiling of the United States, but the future looks even bleaker. 
This September, the Congressional Budget Office, which is neutral and 
nonpartisan, prepared for us, as they always do, it is their custom and 
I think it is required by law, an update of the economy and the budget 
and a projection of where the economy was going and a projection of 
where the budget was going with the economy. Here is what they came up 
with.
  They predicted a deficit of $319 billion. That is about where we came 
out. Look at the red line here and you will see their continued 
projection shows that over the next 10 years the deficit will double. 
It will increase from 320 to $640 billion in the year 2015. That is 
CBO's projection per certain requests we made to them to adjust their 
baseline survey.
  We said to CBO, take your baseline survey and assume four things in 
the President's budget: number one, that the tax cuts passed in 2001, 
2002, and 2003 will all be renewed and extended when they expire at the 
end of 2010;
  Number two, that the alternative tax will be fixed as we all know it 
must be so it does not affect middle-income taxpayers to whom it was 
never intended;
  Number three, that we will eventually have a drawdown of our troops 
in Afghanistan and Iraq, principally Iraq, so that we have 20,000 in 
each theater. CBO has a model for estimating what the likely cost of 
that force is going to be;
  Finally, the President gave us the numbers for implementing his 
Social Security privatization program for the last 2 years of his 5-
year forecast. Pick up where he left off and carry it out 10 years. 
Make those changes, we said to CBO, and tell us what then. If you hit 
the highlights, carry out the basics of the Bush budget, what then 
happens to the budget? Here is what happens with the deficit: it goes 
from 320 to 640 in 10 years.
  The debt of the United States held by the public, and in many cases 
held by foreigners, goes from $4.6 trillion in 2005 to $9.2 trillion in 
2015. Debt service, this is obligatory, this is one thing in the budget 
that has to be paid or the credit of the United States will collapse, 
the debt service that we now pay, the interest we now pay on the 
national debt, net interest, will increase from $182 billion in 2005 to 
$458 billion in 2015. It will become one of biggest items in the 
budget. This is the sort of thing that breeds cynicism of our 
government, because people pay heavy taxes, yet they see nothing in 
return due to the fact that money is going to service the national 
debt.
  One thing else, a lot of this is due to tax cuts that they keep 
making despite the bottom line, despite the fact that the original 
forecast showing $5.6 trillion in surpluses over a 10-year period of 
time no longer apply. However, those tax cuts eventually become a debt 
tax because that is what you see here. We have a debt tax, a tax that 
has to be laid on the people in order to pay the debt service, the 
interest on the national debt, which is truly obligatory.
  Mr. Speaker, I yield to the gentleman from Virginia (Mr. Scott).
  Mr. SCOTT of Virginia. Mr. Speaker, I thank the gentleman for 
pointing that out. Sometimes it is helpful to puts these numbers in 
perspective. Is it not true that the military budget on an annual basis 
is approximately $400 billion?
  Mr. SPRATT. It is indeed. That is true. It has increased 
substantially.
  Mr. SCOTT of Virginia. So the debt service in 2015 is going to rival 
the entire military budget?
  Mr. SPRATT. That is true.
  Mr. SCOTT of Virginia. And you get absolutely nothing for interest on 
the national debt. It is money down the drain. You do not get the first 
rifle. You do not get the first schoolbook. You do not get any health 
care. You do not get anything for interest on the national debt.
  Mr. SPRATT. But it has to be paid. It is obligatory. There is no way 
around it. You have got to pay it, otherwise the bonds default and the 
country is in bankruptcy. We cannot let that happen.
  Let me touch on the package that we expect to come to the floor to 
show what our concern is and why we are here at this hour of the day 
talking about the package that the Republicans are putting together to 
bring to the floor ostensibly to pay for some of the costs for 
Hurricane Katrina but truly, truly to offset additional tax cuts of 
$106 billion.
  Originally, as the gentleman from Virginia (Mr. Scott) knows, because 
this is his committee and he can comment further upon it, the Higher 
Education Act had to be amended this year and was to be amended so that 
student loans would enjoy fixed rates, not variable rates which would 
go up as interest rates go up as they are likely to do in the near 
future.

                              {time}  2045

  That decision has been discarded. It is gone.
  Next, origination fees. The front-end fees that students have to pay 
to take out a student loan were to be lowered. Not anymore, not with 
the latest cut. What we are looking at are the barest component parts 
of this bill called the reconciliation bill that is coming to the 
floor. It went directly from the Committee on the Budget to the 
committees of jurisdiction, like the Committee on Education and the 
Workforce, and they said cut so much money from programs in your 
jurisdiction. So where did the Committee on Education and the Workforce 
cut? They turned to student loans, the most significant part of their 
budget, and the Pension Benefit Guaranty Corporation.
  Mr. SCOTT of Virginia. Mr. Speaker, I would point out, and I 
appreciate the gentleman bringing this to our attention, that when the 
Committee on the Budget instructed the Committee on Education and the 
Workforce to cut mandatory spending by those billions of dollars, there 
were only a couple of programs in the education jurisdiction that has 
mandatory spending. One is student loans, and then school lunches, and, 
to a little minor extent, job training. Those are the only programs we 
could cut to accommodate that instruction that the Committee on the 
Budget gave.
  When you start talking about balancing the budget, and we say 
balancing the budget on the backs of those that actually need the help, 
going after student loans, when student loans right now and when 
assistance for higher education is at an all-

[[Page H9081]]

time low, 20 or 30 years ago a Pell grant would cover about 85 percent 
of the cost of going to a public college. Now it is about 30 percent, 
and the rest you have to make up with student loans. We are cutting the 
student loan subsidies, which means that the students could end up 
paying thousands of dollars more for their education than they do now. 
That is because we are not paying for Katrina. We are paying for the 
tax cuts, and some of these tax cuts are about as mean-spirited in 
terms of priorities as you can imagine.
  We call them tax cuts for the wealthy. People say, oh, no, no, it is 
not tax cuts for the wealthy. The gentleman from South Carolina (Mr. 
Spratt) is familiar with the tax cut that had not even gone into effect 
yet but will go into effect next year.
  Two hundred billion dollars, 5-year cost, to implement the two tax 
cuts that address the personal exemption and standard deduction phase-
in. We have a chart that shows who gets the benefit of this $200 
billion. If you make under $75,000 a year, you do not get anything; 
$75,000 to $100,000, on average you will get $1.00; $100,000 to 
$200,000 on average will get $25, there is a bar down there, you just 
cannot see it, in terms of what you might get, but $25; $200,000 to 
$500,000, about 500 and some dollars on average; $500,000 to $1 
million, over $4,000; and over $1 million, on average you will be 
getting $19,000. That is how we distribute 5-year costs, $200 billion, 
and rather than let us not make this go into effect and have the $200 
billion go to deficit reduction.
  Mr. SPRATT. These two tax provisions, called PEP and Pease, phase-out 
of the personal exemption and the phase-in limitation on itemized 
deductions, these two provisions were signed into law by the first 
President Bush.
  When the second President Bush sent up his request for tax cuts, 
these provisions were not included in his package of proposed tax cuts. 
They were added by Members and pushed to the very end of the 
implementation period. They do not actually get cut out or cut back, 
phased out until the year 2007.
  Nevertheless, as you are pointing out, these provisions, if they were 
simply left in place, would yield enough revenues over time to pay the 
cost of Katrina and leave a substantial amount of change on the table.
  Mr. SCOTT of Virginia. Mr. Speaker, $200 billion, and instead, we are 
going after student loans. We are going after food stamps. We are going 
after Medicaid. This is not something new, somebody taking something 
somebody already has. This had not even gone into effect yet, where the 
millionaires get $19,000. Everybody making less than $75,000 gets 
nothing; $75,000 to $100,000, you get $1. You cannot even see on this 
chart what you get until you get up around $200,000 in income. So, when 
we talk about tax cuts for the wealthy, this is what we are talking 
about, $200,000.
  You talked about paying for Katrina and what that does to our fiscal 
situation. This chart shows the annual deficit as you have outlined, if 
we pay for Katrina and if we do not pay for Katrina, and the solid line 
shows what the projections are, and the dotted line is if we borrow 
money and do not pay for Katrina how much more deficit there would be.
  This is obviously a blip on the screen because it shows that there is 
a 1-year deterioration in the budget, but then it goes back. You can 
hardly tell a difference in the lines later on. It does not make any 
difference at all later on what we are doing to Katrina.
  When this administration came in, there was a projected over $5 
trillion surplus coming in, and by the time they finish, we are looking 
at in excess of $3 trillion in deficit for the same 10 years, a $9 
trillion swing, $200 billion for Katrina, which is the estimated total 
cost. That is .2. Nobody said anything about the $9 trillion, and all 
of the sudden, as you have suggested, they are going to jump up and try 
to be fiscally conservative by making people cut student loans and food 
stamps and Medicaid to pay for the .2, which has zero to do with the 
long-term deterioration in the budget to begin with.
  I appreciate your pointing this out to everyone, that the Katrina 
cost is virtually negligible compared to all of the other damage done 
to this budget.
  Mr. SPRATT. Mr. Speaker, let me return to student loans and yield 
back to the gentleman because he is far more conversant in student 
loans than I am.
  It is curious that you would turn to student loans, to kids who are 
accumulating more debt than any generation in America to get a college 
education, and raise the cost of student loans in order to pay for the 
cost of Katrina. It just does not strike me as the kind of equitable 
loading that would support.
  Mr. SCOTT of Virginia. Mr. Speaker, I would say if you talk about 
student loans and helping student loans, if you cut back on the student 
loan program, somebody has to pick up that weight. The students who are 
affected by this will be paying thousands of dollars, $5,000 and $6,000 
more, for their college education than they would have had we not gone 
after the student loan program to pay for the tax cuts.
  Mr. SPRATT. Because they are so devilishly difficult to understand 
all the fine details that go into the pricing of student loans and the 
renewability and consolidation. A lot of the details about the changes 
being proposed are not yet widely disseminated and widely understood. 
Nevertheless, the students are going to feel it and see it once they 
realize what the long-term cost of it is and the envelope they have to 
repay.
  Mr. SCOTT of Virginia. The simple bottom line is if you take money 
out of the student loan program, somebody's going to pay it. It is the 
students, and it is thousands of dollars more per student.
  Mr. SPRATT. I looked the numbers up, and that is why I have got them 
available, but let me show you how the reconciliation process works so 
that the gentleman from Virginia (Mr. Scott) can pick up from there.

  Originally, when the Republicans decided in their budget resolution 
that they would cut $35 billion to facilitate $70 billion in tax cuts, 
it had nothing to do with Katrina. It was just one way of diminishing 
the impact of the tax cuts on the bottom line. Originally, when that 
$35 billion number was set as the reconciliation target, the amount 
that was reconciled to the Committee on Education and the Workforce was 
$12.6 billion.
  That committee labored diligently. I do not think the gentleman voted 
for the final product, but it was still $10.6 billion, $2 billion less 
than what was reconciled. Now, all of the sudden comes a claim for an 
additional $5.5 billion. Where in the world will the $5.5 billion come 
from within the jurisdiction of your committee?
  Mr. SCOTT of Virginia. The Committee on Education and the Workforce 
has essentially three programs they can get the money from: student 
loans, school lunches, and, to a small extent, job training programs. 
That is about it.
  So when you have billions of dollars coming out of those programs, 
obviously the students who are borrowing money, the students who eat 
lunches at school and possibly job training. The job training money is 
so small that you could wipe the whole program out and still not come 
up to the billion of dollars you need to reconcile the instruction from 
the Committee on the Budget. Basically it is student loans and school 
lunches.
  In order to fund tax cuts, in this case as we have shown primarily 
for the wealthy, and as you have indicated, had we done nothing with 
the budget, had we not passed the budget, had we not made any changes, 
just let the budget go on as it usually does without the changes, the 
bottom line would be over $100 billion better off if we had done 
nothing.
  Instead we have cut taxes, those well over $100 billion worth coming 
up next year, and to make up for some of it, we are going after student 
loans, school lunches, and other committees and child support payments, 
facilitating those. We are cutting back on those support services, 
cutting back on Medicaid and other necessary food stamps.
  The kinds of services that Katrina victims would actually need, that 
is what we are cutting back on to fund not the cost of Katrina, the 
cost of the tax cuts, because the cuts we are making have not even 
covered the tax cuts yet. So obviously we are not doing anything in 
term of the ravages of the hurricanes.
  Mr. SPRATT. Already in the bill you have reported, which is $2 
billion short of your targeted amount, and now it is going to be $5.5 
billion more than either targeted amount, already you have reversed the 
decision to lower origination rates. Your committee has raised the rate 
effectively on student

[[Page H9082]]

loans. You have reversed the decision to increase the amount that 
students can borrow. You have changed the rates at which they could 
expect to consolidate their loans. How do you get the additional $5.5 
billion after having done this much already to student loans?
  Mr. SCOTT of Virginia. The bottom line is you get it from the 
students. They will be paying more. Thousands of dollars each on 
average for student loans, they will have to pay. It is the only way to 
get it. If you cut the subsidy, somebody's got to pick it up, and it is 
the students.
  We also try to make up for a little bit of it by attacking pensions, 
those who have pensions in the Pension Guaranty Fund, come up with a 
little money by adding some fees on to that.
  But in terms of trying to meet the requirement of the Committee on 
the Budget to try to get this thing closer in terms of deficit, student 
loans and school lunches, it just seems to be an inappropriate 
priority, and we can certainly do better than that.
  Mr. SPRATT. Let us look at the Committee on Ways and Means. In the 
original budget resolution, the Committee on Ways and Means was largely 
spared, mainly because the cuts in Ways and Means would mostly fall on 
Medicare. It is the biggest entitlement within their jurisdiction 
except for Social Security, and that is not in the cards right now.
  Only $1 billion was reconciled in the way of spending cuts to the 
Committee on Ways and Means, but now, in recent weeks, in the zeal to 
get the amount from $35 billion to $50 billion, which is reconciled, 
they have added to the directive for Ways and Means, or they will if 
this resolution gets passed this week, another $7 billion, $8 billion.

                              {time}  2100

  Very little of this actually comes out of Medicare because they do 
not want to touch Medicare for fear that they will have a fight in 
their own ranks, but this is where it comes from. This is astounding. 
It comes from child support enforcement. This is the money that we 
appropriate to match State money to enforce fathers who are not 
supporting their families to come up with the financial support for 
their own families. We let them know this program will be robustly 
funded. We have a national program so they cannot skip from one State 
to another. We have a State-by-State program so they cannot elude 
enforcement. They are going to take a reduction in child support 
enforcement of $3.8- to $4 billion in child support enforcement.
  Foster care for children and families, foster care families, children 
not with their own biological families, a cut of $577 million.
  And then Supplemental Security Income, the welfare program of last 
resort for people who are disabled and the elderly and have nothing 
else to fall back on. SSI is truly a safety net program. It will be cut 
by $732 million. Do you know how? They will say to people who have back 
claims for SSI, who qualify for SSI, go through a long process to prove 
it, and who have a claim settlement at the end of that process, we 
cannot pay you 100 percent of this. Despite the fact you have been 
living on next to nothing, we will pay you in installments, so $732 
million out of SSI.
  And then in the same bill we are told all of these things that are 
truly safety net programs, they turn to something called antidumping 
duties. We impose duties, antidumping duties, on foreign companies in 
foreign countries that ship goods to us, like steel, below its true 
market value in the country from which it comes. When we find that 
people are doing that in order to undercut our domestic industry, we 
impose antidumping duties on those industries. The law provides that 
the duties thus collected go to the American companies that are hurt by 
these illegal trade practices.
  What they propose to do is repeal the Byrd amendment which provides 
for the money to go to these firms. That repeal will not save a dollar. 
To the contrary, it will cost Federal spending of $3.2 billion over a 
5-year period of time. After squeezing money out of child support 
enforcement, foster care and SSI, they turn around and give up a $3.2 
billion resource that goes to firms that have been hard hit by unfair 
foreign trade.
  Mr. SCOTT of Virginia. Madam Speaker, let me remind Members, this is 
the kind of tax cut that is under the jurisdiction of the Committee on 
Ways and Means. As this chart shows, it is $200 billion primarily for 
the wealthy. If a family makes less than $200,000, you can hardly see 
what you would get. Instead of going after this tax cut that has not 
even gone into effect yet, they attack unemployment compensation, SSI, 
and the child support enforcement services. Those are the kinds of 
things that make a difference in people's lives.
  When I was in the State senate, one of the things that we kept having 
problems with in child support enforcement was the interstate cases. 
Virginia could take care of its own cases. We put the resources in to 
find the responsible parent. We would get the wage withholding. We 
could take care of the case if it was in Virginia. But once it went out 
of State, we had problems. Those are the kinds of cases that the child 
support enforcement from the Federal Government can help.
  That is what you are eliminating, and those are the kinds of things 
that make a difference in people's lives because parents need that 
child support to help raise the children. If you do not get it, it is 
much more difficult to raise the children. You have financial stress. 
We are cutting back on that kind of assistance to people in order to 
fund the tax cuts, many of which go primarily to the wealthy.
  Mr. SPRATT. Madam Speaker, a lot of people say it is necessary for 
fiscal reasons. We have to balance the budget. They say to us as 
Democrats, What would you do? And that is fair enough.
  Whenever anyone raises this issue, I think it is pertinent for us to 
point out this is what we did. Beginning in 1992, after President 
Clinton came to office, January 20, 1993, on February 17, 1993, the 
first piece of legislation he sent to the Congress was a 5-year budget 
to cut a deficit of $290 billion, he inherited that deficit, to cut it 
in half over the next 5 years. This is what happened. Every year 
thereafter, 1993, 1994, 1995, 1996, every year thereafter, the bottom 
line of the budget got better and better and better, to the point where 
in 1996 we had a deficit of about $120 billion. We convened again under 
his auspices, the President's auspices, and we passed the Balanced 
Budget Act of 1997. As a consequence of that, in 2 years the budget was 
not just in surplus, it was in a surplus of $236 billion.
  So all of this is history. This is where we took the budget, and this 
is where we handed it off, at that point, with a surplus just below 
$200 billion. We handed the budget over to President Bush, and every 
year thereafter, except this year, the bottom line is that the budget 
got worse. It got marginally better this year, but as this chart shows, 
it is still $320 billion.
  As I said, under the basics of the Bush administration's budget, the 
highlights of his budget, the things that he is pushing us to do, if we 
follow that course, CBO tells us we will incur a deficit in 10 years of 
$640 billion, twice today's deficit, and the debt service of the United 
States will go up threefold from $182 billion to $458 billion.
  Mr. SCOTT of Virginia. Madam Speaker, as we look at that chart where 
each year under the Clinton administration was better than the one 
before, and we went into such surplus that when Chairman Greenspan was 
testifying before Congress in 2001, he was answering questions like, 
What happens if we pay off the entire national debt? What is going to 
happen to the bond market? What is going to happen to interest rates?
  We had at that point projected we would be able to pay off the 
national debt held by the public by 2008. By 2013, if we were 
continuing to run surpluses, we would be able to put all of the money 
back in the trust funds. Members talk about Social Security being 
empty. Social Security would have had gotten all its money back, and 
there would be assets in the trust fund, not the IOUs we have now.
  But in 2001, Congress passed massive tax cuts, President Bush signed 
them, and we see what happened.
  Now, Members will remember in 1995 when the Republicans took over the 
United States House and Senate, they also passed massive tax cuts. What 
happened to those tax cuts in 1995? What did President Clinton do to 
those tax cuts?

[[Page H9083]]

  Mr. SPRATT. Madam Speaker, he vetoed those tax cuts.
  Mr. SCOTT of Virginia. And Republicans threatened to close down the 
government. In fact, they closed down the government, but President 
Clinton refused to sign those massive tax cuts we could not afford. 
Year by year he held that veto pen out to make sure that we did not do 
anything irresponsible, and we ran up those surpluses.
  The first thing this President did was sign those massive tax cuts 
that we could not afford, and we see what happened.
  I think it would be helpful if the gentleman would explain what PAYGO 
means to know how we could maintain that fiscal discipline.

  Mr. SPRATT. Madam Speaker, this was not just serendipity or good 
luck. We had a good economy, but we also had a good set of budget 
policies and a good budget converging with a good economy.
  One of the things that we did in 1991 under the first President Bush, 
we adopted a set of budget rules in the Budget Enforcement Act. One of 
these required every budget to be a 5-year budget.
  Secondly, another rule required that we put a cap on discretionary 
spending. We cap and limit on a 5-year basis the money that we 
appropriate every year for discretionary programs. These are 
discretionary programs.
  Thirdly, we adopted something called a pay-as-you-go rule. It was a 
very effective rule which simply provided if Members want to increase 
the benefits under an entitlement program, Medicare, Social Security, 
whatever it may be, you have to either pay for it or cut some other 
entitlement by an equal amount. By the same token, we said if you want 
to cut taxes when we have a huge deficit, you have to pay for those tax 
cuts, offset those tax cuts, either with a spending cut of equal amount 
or with a tax increase elsewhere in the Code of an equal amount so it 
is deficit-neutral, it does not impact and worsen the deficit. Those 
rules proved to be extremely helpful as we moved the budget from a $290 
billion deficit in 1992 to a $236 billion surplus in the year 2000.
  Mr. SCOTT of Virginia. Madam Speaker, with PAYGO, that means if you 
want to have a new spending program, you have to cut spending somewhere 
else or raise taxes to pay for it. If you have a new tax cut, either 
you have to cut spending that same amount or raise some other taxes, 
but you have to pay as you go. What happens under that is if you have 
natural growth, you can do better each year on the deficit. But what 
happened in 2001 with PAYGO?
  Mr. SPRATT. Madam Speaker, in 2001, 2002, PAYGO, the multiyear 
spending caps and the sequestration provision, all of the budget 
enforcement rules that we put in specially in 1991 that served us so 
well in the 1990s, were allowed to expire. Why? Because the PAYGO rule 
would have impeded further tax cuts when we had still big deficits.
  Mr. SCOTT of Virginia. Therefore, when the tax cuts were offered, 
they did not have to be paid for. So the question was not how would you 
like some new tax cuts with these spending cuts, or how would you like 
these tax cuts with increased taxes here to pay for them; the question 
before us was: How would you like some tax cuts? Congress said, well, I 
think I will.
  At the same time, how would you like some more spending increases? 
You do not have to raise taxes to pay for them and/or cut other 
spending, so the question before you is how would you like to spend 
more money? Well, I think I will. This chart shows what happened.
  Mr. SPRATT. Here is a good account. Defense, for reasons we all 
understand, has gone up substantially from the year 2000 to the year 
2011. This is a projection. It will increase from about $300 billion to 
$600 billion over that period of time.
  When the President talks about the increase in spending as if he is 
laying the blame on the Congress, and in truth most of it is coming in 
defense accounts, and all of it has been requested by the President of 
the United States. We have appropriated. I voted for it. I do not think 
you send troops in the field and give them a tough mission to do and 
not back them up. But let us be honest where the spending increases he 
decries are really coming from. They are coming from defense.
  This layer right here was what was planned for defense in January 
2001. This red layer is what the Bush administration added to it in the 
way of policy. It is mainly new equipment, personnel and things of that 
nature. This is the cost of Iraq, Afghanistan and future war costs 
here; also, the cost of waging the war on terror, but it does not 
include homeland security. This is cost risk because the Pentagon 
typically has overruns in its programs. CBO said it is reasonable to 
assume they will miss their targets by at least this amount.
  When you put all these layers together, you see a budget increase 
from $300 billion to $600 billion over a 10-year period of time. At the 
same time all of this is being done, more or less deliberately, stacked 
on top of each other, we are having substantial tax cuts. When you put 
together these two factors, the defense spending increases and the tax 
cut decreases, you begin to see the emergence of the deficits that we 
are struggling to deal with today.
  Mr. SCOTT of Virginia. Madam Speaker, I just want to emphasize the 
fact that all of these cuts in spending today are not due and have 
virtually nothing to do with Hurricane Katrina. They are there whether 
Hurricane Katrina spending happened or not.
  Mr. SPRATT. It is a reaction to this curve right here, a recognition 
that the chickens are coming home to roost. All of the bad budget 
decisions and fiscal policy risks that have been taken are not breaking 
favorably, are beginning to accumulate, and we have increasing deficits 
that require dramatic action.
  The problem is, and there is recognition of the problem finally, and 
that is good. There is reaction to it, and that is good, but the 
resolution that is before us, the reaction that is being taken, the 
substance of it, does not really address the problem. And, if anything, 
it worsens the problem because it adds to the deficit rather than 
diminishing the deficit.
  That is why we are out here trying to explain this somewhat 
complicated fact in the face of what is posing to be, taken as a 
pretext to be, a fiscal responsibility initiative.

                              {time}  2115

  Mr. SCOTT of Virginia. Madam Speaker, as this chart shows, we could 
have done better, and we did do better when President Clinton vetoed 
the irresponsible budgets and there were enough Democrats in Congress 
to sustain those vetoes. And if we look at that chart, every year is 
better than the one before. And when this administration came in in 
2001, they inherited a 10-year $5 trillion surplus, $5 trillion 
surplus; and now it looks like those same 10 years will run into a 
deficit of over $3 trillion, a total of over $9 trillion.
  Mr. SPRATT. In the wrong direction.
  Mr. SCOTT of Virginia. In the wrong direction.
  Mr. SPRATT. Madam Speaker, I thank the gentleman for his comments.

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