[Congressional Record Volume 151, Number 165 (Monday, December 19, 2005)]
[Senate]
[Pages S14015-S14024]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
DEFICIT REDUCTION ACT OF 2005--CONFERENCE REPORT
The PRESIDING OFFICER. The clerk will report the conference report.
The assistant legislative clerk read as follows:
The Committee of Conference on the disagreeing votes of the
two Houses on the amendments of the House to the bill (S.
1932), to provide for reconciliation pursuant to section
202(a) of the concurrent resolution on the budget for fiscal
year 2006 (H. Con. Res. 95), having met, have agreed that the
Senate recede from its disagreement to the amendment of the
House, and agree to the same with an amendment, and the House
agree to the same, signed by a majority of the conferees on
the part of both Houses.
The PRESIDING OFFICER. The Senate will proceed to the consideration
of the conference report.
(The conference report is printed in the proceedings of the House in
the Record of Sunday, December 18, 2005.
The PRESIDING OFFICER. Who yields time?
The Senator from New Hampshire.
Mr. GREGG. Mr. President, we are now on the deficit reduction
conference report. We have 10 hours of debate, 5 hours equally divided.
I know my colleague from North Dakota wants to speak tonight.
Just for the edification of our membership, we will run some time off
the clock tonight--I think about 2 hours--and then come back tomorrow
and continue the debate and hopefully wrap this up tomorrow.
This bill is a culmination of a lot of work done in the Congress, by
the President, and by the Members of the Republican Party, to try to
put some discipline into the fiscal accounts of the Federal Government.
This bill represents the first time in 8 years that the Federal
Government has attempted to control the rate of growth in entitlement
spending. People who watch this debate understand this issue, but just
to frame it again, Federal Government spending is divided into
basically three different areas.
There is interest on debt, which we have virtually no control over.
There is the discretionary spending, otherwise known as the
appropriations process, which means every year we spend a certain
amount of money. It is really up to us how much we spend, and it is for
specific programs. The majority of it goes to the defense spending, but
other money goes to education, it goes to environmental issues, it goes
to highways--things for which every year we appropriate, saying we are
going to spend this much. We can change that number arbitrarily from
year to year, and we do.
The third element of Federal spending is called mandatory entitlement
spending. This spending occurs as a matter of law because certain
people have come to certain situations in their life which allows them
to receive a benefit from the Federal Government. They may be veterans
who have served us well; they, therefore, get benefits. They may be
persons of low income who need assistance, especially a child in a low-
income family who needs assistance. They may be a retired citizen who
paid into Social Security, who gets health care under Medicare, or a
low-income person who gets health care under Medicaid, especially
nursing care. These are entitlements. They make up the vast majority of
Federal spending. Discretionary spending only makes up 30 percent of
the Federal accounts, and half of that is defense spending.
Entitlements are also the fastest growing part of the Federal
Government. We know because the baby boom generation is going to
retire, and spending on entitlements, specifically on Social Security,
Medicare, Medicaid, the health care accounts especially, is going to
increase radically over the next generation's 30 years as the baby boom
generation begins to retire. It is estimated today by the Comptroller
General that there is a $44 trillion--that is trillion dollars with a
``T''--$44 trillion unfunded liability, which means we don't know how
we are going to pay for it. The obligation is in place already for the
cost, primarily for health care programs for retired people who are
going to be the baby boom generation.
The practical effect of having that high an obligation out there and
unpaid for is our children are going to have to pay the price. The
practical effect of that is our children and our children's children,
these wonderful young people who work here as pages, when they become
earners and have kids of their own are going to have to pay so much to
pay for programs which are already on the books to support our
generation, the baby boom generation, they are essentially not going to
be able to have as high a quality of life as we have. They are not
going to be as comfortable in sending their kids to college, buying a
car, buying a home, or just doing the day-to-day activities of life
because they are going to have to pay a huge tax burden for our
generation, unless we do something about it.
That is what this bill is about. For the first time in 8 years, the
Federal Government has stepped up and said: We are going try to do
something--the Republican side of the aisle--about this huge burden we
are going to put on our children through entitlement accounts by
addressing those accounts. We have been aggressive on the discretionary
side. We have essentially frozen nondiscretionary spending, but on the
entitlement side it continues to grow at a dramatic rate. This bill is
a step, really
[[Page S14016]]
more than a toe, but putting our whole foot up to our ankle in the
water of trying to control entitlement spending, mandatory spending. It
amounts to almost $40 billion in savings in Federal spending.
If this bill passes, it will reduce the debt of the Federal
Government which will be passed on to our children by $40 billion. That
is a big number. It is a big number in New Hampshire, and I know it is
a big number in the State of every Member of this Senate. In the
context of overall Federal spending, regrettably it is not as big a
number as I would like, but it is still a big step forward on the road
toward fiscal responsibility, and it is the first attempt to do this in
8 years. And this is an important point to stress. This is the only
opportunity any Member of this Senate is going to have in this session
of this Congress to try to control spending, to try to reduce the debt
of the Federal Government.
We are going to hear a lot of talk from the other side saying: Well,
you have a tax relief bill out there which is being reconciled, and it
is twice the size of the spending restraint here. The tax bill isn't
being voted on tonight or tomorrow; the deficit reduction bill is being
voted on tonight or tomorrow. If you want to reduce the deficit, if you
want to reduce the debt of the Federal Government, reduce the costs
that will be passed on to our children and our children's children,
this is your opportunity to do it. If you want to vote against the tax
relief bill, go ahead.
I note as an aside that the tax relief bill has as its major function
commitments to programs which I think have vast support across this
Congress. In fact, I have heard other Members on the other side of the
aisle say: Why aren't we passing a patch to the AMT so 20 million
people do not fall under the alternative minimum tax? That is $30
billion of the tax bill. Why aren't we extending the deductibility of
State and local sales taxes? That is a big chunk of the tax bill. Why
aren't we extending the R&D tax credit, which causes us to create jobs
in this country by giving entrepreneurs an incentive to go out and
invest in R&D?
We are hearing that from the other side of the aisle. The majority of
the items in the tax relief package of $70 billion are items which have
very broad support in this Congress--Democratic and Republican support.
So it is a bit of a straw dog--in fact, it is a very large straw dog,
maybe a Newfoundland straw dog--to claim that extension of the tax bill
for some reason, the majority of which is supported on both sides the
aisle, is somehow reducing the effort on the deficit in this bill.
The two don't have that much relationship, and furthermore the tax
bill already has broad support on the main elements of it. The only
ones at issue are dividends and capital gains, which do not even impact
this year or next year because that part of the tax relief package
doesn't kick in until 2009 or 2010.
This is it, folks. It is your one chance as Members of Congress, as
Members of the Senate, to actually do something about the debt we are
going to pass on to our children. You have an opportunity to reduce
that debt by almost $40 billion.
In addition, I would note, there is a net number, the $40 billion.
There are initiatives in this bill which are fully paid for which
make a lot of sense and which are pretty good policy. We decided to put
them in after we had saved money to pay for them.
For example, the Pell Grant Program is expanded dramatically to low-
income kids. This is a program to encourage low-income children who are
especially interested in math and science to be successful in our
schools. We know it is the seed corn for our productivity and our
competitiveness as a Nation to promote math and science skills.
There is an expansion of Medicaid to low-income children. About 1
million--over 1 million--needy kids today who are low income, who do
not have health coverage will get health coverage.
There are efforts in this bill to assist the people in the gulf
coast, significant efforts. It would be very hard, I would think, if I
were from the gulf coast to vote against this bill because there is a
tremendous amount of funds being focused on the gulf coast, to address
the needs of the gulf coast in the area of education and in the area of
Medicaid. Literally billions of dollars, all paid for.
In addition, there is money for LIHEAP, $1 billion. Those from cold
regions of the country know because of the runup in the price of gas
and oil it will be very hard for a number of low-income families to
make it through the winter. They will have to make some tough choices.
We want to fund the low-income energy assistance program. This bill
does it; it pays for it with spending reductions.
In addition, there is significant and positive welfare reform
language which the Governors are asking for, bipartisan governorship is
asking for, as well as Medicaid reform language--again, with
bipartisan, strong support from the Governors--giving the Governors
more flexibility and allowing them to deliver more service to more low-
income people at less cost.
This bill has a lot of good policy in it as well as saving $40
billion. It is the first and only opportunity--not the first
opportunity because we voted on it a few times--the last opportunity to
cast a vote to save $40 billion and not pass the debt on to our
children.
It is a positive bill. I hope my colleagues will support it.
I yield the floor.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. CONRAD. Mr. President, I thank the chairman for his spirited
defense of this package. He is quite right. There are elements of this
package that are positive. There are elements of this package that at
some point we will adopt. Perhaps we will adopt them this year.
The chairman has left out certain chapters in the book of
reconciliation. Reconciliation was part of this year's budget process.
There are three chapters in the book. The first chapter is the spending
cuts that have now come back from the conference report, deliberations
between the House and the Senate, that cut spending $40 billion over 5
years. That is $8 billion a year when the budget is $2.5 trillion. If
my math is right, that is one three-hundred-fiftieth of the spending
for a year.
But what is left out of the chairman's presentation is the other
chapters of the book. Chapter No. 2 is the tax cuts. He is quite right,
they are not before the Senate today, but they are coming. They are
part of this package. They are part of this book. They are the second
chapter. The second chapter cuts $70 billion of taxes. Put the two
together, a $40 billion spending cut and a $70 billion tax cut, and
guess what. You have increased the deficit, not reduced it.
This is all part of a package. It is part of the budget process,
three chapters that one has to read to reach a conclusion on the
meaning of the book. The third chapter is the one they really do not
want you to read. The third chapter increases the debt of the country
by $781 billion. That is the third chapter. We do not hear them talk
about that chapter at all. There is a reason for that.
If we go back and look at what the President has said--in 2001, when
we enacted his economic program, he said:
[W]e can proceed with tax relief without fear of budget
deficits, even if the economy softens.
Mr. SARBANES. Will the Senator yield?
Mr. CONRAD. I am happy to yield.
Mr. SARBANES. That was in March of 2001. At that time, wasn't the
Federal budget running a surplus?
Mr. CONRAD. The Senator is exactly right. The Senator from Maryland,
a valued member of the Senate Committee on the Budget, remembers very
well the budget was in surplus. In fact, we had a projection from the
administration that we were going to have almost $6 trillion of
surplus.
Mr. SARBANES. So at the time we were running this surplus--and let me
just note, it had taken a lot of work to get out of an earlier deficit
into surplus--and there was some concern expressed that the excessive
tax cuts the President was proposing would throw us into a budget
deficit and we would lose that surplus, the President told us in no
uncertain terms that there was no reason to fear budget deficits; is
that correct?
Mr. CONRAD. The Senator is exactly correct. The President told us
there was no concern about the possibility of budget deficits. In fact,
the Senator may recall this chart provided by the Congressional Budget
Office and the
[[Page S14017]]
Office of Management and Budget of the President that said this was the
range of possible outcomes going forward with the fiscal affairs of the
country. They adopted the midpoint of this range of possible outcomes
showing very dramatic surpluses, all above the line, dramatic surpluses
throughout this entire period coming to 2005.
Look what actually happened. At that time, the worse case scenario
was this bottom line. We can see for the most part it was all in
surplus territory. This is what they said was the best case scenario.
They adopted the middle of the range of possible outcomes.
I can remember very well our Republican friends saying to me: Don't
you understand, Senator, it will be way above this midrange because the
tax cuts will generate greater economic activity and more revenue.
Now we can look back and test that theory and see what happened in
the real world. Here is what happened in the real world: This red line,
it is far below the worst case estimate of what might happen. In fact,
it represents massive deficits, the biggest in our history. That is
what really happened.
Then the President said the next year, in the State of the Union
Address:
. . . Our budget will run a deficit that will be small and
short-term . . .
That was after saying there would not be any deficits. That proved to
be wrong.
Mr. SARBANES. Will the Senator yield?
Mr. CONRAD. I am happy to yield.
Mr. SARBANES. So the previous year the President was saying there
would be no deficit, and a year later, in the face of what obviously
would be a deficit, he said, well, it will be a small and short-term
deficit.
Mr. CONRAD. That is exactly what he stated in 2002, small and short-
term deficit. Now we are able to check that record.
He made that claim in 2002, the first year we were into deficit,
after running surpluses in the years leading up to that.
In 2001, the first year he was in office, the budget from the
previous administration had a surplus. The next year, after his
policies were adopted, we plunged into deficit. Then he told us that
year the deficits were small and short term.
The chart shows what has happened. The next year the deficit got much
worse. In 2003, it was approaching $400 billion. In 2004, the deficits
actually exceeded $400 billion. This year, the deficit is over $300
billion. Of course, much of the Katrina costs have not been included in
this year's deficit because it will be coming next year.
It is very interesting, the President was wrong about saying no
deficits. We saw that in 2002. So in 2002 he said they will be small
and short term. He was wrong again. Instead of small and short term,
they are large and long lasting; in fact, the biggest deficits we have
ever had in the history of the country.
Mr. SARBANES. Will the Senator yield for a question?
Mr. CONRAD. Yes.
Mr. SARBANES. In 4 years, after the President said there would be no
deficits, we have incurred deficits of, according to my quick
calculation, over $1.2 trillion; is that correct?
Mr. CONRAD. The Senator is correct.
If you go to the next step, what we have is a situation that is more
serious even than that. The deficit does not capture the increases in
the debt. The deficit last year was $319 billion. I say ``last year''
because we are now in Federal fiscal year 2006. That started October 1.
So the 2005 deficit ending the end of September, the year ending the
end of September, was $319 billion. But here is how much got added to
the debt: not $319 billion but $551 billion. All of it has to be paid
back.
Of course, as the Senator knows, the big difference between the two
calculations--the deficit and what got added to the debt--the biggest
difference is the money being taken from Social Security to pay other
bills.
Last year, the last Federal fiscal year, $173 billion of Social
Security money was taken to pay for other things. The result is, when
you add that with the deficit and other trust funds that are being
raided--another $59 billion--what got added to the debt was really $551
billion.
If we look back on the relationship between spending and revenue
expressed as a share of gross domestic product--and we do it in that
way because economists tell us that is the best way to make these
comparisons--the red line on this chart is the spending line. You can
see, the spending had come down substantially until we reached the year
2000. Spending had come down each and every year of the Clinton
administration as a share of gross domestic product. Now we have had a
substantial uptick because of defense costs and homeland security,
rebuilding New York.
But look at the revenue line. The revenue line, which was at a peak
when the President came into office--he said this was a record high. He
was right--but look at how the revenue plunged with the President's
policies. Most of this is tax cuts. And the other, of course, is
economic slowdown. The result is, we have opened up a chasm between the
revenue line of the United States and the spending line. We see that
gap going forward, and really at the worst possible time because this
is before the baby boomers retire.
In looking at that, the President told us--the next year, after his
2002 address--in 2003:
[O]ur budget gap is small by historical standards.
So first he told us there would be no deficits. Then he told us the
deficits would be small and short term. Both of those proved to be
wrong. Then he said to us, well, they will be small by historical
standards.
Let's check that assertion because here is what we see: They are not
small by historical standards. In fact, they are the biggest deficits
we have had in the history of the United States. I know the President
likes to say, well, as a share of GDP they are not as big as the
deficits in the 1980s. But that is because he excludes the money he is
taking from Social Security. Back in the 1980s, there was no money to
take from Social Security, or very little. Now there are large amounts
to take from Social Security, and the President is taking it all, every
penny; last year, $173 billion.
Over the next 10 years, under the President's plan, he is going to
take $2.5 trillion of Social Security money and use it to pay for other
things. This is at a time when he says there is a shortfall in Social
Security. Well, he is helping create the shortfall in Social Security
because he is taking the money and using it to pay for other things.
Then the President told us in 2004:
So I can say to you that the deficit will be cut in half
over the next five years.
Let's review. In 2001, he told us there were going to be no deficits.
He was wrong. In 2002, he said it was going to be small and short term.
Wrong again. The next year he told us, in 2003, the deficits were going
to be small by historical standards. Wrong again. They are the largest
deficits we have ever had in dollar terms. And if you measure
appropriately, as a share of GDP, it is as large as the deficits in the
1980s, when you include the money from Social Security that he is
taking to pay for other things.
Now he says he is going to cut the deficit in half over the next 5
years. Well, let's examine that claim. Here is what the President says
is going to happen: The deficit is going to get cut in half over the
next 5 years. But he has really left out a lot of things to make that
assertion. He has left out the war cost past September 30 of this year.
There is nothing in his budget for that. He has left out the money to
fix the alternative minimum tax, the old millionaire's tax that is
rapidly becoming a middle-class tax trap. It costs $700 billion to fix.
He has no money in his budget to do it. And, of course, his Social
Security plan, which is the biggest budget buster of all, he has no
money in his budget to do that.
When you put all those items back in, you see quite a different
picture emerge. In fact, past this 5 years, you see the deficit growing
dramatically. Of course, the biggest reason for that is, the cost of
the President's tax cuts absolutely explodes in the second 5-year
period.
Now, the President told us, back in 2001, how important it was to pay
down the debt. He said at the time:
. . . [M]y budget pays down a record amount of national debt.
We will pay off $2 trillion of debt over the next decade.
That will be the largest debt reduction of any country, ever.
Future generations shouldn't be forced to
[[Page S14018]]
pay back money that we have borrowed. We owe this kind of
responsibility to our children and grandchildren.
So the President, back then, was telling us he was going to pay down
the debt. Well, there is no paydown of debt occurring here. The debt is
exploding. It was $5.7 trillion back in 2001. It is $8 trillion today.
And here is where it is headed: By 2010, under the terms of the budget
that we are discussing, the debt is going to reach $11.3 trillion. So
on this President's watch, the debt will have doubled. All the while,
he was telling us he was going to have maximum paydown of the debt, and
that we owed it to future generations to pay down debt. There is no
paydown of debt going on here. The debt is skyrocketing.
Mr. SARBANES. Will the Senator yield for a question?
Mr. CONRAD. I am happy to yield.
Mr. SARBANES. This reconciliation process really is a package, in
which you have to consider not only the spending cuts but the tax cuts
they are pushing through, as well as the increase in the debt. Am I
correct that this reconciliation package includes raising the debt
limit by some $800 billion?
Mr. CONRAD. The Senator is correct. This package really does have
three chapters. The first chapter is the spending cuts, $40 billion
over 5 years. There is only $8 billion a year in a $2.5 trillion
budget. It is so insignificant. But then the second chapter is cutting
taxes $70 billion, which, if you put the two together, there is no
deficit reduction going on here. They are increasing the deficit. And
the third chapter is extending the debt limit of the United States by
$781 billion.
That is what happens if you read this whole book. It is not a
pleasant ending.
Mr. SARBANES. If the Senator will yield further?
Mr. CONRAD. I am happy to.
Mr. SARBANES. I want to tell the Senator one story. I was in a
shopping center over the weekend, and I saw a bumper sticker on a car.
The bumper sticker said: ``Mr. Bush, we will be forever in your debt.''
Just then, the person whose car that was came along, and I said to
them: What was it you were thinking about that the President has done
when you say we are going to be forever in his debt? I thought it was
for something he had done. The person said: Think about it. I meant
exactly what it says. Mr. Bush, we are going to be forever in your
debt.
Here is the debt, which the Senator from North Dakota is pointing
out. I think the person is right. We are going to be forever in this
debt. This is what is being handed to this generation, the next
generation, and the generation after that.
As the Senator pointed out in the previous chart, they have doubled
the debt over this very short time period.
Mr. CONRAD. They have doubled it. And the amazing thing to me is our
colleagues are out here with a bill that is headlined, ``Deficit
Reduction.''
If you read the fine print and look at their own estimates of what
happens if this budget is finally approved and implemented, here is
what it does to the debt. Anybody see any reduction of deficit here
anywhere? This is taking us from $7.9 trillion of debt at the end of
fiscal year 2005 and it is going to run it up to $11.3 trillion in 5
years. Each and every year, according to their estimates of what their
budget does, the debt of the country is going to increase by $600 to
$700 billion a year. They are out here talking about a deficit
reduction package. Please. Do words have no meaning? Do we make phrases
up in order to fool people? People aren't going to be fooled because
each and every year they are going to be able to see what has happened
under the claims that are being made. Have the deficits been reduced?
Has the debt been reduced? Or is it skyrocketing?
I make the assertion today that if this budget is actually
implemented for the next 5 years, for which it has been approved, at
the end of the time, the debt will be dramatically larger than the debt
today. The kind of stunning result of all this is that our country is
borrowing more and more money, much of it from abroad. I went and
looked at the external debt of the country. It took 42 Presidents--here
are their pictures, all of these Presidents--224 years to run up a
trillion dollars of external debt. In fact, it was $1.01 trillion of
external debt. This President has more than doubled it in 5 years. This
President has run up more debt that is held by foreigners than 42
Presidents did in 224 years. That is a remarkable accomplishment. I
hesitate to call it an accomplishment because accomplishment suggests
something positive. There is nothing positive about it.
The result is, here are the countries to which we owe money. We owe
Japan almost $700 billion. We owe China almost $250 billion. And my
favorite is the Caribbean Banking Centers. We owe them over $100
billion. One would think, in the midst of all this, Congress would want
to actually do something to reduce the deficit.
Mr. SARBANES. Will the Senator yield for a moment?
Mr. CONRAD. Yes.
Mr. SARBANES. Let me go back to this external debt that is being held
outside the country. Isn't it important to understand, as difficult as
the deficit and debt problems are, that when the debt is held
internally, it is Americans owing it to Americans. But when the debt is
being held externally, it means that as a nation, we have to service
this debt which is being held outside of the country. So that amount
becomes a charge, as it were, against our own standard of living; isn't
that correct? Would not our standard of living be lowered as a
consequence of having to meet this external debt-servicing requirement?
Mr. CONRAD. The Senator is exactly right. What is happening now is,
we used to borrow the money largely from ourselves. Now we are
borrowing from abroad. Since the President took over, the debt of the
country has gone from $5.7 trillion to $8 trillion. That is a $2.3
trillion increase. Look at this: The debt has increased by $2.3
trillion, but a trillion of it has come from abroad. Over 40 percent of
the debt that has been increased under this President is coming from
abroad. Again, I go back to the historic record. It took 224 years and
42 Presidents to run up a trillion dollars of debt held abroad. This
President has exceeded that amount in 5 years.
During the President's term, the debt has increased $2.3 trillion, a
trillion of it coming from foreigners.
Mr. SARBANES. Will the Senator yield? I note from his chart, in 2001,
we had $5.7 trillion in debt, of which $1 trillion was held abroad.
Mr. CONRAD. Right.
Mr. SARBANES. So about a sixth, maybe 17 or 18 percent, was being
held abroad.
Mr. CONRAD. That is correct.
Mr. SARBANES. This President has added $2.3 trillion in debt, of
which $1.1 trillion is being held abroad. So there has been a dramatic
shift in who is holding this debt and what that represents in terms of
a burden on our society.
Mr. CONRAD. It is very dramatic. You can see the trend continuing.
Now, when we have a bond auction, about half of the debt is being
bought by foreigners.
Mr. SARBANES. There is a wonderful line in a Tennessee Williams play
where Blanche DuBois says: I have always depended on the kindness of
strangers. It seems to me that is what is happening to the fiscal
situation of the United States. We are becoming increasingly dependent
on foreigners and in particular foreign countries, since this debt now
is being purchased largely by the central banks and not by individual
investors. There has been a dramatic shift in terms of who is holding
our debt. We are becoming increasingly dependent on others for our
fiscal survival. It is a dramatic and deeply concerning development.
Mr. CONRAD. I spoke to the student council leaders of my State. There
were 900 to 1,000 of them in the room. I pointed out this fact about
more and more of our debt being held externally. I asked them: How many
of you think this is a sign of strength and how many think it is a sign
of weakness? Some people say this is a sign of strength that people
will loan us this amount of money. And I would say 98.9 percent of the
students said they saw it as a sign of weakness, not a sign of
strength. Maybe one reason is they realize they are the ones who will
have to pay this bill.
Now we have this bill before us. Here is the total spending we are
going to do over the next 5 years--$14.3 trillion. Our friends come
here with $40 billion of spending cuts. That is one three-
[[Page S14019]]
hundredth, less than one three-hundredth, in fact, one three-hundred-
fiftieth of the spending that is going to occur over the next 5 years,
one three-hundred-fiftieth of the spending. Of course, it is going to
be completely topped by the tax cut that they are proposing, a tax cut
of $70 billion that is going to occur. It is interesting. Why do we
have this package before us? Here is what the chairman of the Ways and
Means Committee said in the House. He told a group of lobbyists that
the spending cuts are necessary to make room for tax cuts. The spending
cuts are $40 billion over 5 years. The tax cuts in the Senate are $70
billion. In the House, the tax cuts are even bigger. In the House, the
tax cuts over 5 years are $95 billion.
Some people have said to us: Senator, who knows what is going to
happen in 5 years? How about this next year? What is the comparison in
this package between the spending cuts and the tax cuts? Here you have
it. In the Senate package, the spending cuts are $5 billion for the
year and a $2.5 trillion budget. That is one five-hundredth of the
spending. And the tax cuts are $11 billion. So in the first year, they
are $6 billion under water. They are adding to the deficit, adding to
the debt by $6 billion, not cutting it as they claim here in their
speeches. But when you put the whole package together, they are
increasing the deficit.
If you look at the House package and their proposed tax cuts, it's
much worse. Five billion dollars of spending cuts, $21 billion in tax
cuts in the first year. So they are adding to the deficit by $16
billion in the first year alone, adding to the debt.
(Mr. Talent assumed the Chair.)
Mr. SARBANES. Will the Senator yield for a question on that chart?
Mr. CONRAD. I am happy to.
Mr. SARBANES. Is it not also important to ask the question, who is
being affected by the spending cuts and who is benefitting from the tax
cuts, because that gives you a sense of what the priorities are? It is
my perception that the spending cuts are affecting those who have
little--working people, or people in difficult circumstances, such as
young people trying to get a college education. The tax cuts for which
these spending cuts are being imposed--as the chairman of the House
Ways and Means Committee said, to make room for them--are going
primarily to benefit those at the upper end of the income and wealth
scale. So aren't those the priorities that are being set here? People
have to make the connection. They say we are doing the spending cuts to
reduce the deficit. Of course, then they admit they are trying to hold
the deficit down through spending cuts in order to make room for the
tax cuts.
So you have to ask, who is being hit by the spending cuts? Who is
getting the benefit of the tax cuts? Those priorities, it seems to me,
are standing completely on their heads. They are just the wrong set of
priorities. We have to make that connection, don't we, to understand
what is happening?
Mr. CONRAD. We do. I have in my hand a report from the Center on
Budget Policy Priorities, a group the Senator knows well, a very well
respected group in this town. This is the headline: ``Budget Conference
Agreement Contains Substantial Cuts Aimed at Low-Income Families and
Individuals.''
One of the points they make is that this budget agreement increases
the copayment and premiums for those who are on Medicaid. Those are the
least fortunate among us. They say:
A large body of research has found that such cost-sharing
increases are likely to lead many low-income Medicaid
patients to forego various health care services and
medications or not to enroll in Medicaid at all.
Second, it provides for benefit reductions. They go on to report that
the conference report retains about a third of the House-passed cuts
that, for many Medicaid beneficiaries, would eliminate the Federal
standards which assure that they receive comprehensive health care
coverage.
It goes on. Some of the cuts are for, stunningly enough, child
support enforcement. So they are cutting funds for child support
enforcement. The CBO estimates show the conference report includes a
billion and a half in cuts in Federal funding for child support
enforcement efforts. That is funding that States use to track down
absent parents, for child support orders, and to collect and distribute
child support. The Congressional Budget Office has estimated that this
loss in Federal child support funding will result in child support
going uncollected over the next 5 years of $2.9 billion.
Some of those advocates for this say they are friendly to families.
What is friendly about letting deadbeat dads escape their
responsibilities to their kids and their families? That is part of what
is done here. If this package were really reducing the deficit, that
would be one thing. It doesn't reduce the deficit. This package, when
you include the tax cuts, dramatically increases the deficit. When you
look at this package, not only does it cut child support enforcement
and Medicaid for those who are the lowest income among us, it also
badly underfunds child care because also buried in the package is
reform of welfare.
The Congressional Budget Office estimates that it would cost $8.4
billion for the States to meet the new work requirements. Only a
billion dollars is provided. So if we are going to have these people go
to work, one of the things that happens is the cost of childcare goes
up. The cost of childcare goes up by $8.4 billion, and they short-
funded it by $7.4 billion. We all know who gets the benefit of the tax
cut. The tax cuts on the House side go overwhelmingly to the wealthiest
among us. The average tax cut just on the capital gains and dividend
provisions in the House bill provides those earning over a million
dollars a year a $35,000 tax cut.
I don't find this in any religious teaching that I have been exposed
to. But the message is very clear. We take from the least among us to
give to those who have the most among us. That is what this bill does.
On top of that, when you put the whole reconciliation package together,
it increases the deficit, increases the debt, and in chapter 3 expands
the debt of the United States in one fell swoop by $781 billion.
Mr. SARBANES. Will the Senator yield?
Mr. CONRAD. Yes.
Mr. SARBANES. In light of what we previously looked at as to how this
debt is being financed from outside the country, in effect what is
happening is that in order to give tax cuts to very wealthy people, we
are borrowing from Japan, China, Korea, and the Caribbean money
centers, and so forth and so on. That is where we are finding the money
to fund this debt that is being created and run up in order to give tax
cuts to wealthy people, is it not?
Mr. CONRAD. I was speaking to people in my State, and one person in
my audience said: You know, the President says that it is the people's
money and we ought to give it back to the people. Well, that is
absolutely true. This person in the audience said: But it is turning
out that it is the Chinese people's money, the Japanese people's money.
That is whose money we are giving back. We are having to borrow from
them to give it back.
This is a bizarre situation that we are in, but that is what is
happening. Some say, well, if you borrow the money, somehow it will pay
off. Let's make sure that Chairman Greenspan doesn't believe that. He
said this before the Joint Economic Committee:
We should not be cutting taxes by borrowing.
We are borrowing in huge amounts.
This is his statement on restoring the pay-go provisions that we
tried hard to get restored, which say you can have additional tax cuts,
but you ought to pay for them. You can have new spending, but you ought
to pay for it.
He said this on March 2 before the House Budget Committee:
All I am saying is that my general view is I like to see
the tax burden as low as possible. And in that context, I
would like to see tax cuts continued. But as I indicated
earlier, that has got to be, in my judgment, in the context
of a pay-go resolution.
That is what we offered to our colleagues, but they didn't accept it.
Here are the major provisions in this package. It cuts low-income
beneficiaries in Medicaid. It cuts child support. It cuts foster care.
I mean, really, is this the priority of the country to cut child
support enforcement, foster care, and medical help for those who have
the least among us?
It delays Social Security supplementary benefit income payments for
poor, disabled individuals. Now there
[[Page S14020]]
are new work requirements imposing unfunded mandates on the States.
Mr. President, I think these are the wrong priorities for the
country. The reconciliation bill unfairly targets Medicaid
beneficiaries. The Senate proposed no increase in cost sharing for
these very low income people. The House insisted on $2.4 billion from
those same very low income people. The conference report included 80
percent of what the House proposed.
Mr. SARBANES. Will the Senator yield for a question?
Mr. CONRAD. Yes, I will be happy to yield.
Mr. SARBANES. The way the Medicaid Program is structured, as I
understand it, is that in order to be a Medicaid beneficiary, in order
to receive Medicaid to meet your health care needs, you have to be
adjudged to be at an income level that is so low it is clear you can
not afford medical care. In order to get Medicaid to begin with, don't
you have to meet that requirement?
Mr. CONRAD. Absolutely. The Senator is correct.
Mr. SARBANES. And now they are proposing to take people who get
Medicaid because their income is so low that they can't meet their
health care needs in any other way, and they are imposing additional
burdens on these Medicaid recipients.
Mr. CONRAD. I say to my colleagues, it is not just in Medicaid. They
are cutting foster care. They are cutting child support enforcement.
You have to ask yourself: What can they be thinking?
The President's 2006 budget cites the child support program
as one of the highest rated block/formula grants of all
reviewed programs government-wide.
This is a program that epitomizes the value of parental
responsibility--increasing family self-sufficiency,
decreasing public assistance use, reducing out-of-wedlock
births and discouraging divorces.
That is what the Center for Law and Social Policy said on November 17
of this year. And we have a bill before us that cuts child support.
One has to wonder, What are they thinking? What are the priorities
that are contained here, priorities that cut the spending $40 billion
by targeting those who are the least fortunate among us--$40 billion
over 5 years. It is only $8 billion a year. The first year it is only
$5 billion of savings in a $2.5 trillion budget. That is one five-
hundredth of the budget, and then they cut the taxes, especially for
the wealthiest among us, much more. So, when you put the two together,
they have increased the deficit, not reduced it; they have increased
the debt, not reduced it at the very time the debt is exploding before
the baby boomers even retire, which will put even more pressure on our
budget.
This is a budget that makes no sense. It makes no sense. I have never
seen this town more disconnected from reality than we are with this
budget.
This bill hurts companies, farmers, and workers, repeals the
antidumping provision, eliminating assistance that benefits U.S.
companies, farmers, and workers who have been targets of unfair and
predatory trade practices.
I conclude as I began. This package does not make sense. When you put
together all of the elements of reconciliation, it increases the
deficit, it increases the debt at the very time the debt has already
been dramatically increased, at the very time we are borrowing more and
more money from abroad to float this boat, and this budget and this
budget plan pushes us down the road to more deficits and more debt, and
they have labeled it deficit reduction, but nothing could be more
misleading.
This is a package, when you put it all together, that increases
deficits and increases debt and at the worst possible time--before the
baby boomers retire--and puts even further pressure on these fiscal
imbalances that are leading us to borrow more and more money from all
around the world.
At some point, we have to stop and we have to get on a firmer fiscal
course. We have to restore fiscal discipline to our country.
I thank the Chair and yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. GREGG. I ask the Senator from Maryland how much time he wishes to
speak?
Mr. SARBANES. Five minutes, at most.
Mr. President, I first thank and commend the very able Senator from
North Dakota for a very powerful presentation and also for his work,
day in and day out, as the ranking member on the Democratic side on the
Budget Committee. I don't think there is anyone in the Senate who
understands the fiscal situation better or has a more perceptive
analysis of what has happened than the very distinguished Senator from
North Dakota. I thank him for his leadership on this issue.
I will be very brief. I simply want to say that this conference
report before us is worse than what the Senate passed, significantly
worse. It will cut crucial assistance to working families, to students,
and to the elderly, amongst others. I think these cuts will move the
Nation in the wrong direction. I particularly disagree with imposing
these cuts on low- and moderate-income Americans, supposedly to bring
our budget deficit under control but actually to make room to give tax
cuts to very wealthy people.
The budget resolution provides for reconciliation protection for both
the spending bill and a tax bill. So to see the impact of the
reconciliation process, one has to take the two together. Although we
only have the spending bill now, the tax bill will follow along as
surely as the night follows the day.
The budget resolution requires almost $40 billion in spending cuts.
The same budget resolution tells the committees to report tax cuts of
$70 billion. So we have a reconciliation process supposedly intended to
reduce the deficit--in fact, they call it the Deficit Reduction Act;
where is George Orwell when we need him?--which, when both the spending
bill and the tax bill are considered, is going to increase the deficit,
not reduce the deficit.
So these spending cuts are being made not to address our budget
deficit, they are being made to make room for tax cuts--the quote from
the chairman of the House Ways and Means Committee was absolutely on
point. This legislation is a clear example of a fiscal policy that
places a higher priority on tax cuts than on funding needed services
and reducing the deficit. This is clearly a misplaced priority,
regrettably one that has characterized this administration.
We have seen this incredible swing in our fiscal position over the
last 5 years. When President Bush came into office, we were projecting,
over the next 10-year period, a surplus in the Federal budget of $5.6
trillion. Today, after a series of excessive tax cuts, we are
projecting a deficit over 10 years of $4.5 trillion. This is a swing in
our fiscal position of $10 trillion in the wrong direction, from a $5.6
trillion projected surplus to a $4.5 trillion projected deficit.
We are risking our fiscal future. We are targeting tax cuts to those
who need them the least and we are cutting programs for those who need
them the most.
This is an incredibly wrong set of priorities. I am very much opposed
to this conference report, and I very much urge my colleagues to reject
this conference report when it comes to a vote.
Mr. President, I yield the floor.
The PRESIDING OFFICER. Who yields time? The Senator from New
Hampshire.
Mr. GREGG. Mr. President, I want to respond briefly to a couple of
the comments that were made, and then I think what we will do--I have
talked with the Senator from North Dakota and he has been very
accommodating--I think we will deem 2 hours off the bill equally
divided as of this evening, which means he gives up 15 minutes and I
give up 45 minutes. That is how negotiations are almost every time we
get together.
A couple points were made. First, that the antidumping language was
taken out. Actually, the antidumping language is still in the bill.
So that item of concern by the Senator from North Dakota has been
addressed, and I would think that that would cause him to vote for the
bill.
The second item was the issue of child support enforcement. Now, the
House bill did have some initiatives in there which the Senate spoke on
relative to a motion to instruct, and the final language came very
close to the Senate position on child enforcement. In fact, essentially
what the bill says is that we are not going to reduce the effort on
child support again. What we are not going to allow States to do,
[[Page S14021]]
however, is game the system where they take Federal funds, use those
Federal funds, claim them to be State funds and then ask for a Federal
match to Federal funds when they should be using State funds. That
sounds a little confusing but the way it works is this: The State has
to match $100 to get $1,000 from the Federal Government. What they will
do is take $100 from the Federal Government--instead of coming up with
$100 from the State, they will say they got their $100 from the Federal
Government and they are going to claim it is a State $100 and then they
are going to match and then they ask for another $1,000. Well, that is
gaming the system and it is not appropriate. I think there is general
agreement that that is bad policy.
In fact, what the bill does in the area of child support is increase
child support under the current TANF laws. There is welfare reform in
this bill, and it is pretty positive in the area of child support, in
expanding child support. So I think that, again, there is positive
child support language in here. Some of the language which was referred
to is reflective of the way the original House bill was but is not
reflective of the conference. The same is true for the foster care
area. To the extent foster care is addressed, it is addressed in a very
reasonable way, dealing with Federal-eligible children who are living
with unlicensed relatives in another ineligible setting or who have not
yet entered foster care. So basically, again, there is an issue of
gaming the system by the States, but it does not impact--and in fact,
again, this bill specifically addresses, in a positive way, the foster
care issue.
So those three items were raised. There were a lot more which were
raised, but those three items need to be addressed. More importantly,
on a broader scale, this bill, rather than, in my opinion, impacting
low-income individuals in a negative way, actually has a pretty
positive impact on a lot of low-income accounts. As was mentioned
earlier, there is a very large expansion of the Pell grant program for
low-income students. There is a very large expansion of something
called the SMART Program for low-income students who are going to
participate in math and science. There is a significant expansion of
Medicaid assistance. Over a million children will be picked up under
this bill. The Medicaid proposals which are in this bill will basically
protect the integrity of the system so that it can be expanded rather
than be gamed by people who spend down inappropriately and basically
pass their burdens on to the Federal taxpayer when they can actually
afford some of the costs of their nursing home care, and it will give
the State Governors much more flexibility.
That is why I believe it was the Governor of Virginia, Governor
Warner, who came out strongly for the flexibility language and the
spend-down language because, and I believe I am representing this
correctly, he saw this as a positive step to be able to deliver more
child care to more kids who are low income by having more flexibility
and doing it with less of an increase in dollars.
Remember, we are not talking about cutting anything in Medicaid.
Medicaid will spend $1.2 trillion during this 5-year window. It will
grow at 40 percent. We are talking about a $5 billion cut on a $1.2
trillion base. Essentially, it does not even show up if one does a
chart--because the lines are so close together--as being a significant
reduction in the Medicaid accounts.
What is important about Medicaid is the policy that comes with that
proposal, which policy specifically will give the Governors what they
have asked for in a bipartisan way. They came to the Congress and said:
This is what we would like to deliver this program more effectively to
more people. This bill carries that type of language with it and that
is the way we should approach this. So it is a good bill relative to
low-income individuals, especially those on Medicaid and those wanting
to go to college.
There are initiatives in here which will benefit those people and be
positive. But it is also a good bill for all Americans. The idea that
we are going to actually, if we pass this bill, reduce the debt by $40
billion is a pretty good idea. Most Americans would like to see the
Federal debt go down, and they would like to see us do something to
discipline Federal spending in some way, and this is not a dramatic
way.
The Senator from North Dakota held up a chart to point out that it
was not dramatic. He made our case for us. One cannot say all of these
things are egregious and then hold up a chart that says there is $14
trillion of spending that is going to occur in the next 5 years and
only $40 billion of cuts and look how small that cut is--it is not a
cut but a reduction in rate of growth--compared to all the spending
that is going on, so it is not relevant, and then turn around and say
but the $40 billion is inappropriate because it does too much.
Well, it does not do too much. It is a step forward. It has some
policy which will hopefully drive the outyears in a very positive way,
give the Governors more flexibility in the Medicare area, do a number
of things in a number of other accounts which will be positive. As a
result, most importantly, we will have for the first time put not our
toes but at least up to our ankles in the waters of trying to put some
fiscal responsibility into the area of mandatory and entitlement
spending, which is the single largest driver of our deficits and our
outyear problems relative to being able to pay the cost of the Federal
Government.
So I certainly hope we will pass this bill because it is the
responsible thing to do in my view.
I ask unanimous consent that we deem 2 hours have been used on the
bill and that those 2 hours would be equally divided between the
parties.
The PRESIDING OFFICER. Is there objection?
Mr. CONRAD. Mr. President, I would like 1 minute to respond to two
points that were made and then I would be happy to agree.
The PRESIDING OFFICER. The Senator is recognized.
Mr. GREGG. I will reserve until the Senator has used his 1 minute,
which I hope the Chair will discipline very precisely.
Mr. CONRAD. Mr. President, on the question of foster care, the bill
includes $343 million in net cuts in foster care funding, including two
cuts that will make it harder for some States to provide federally
funded foster care benefits to certain grandparents who are raising
their grandchildren. That is not the right priority for the country.
On the question of child support enforcement, the Congressional
Budget Office estimates show the conference report includes $1.5
billion cut in Federal funding for child support enforcement efforts
over the next 5 years. This is funding that States use to track down
absent parents, establish legally enforceable child support orders and
collect and distribute child support owed to families.
CBO has estimated that this loss in Federal child support funding
will result in $2.9 billion in child support going uncollected over the
next 5 years. These cuts are smaller than in the House bill. It will
nevertheless take billions of dollars out of the pockets of mothers and
children who are owed child support.
This report goes on to say the conference agreement also contains
some modest improvements in child support but the cuts in Federal
support for the program and the associated loss of child support
collections far outweigh the very modest benefits that some families
would see as a result of a few improvements.
I ask unanimous consent that this report from the Center on Budget
and Policy priorities be printed in the Record after my statement.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1).
Mr. GREGG. Mr. President, I renew my request.
The PRESIDING OFFICER. Is there objection?
Mr. CONRAD. I reserve the right to object for another 30 seconds. On
the Byrd antidumping proposal, the Senator is correct that the repeal
is not immediate but the repeal is still in the bill. It is postponed
by 2 years. So I say on these issues we have a difference of position.
I think this goes in the wrong direction. I think it expresses the
wrong priorities for the country. Most seriously to me the whole
reconciliation package increases the deficit and increases the debt. We
ought to be doing precisely the opposite.
[[Page S14022]]
Exhibit 1
[From the Center on Budget and Policy Priorities, Dec. 18, 2005]
Budget Conference Agreement Contains Substantial Cuts Aimed at Low-
Income Families and Individuals
(By Edwin Park, Sharon Parrott, and Robert Greenstein)
Some are claiming that the conference agreement on the
budget reconciliation bill is closer to the Senate-passed
bill in the low-income area than to the House bill and does
not harm low-income Americans to any significant degree.
While some low-income cuts in the House bill have been
dropped, the conference agreement contains numerous cuts in
various low-income areas--including Medicaid--that are much
closer to those in the House-passed bill than to the
provisions of the Senate bill.
Taken as a whole, the provisions in the conference
agreement would cause considerable hardship among low-income
families and people who are elderly or have disabilities.
This is due in no small part to action by the conferees to
shield certain powerful special interests--principally
pharmaceutical companies and the managed care industry--and
to extract deeper savings from low-income families instead.
MEDICAID
The CBO estimates show that conference agreement retains
the majority of the Medicaid cuts contained in the House-
passed bill that directly affect low-income beneficiaries.
According to the preliminary estimates issued by the
Congressional Budget Office (no legislative language is yet
available), the reconciliation conference report achieves
much of its Medicaid savings by retaining a number of
provisions in the House-passed reconciliation bill that would
require low-income Medicaid beneficiaries to pay more out-of-
pocket for health care or reduce the health care services for
which many beneficiaries are covered. The conference report
forgoes the Senate reconciliation bill's more balanced
approach; the Senate had avoided changes that would harm low-
income beneficiaries by achieving larger savings in the area
of Medicaid prescription drug pricing and by reducing
excessive payments made to Medicare managed care plans. Key
aspects of the Medicaid component of the conference report
include the following:
Increases in co-payments and premiums. The conference
report leaves largely intact the House-passed cuts that would
allow states to increase substantially the co-payments that
many Medicaid beneficiaries are required to pay to access
health care services and medications, as well as the premiums
they can be charged to enroll in Medicaid in the first place.
The cuts in the cost-sharing area in the conference report
(i.e., the cuts resulting from increases in co-payments and
premiums) are 80 percent of the size of the House-passed cuts
in this area over five years, and 90 percent the size of the
House cuts over ten years. A large body of research has
found--and CBO has concluded--that such cost-sharing
increases are likely to lead many low-income Medicaid
patients to forgo various health care services and
medications or not to enroll in Medicaid at all.
Altogether, the conference report includes cuts related to
co-payments and premiums that total $1.9 billion over five
years and $10.1 billion over ten years (as compared to $2.4
billion over five years and $11.2 billion over ten years in
the House-passed reconciliation bill). The Senate bill
included no increases in co-payments and premiums.
Benefit reductions. The conference report retains about
one-third of the House-passed cuts that, for many Medicaid
beneficiaries, would eliminate the federal standards which
assure that they receive comprehensive health care coverage.
Under the House bill, many beneficiaries could lose access to
various medically necessary services, possibly including
therapy services, personal care, eyeglasses, hearing aids,
and crutches. The conference agreement includes benefit cuts
of $1.3 billion over five years and $6.3 billion over ten
years from a scaling back of the health care benefits that
Medicaid covers. (The House bill contained $4 billion in
benefit cuts over five years and $18.5 billion over ten
years. The Senate included no reductions in benefit coverage
in its bill.)
Overly restrictive asset transfer rules for people who need
nursing home care. The conference report appears both to
adopt all of the provisions in the House-passed bill to
restrict eligibility for Medicaid long-term care services and
to contain additional provisions not included in the House
bill that would yield further savings in this area. Under the
conference agreement, the savings in this area would be 11
percent larger than under the House bill, and seven times
larger than under the Senate bill.
Preventing more-affluent individuals from sheltering assets
that could be used to pay for their long-term care is a
laudable goal. The provisions in the conference agreement,
however, appear to go well beyond that. For example, one
provision of the House bill that appears to have been
retained in the conference report would penalize many non-
affluent individuals who make modest gifts to relatives or
contributions to charity, and then experience an unexpected
decline in their health several years later that causes them
to need long-term care. The conference agreement includes
Medicaid reductions in this area of $2.4 billion over five
years and $6.4 billion over ten years (higher than the $2.2
billion over five years and $5.8 billion over ten years in
the House-passed bill). The Senate's more targeted and
carefully designed provisions in this area would have
produced savings of $335 million over five years and $890
million over ten years.
The conference report's health care provisions also move
toward the House bill in another respect: they cater to
powerful special interests--in particular, the pharmaceutical
and managed care industries--at the expense of low-income
beneficiaries.
No increase in drug manufacturer rebates. The Senate bill
avoided harmful co-payment and premium increases and benefit
reductions in part because it achieved much of its Medicaid
savings by restraining the amounts that Medicaid pays for
prescription drugs. To ensure that Medicaid gets the best
prescription drug prices, the Senate bill increased the
minimum rebates that drug manufacturers are required to pay
the Medicaid program for drugs dispensed to Medicaid
beneficiaries. The Senate bill also applied the rebates to
drugs provided to Medicaid beneficiaries through managed care
plans. The Senate drug rebate provisions produced Medicaid
savings of $3.9 billion over five years and $10.5 billion
over ten years, which helped the Senate reach its savings
target without harming low-income beneficiaries.
In a victory for the powerful pharmaceutical industry, the
conference agreement fails to include the Senate's
significant rebate provisions. The conference agreement
includes only two minor provisions related to drug rebates
already included in both the House-passed and Senate-passed
bills; these provisions generate savings of only $220 million
over five years and $720 million over ten years.
No elimination of the Medicare stabilization fund. The
conference report also protects Medicare managed care plans.
It drops a Senate provision that would have eliminated a
wasteful $10 billion slush fund to encourage participation in
Medicare by regional Preferred Provider Organizations (PPOs).
The Medicare Payment Advisory Commission (MedPAC)--
the official, independent advisory body to Congress on
Medicare payment policy--recommended this summer, in a
nearly unanimous vote, that this fund be eliminated
because it is unnecessary and unwarranted and provides an
unfair competitive advantage to PPOs over traditional
Medicare fee-for-service and other managed care plans such
as Medicare HMOs. Nevertheless, the conference agreement
leaves this fund fully intact, forgoing $5.4 billion in
savings over five years (and twice that over ten years)
that were contained in the Senate bill. The removal of
this Senate provision likely was done at the behest of the
managed care industry and the Administration, which
threatened to veto the budget bill if the Senate provision
was included in the final conference agreement.
Partially gutting another provision to curb overpayments to
managed care plans. There is near-universal agreement among
analysts that the current Medicare payment structure provides
excessive payments to managed care plans, and the
Administration announced earlier this year that it would act
administratively to eliminate a feature of the payment
formula that is responsible for a significant volume of
excessive payments. MedPAC endorsed the Administration's
action, and the Senate reconciliation bill wrote the
Administration's planned administrative action into law, for
a savings of $6.5 billion over five years and $26 billion
over ten years, according to CBO. Under the conference
agreement, however, the ten-year savings have been lowered
from $26 billion to $4.1 billion, according to the CBO
estimates. While the conference report language is not yet
available, it appears that the conference agreement is
written so the part of the Medicare payment formula that
would be reformed would revert to its current, problematic
status after five years, and after that time, managed care
plans would again receive the overpayments this provision is
supposed to curb.
In short, in place of the Senate's reasonable savings from
eliminating the wasteful Medicare stabilization fund and
lowering the prices that Medicaid pays pharmaceutical
companies for prescription drugs, the conference agreement
includes a hefty share of the House Medicaid provisions on
cost-sharing and benefits, which the research indicates are
likely to reduce the affordability and accessibility of
health care for large numbers of low-income patients.
LOW-INCOME PROGRAMS OUTSIDE THE HEALTH AREA
The Senate reconciliation bill did not include cuts in any
low-income program other than Medicaid, and did not seek to
rewrite the welfare rules in a reconciliation bill. The
conference agreement, by contrast, includes sizeable cuts in
child support enforcement, SSI, and foster care, as well as
highly controversial TANF provisions that would impose
expensive, unfunded work requirements on states and result in
the loss of child care for many low-income working families
not receiving TANF cash assistance.
1. Child Support Enforcement: The CBO estimates show that
the conference report includes a $1.5 billion cut in federal
funding for child support enforcement efforts over the next
five years and a $4.9 billion cut over the next ten years.
This is funding that states use to track down absent parents,
establish legally enforceable child support orders, and
collect and distribute child support owed to families, CBO
has estimated that this loss in federal child support funding
will result in
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$2.9 billion in child support going uncollected over the next
five years, and $8.4 billion going uncollected over the next
ten years. These cuts are smaller than those in the House
bill, but will nevertheless take billions of dollars out of
the pockets of mothers and children who are owed child
support. (The conference agreement also contains some modest
improvements in the child support program. The cuts in
federal support for the program and the associated loss of
child support collections, however, far outweigh the very
modest benefits that some families would see as a result of a
few improvements in other child support provisions.)
2. TANF: Despite representing the largest change in welfare
policy since 1996, the nature of the TANF provisions in the
conference report has been a closely guarded secret. CBO
analyses show, however, that the conference agreement would
impose very expensive new work requirements on states.
Moreover, in a major change in policy that goes well beyond
anything in any prior TANF bill, including the House budget
reconciliation bill, the conference agreement would remove
from states the flexibility they now have to apply
different types of work-related requirements to people
receiving assistance funded entirely with state
``maintenance of effort'' funds. (These are state funds
that a state must expend to draw down federal TANF funds.)
CBO estimates that if states attempt to meet the work
requirements in the conference agreement by placing more
parents in welfare-to-work programs (rather than by reducing
the number of poor families receiving assistance at all), the
cost to states would be $8.4 billion over the next five
years, which is slightly more than the cost would have been
under the House reconciliation bill. CBO projects that some
states would not meet the new mandates and would face fiscal
penalties as a consequence.
It is widely known that there was a concerted effort in the
conference to redesign the House bill's work requirements so
that the Congressional Budget Office would conclude that some
states would not be able to meet the requirements and thus
would be subject to fiscal penalties. This was purposefully
done to get around the ``Byrd rule,'' a procedural rule that
generally prohibits the inclusion in a reconciliation bill of
changes in policy that do not significantly reduce or
increase federal costs or revenues. The goal here appears to
have been to secure an estimate from CBO that the changes in
the work requirements would, in fact, save money for the
federal Treasury and to do so by making the new requirements
sufficiently unrealistic that some states would not be able
to meet them. (It remains unclear whether the TANF work
provisions in the conference agreement succeed in meeting the
Byrd rule test.)
3. Child Care: The conference report includes $1 billion in
additional funding for child care, which is $7.4 billion less
than CBO estimates to be the cost to states of meeting the
new work requirements, and more than $11 billion less than
what states will need both to meet the new work requirements
and to ensure that their current child care programs for low-
income working families not on TANF do not have to be scaled
back as a result of the impact of inflation on child care
costs. This means the conference agreement includes no new
funding for states to help meet the intensified work
requirements that will be imposed upon them or to provide
child care for children whose parents will newly be placed in
work programs.
To come up with the funds to meet the new work requirements
and provide child care for the children of mothers placed in
these excluded work programs, many states will have little
alternative but to scale back child care slots for working
poor families not on welfare and shift those slots to TANF
families instead. As a result of the under-funding of child
care in the conference agreement, we estimate that by 2010,
some 255,000 fewer children in low-income working families
not on TANF will receive child care assistance than received
such assistance in 2004.
The $1 billion in child care funding in the conference
agreement is higher than the $500 million in the House-passed
bill. It is $5 billion lower, however, than the amount
included for child care in the bipartisan TANF legislation
approved by the Senate Finance Committee earlier this year.
4. SSI: Under the conference agreement, poor individuals
with disabilities who have waited months for the Social
Security Administration to review and approve their
applications for SSI (a common occurrence in SSI), and
consequently are owed more than three months of back
benefits, would have to receive these benefits in
installments that could stretch out over the course of a
year. The first installment would include no more than three
months of back benefits. By contrast, under current law, most
such disabled individuals receive their back benefits in a
single lump sum payment. Individuals owed more than 12
months' worth of benefits receive benefits in installments,
but the first installment is equal to 12 months of benefits.
This provision of the conference agreement means many poor
SSI recipients with disabilities would have to wait longer
for benefits they are owed, making it more difficult for them
to pay off arrears in bills that have built up during the
period when they were unable to work due to their disability
and were not receiving monthly SSI benefits because SSA was
still processing their application. Under the conference
agreement, some poor individuals with disabilities could die
before receiving the full back benefits they are owed. (With
two minor exceptions, if a person dies before being paid SSI
benefits they are owed, the SSI benefits are not paid to the
person's relatives or estate. These back benefits are not
even available to help family members pay for funeral
costs.)
This SSI provision is largely a budget gimmick; it would
make most of the affected beneficiaries wait longer for the
benefits they are owed, thereby shifting costs from one year
to the next and providing savings in the five-year budget
''window.'' (Some ``true'' savings apparently would be
achieved, as well, as a result of some individuals dying
before receiving the back benefits they are owed.) CBO
estimates the savings from this provision at $425 million
over five years. This is an example of a budget gimmick with
a real human cost, since many impoverished individuals with
disabilities will face a more difficult time making ends meet
as a result of the delays they will be forced to experience
in receiving SSI payments that they are owed.
5. Foster Care: The bill includes $343 million in net cuts
in foster care funding, including two cuts that will make it
harder for some states to provide federally funded foster
care benefits to certain grandparents who are raising their
grandchildren.
The PRESIDING OFFICER. The Senator from New Hampshire has the floor.
He repeats his unanimous consent request. Without objection, it is so
ordered.
The Senator from New Hampshire.
Mr. GREGG. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. GREGG. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. JOHNSON. Mr. President, I express my concerns about the fiscal
year 2006 Budget Reconciliation Conference Report currently pending in
the Senate. I intend to vote against the conference report because I
believe it sets the wrong budget priorities for our nation.
This omnibus spending reduction bill mandates a five-year spending
cut of $39.7 billion. The vast majority of the cuts enacted as a
consequence of this conference report will impact poor and middle-class
Americans.
While the budget reconciliation pulls out all the stops to protect
the interests of insurance companies and drug manufacturers, the
package makes several changes to the Medicaid program that will have a
devastating impact on the health of the most vulnerable individuals in
South Dakota. Low-income Medicaid recipients will see cuts in health
coverage while at the same time facing increased cost-sharing through
the program. Increased copayments and premiums for our poorest citizens
will likely mean that many individuals will forgo necessary care until
emergency services are needed, costing our health system a great deal
more in the long run.
The bill also establishes very strict asset rules for seniors
applying for Medicaid coverage for their nursing home care. While some
adjustments to the asset tests are needed, this package goes too far
and will negatively impact many average to low income earners in their
final years. Finally, the payment methodology changes proposed for
pharmacies are shortsighted and will reduce access to Medicaid coverage
in the future. The conference package reduces reimbursements paid to
pharmacies for generic drugs by approximately 40 percent by 2007. Under
those circumstances, community pharmacies will have a hard time making
ends meet and will lose the incentive to provide this service entirely.
I have recently received a letter signed by 142 national
organizations expressing their concerns about the Medicaid provisions
in this conference report. They understand the devastating impact these
health care cuts will have on the poor and elderly.
The conference report also slashes funding for vital farm programs.
In fact, commodity programs face the brunt of the agriculture cuts in
the bill, and will be reduced by $1.7 billion over the next 5 years. In
addition, the conference report cuts $934 million from conservation
programs, $620 million from research, and $400 million from rural
development programs.
The farm bill that was signed into law by President Bush represented
a contract with rural America. Farmers have based their own financial
decisions on the provisions and funding
[[Page S14024]]
that were promised in that bill. To now make changes to the farm bill
by enacting steep cuts to commodity and conservation programs
undermines our family farmers and ranchers and demonstrates the
administration's lack of commitment to rural economic development.
This conference report also contains $12.7 billion in cuts to the
federal student loan program. Unfortunately, this marks the largest cut
to student financial aid programs in history. While the legislation
does contain funding for the creation of the new Academic
Competitiveness Grants and the National Science and Mathematics Access
to Retain Talent Grants, National SMART Grants, the Senate-passed
budget reconciliation legislation contained more than $8 billion in new
need-based assistance to supplement Pell Grants.
The Academic Competitiveness Grants Program would limit aid to a
small subset of financially eligible students that completed a rigorous
secondary school program to be defined by the Secretary of Education. I
support students taking a rigorous high school curriculum, but this
would be the first time the Federal Government links need-based
financial aid to the academic curriculum available to a student.
The National SMART Grants Program would limit aid to only those
students choosing to major in math, science, technology, engineering,
computer science, or high-need foreign language. While we all want more
students to study math and sciences, we also need to find additional
need-based aid for students that choose other important academic
fields.
Finally, this will be the fourth year in a row that Congress has
failed to increase the maximum Pell Grant award from $4,050.
The Republican leadership has argued that these cuts are a necessary
step toward restoring fiscal discipline. However, when these cuts are
paired with the tax reconciliation bill, they will actually cause an
increase in the national debt. Leaders in Congress have made it clear
that after the completion of the omnibus spending bill, Congress will
consider the extension of investment tax breaks geared
disproportionately toward the super rich with incomes in excess of
$200,000 annually. Correspondingly, the estimated cost from these tax
cuts to the Treasury and the American public far outweigh the savings
forecast from the omnibus spending bill. A key intent of the
reconciliation process is to reign in the governmental spending or to
move through the Congress changes to mandatory domestic programs.
The majority intends to pervert this process by using the omnibus
spending bill as a device to free up room in the budget for costly tax
cuts primarily geared toward the wealthiest two percent of taxpayers.
The end result is that future generations will be saddled with higher
borrowing costs and lower economic growth in order to pay off the
national debt charges run up by the fiscally irresponsible tax cuts
pushed by this Congress. This vote is not for fiscal discipline and
reduced deficits. Instead, those pushing through today's spending cut
bill are doing so to make room for further tax cuts and billions more
to the national debt.
Mr. President, I recognize we must get our fiscal house in order.
However, I do not believe that budget cuts should come at the expense
of ordinary people and struggling family farmers when huge
agribusinesses continue to reap millions without effective payment caps
in place, and tax cuts for multimillionaires are being preserved. The
priorities set forth in this conference report are wrong; I will vote
against the conference report and urge my colleagues to do the same.
____________________