[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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