[Congressional Record Volume 152, Number 31 (Monday, March 13, 2006)]
[Senate]
[Pages S1987-S1996]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR
2007
The PRESIDENT pro tempore. Under the previous order, the Senate will
proceed to consideration of the budget resolution, which the clerk will
report.
The assistant legislative clerk read as follows:
A resolution (S. Con. Res. 83) setting forth the
congressional budget for the United States Government for
fiscal year 2007, and including the appropriate budgetary
levels for fiscal years 2006 and 2008 through 2011.
The PRESIDENT pro tempore. Under the previous order, the time until
11:30 a.m. shall be equally divided.
The Senator from New Hampshire.
Mr. GREGG. Mr. President, we are now proceeding to the budget?
The PRESIDENT pro tempore. That is correct. The budget is before the
Senate.
Mr. GREGG. I begin by thanking the committee, the committee staff,
both the majority and Democratic side, for the assistance in getting us
to this point. We had a markup last Thursday which was done very
professionally. A lot of issues were raised. A lot of votes were taken.
We were able to complete the budget on a timely schedule pursuant to
the rules of the Senate.
Now we are in the Senate. As everyone knows, under the rules of the
Senate, we have 50 hours on the bill. Then we have what is known as the
vote-arama. The Senator from North Dakota and I have been talking. We
hope
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we can coordinate things so that Members will be comfortable getting
their amendments up and have adequate time and have certainty as to
when their amendments are coming up, and in doing that, hopefully,
actually reduce the vote-arama at the end. And cooperation would be
helpful.
Right off the bat, I thank the Senator from North Dakota and his
staff. They have been extraordinarily cooperative as we moved forward
throughout this process.
Let me ask Members, if Members have an amendment, all on our side,
tell us about it so we can get you a time slot.
On the substance of the bill, the purpose of a budget, of course, is
to be a blueprint for how the Government will spend its money in the
coming year. The year for our Government begins on October 1, 2006. We
are already into the 2006 year, so this is the budget for 2007. It is
important, when we are doing a budget, of course, to be reasonably
realistic about what the opportunities are, the demands are, what the
needs are for saving money, what the tax structure will be in the
country. We have attempted to do that in this budget.
We began, basically, with the President's proposal. He sent up a
budget. Ironically, under the rules of the Congress, the President's
budget has no actual impact on the substance of the process. In fact,
the budget of the Congress is never signed by the President. It is a
document entirely within the Congress. Clearly, the President gives his
thoughts and his guidelines. He is in charge of the executive branch.
We take it seriously.
We have looked at the President's budget and used it as a template
for much of what we have done in this budget, although we have departed
in a few significant ways. I congratulate the President for sending up
a budget that is responsible. He controlled spending on the
discretionary side and the non-Defense accounts. He did make proposals
in the area of entitlement spending which were significant and which
would bring about some restraint in the rate of growth, for example, of
the biggest entitlement, which is Medicare and pensions, and even in
the agricultural area he made some proposals. His budget is a
legitimate and effective document talking about how we should, as a
Government, go forward relative to the spending which we are going to
undertake in the year 2007.
We have, however, marked up the budget a little differently. Our
purpose, honestly, my purpose is to reduce the deficit of the United
States. That is critical. We have a situation facing us as a people and
as a Nation which is unique in our history in that we have this large
generation called the baby boom generation. It is the largest
generation in our history, with 70 million people, about twice the size
of any other generation.
The baby boom generation is headed toward retirement. As they retire,
it will put a huge strain on the operation of the fiscal house of the
United States. That retirement begins in earnest in about the year 2008
and accelerates and peaks in the year 2030. At that point, we have
serious issues relative to how we control our budget, and we should be
focusing on those concerns.
But in the short run, there are things we can do to bring the deficit
under control, and we should do this. This budget attempts to do that.
In fact, this budget will reduce the deficit of the United States in
half over the next 4 years. That is a fairly significant step forward.
As a percentage of gross national product, by the year 2010, we will
actually be down to about 1 percent of gross national product, which
will be well below the historical norm of deficits in this country.
Our deficit in the coming year, however, will be higher, and I will
get into that discussion in a few minutes, but let me go back to this
entitlement question because it is important as we start the discussion
that we frame it in the context of the issues that concern me the most.
We have outstanding at the Federal level, as a result of the coming
retirement of the baby boom generation, an obligation of the Federal
Government which amounts to $65 trillion. That is trillion, with a
``T.'' It is hard to understand what a trillion is. I don't know what
it is. I have heard all sorts of different explanations. I will try to
put it in perspective. If you take all the taxes paid into the Federal
Government since our country was founded, since we began to have taxes
as a Federal Government in 1789, it represents $40 trillion. That is
all taxes ever paid into the Federal Government. If we take the net
worth of everyone in this country--their cars, their houses, their
stock, whatever they own that is an asset, and we add it all up--the
net worth of the American people is $51 trillion. That is the second
blue chart.
The total outstanding debt, therefore, of three major programs--
Medicare, Social Security, and Medicaid--represents $65 trillion. So it
is more than what has been paid in taxes since the beginning of time,
as far as this country is concerned, and it is more than the net worth
of our Nation. It is a staggering figure. That is a 75-year figure. And
it is all driven by the fact that this baby boom generation is so
large, and when it retires it will demand so much in the way of
services.
What is the issue? The issue is, if we have this type of an outyear
liability, we need to do things today to try to structure our house and
get it under control. In the last budget cycle, for the first time in 8
years, we stepped forward as Republicans--I think we had two Democratic
votes--we stepped forward as Republicans and passed what was known as
the reconciliation bill to reduce entitlement spending by $39 billion
over 5 years. Anyone would have thought we were scorching the earth in
passing that bill from the outcry from the other side of the aisle,
that all poor people, all people of need were being thrown out the door
as a result of that reduction. Well, to try to put it in perspective,
it was $39 billion. Actually, within that, the most significant item
was the Medicaid item, which was $5 billion over 5 years, or in that
period of 5 years, the Medicaid system was going to spend $1.2
trillion.
So $5 billion and $1.2 trillion would have meant that Medicaid--which
was going to grow at 40 percent over that 5-year period, after this
scorched-earth policy which we put in place, according to the folks on
the other side of the aisle--Medicaid would still grow at 40 percent
over that 5-year period.
We did not even move it a percentage point. We moved it a fraction of
a percentage point in the rate of growth of Medicaid. But it was a
difficult exercise to get that through this Congress because we got no
Democratic votes--well, we got two, I am sorry. And we had to pass it
here with the Vice President voting for it.
Well, we are now in an election year, and the President sent up a
budget which, in an almost heroic way, he said, even though it is an
election year, we should address some of these entitlement accounts,
with Medicare being the biggest. He suggested $35 billion in savings in
Medicare over the 5-year period. Medicare will spend $2.2 billion over
that period, and it would mean the rate of growth of Medicare, instead
of being 38 percent, would be 35 percent. I believe those are the
numbers. I am not sure of those two numbers, but I think those are the
numbers.
In any event, it became very clear from statements made by my
colleagues on the other side of the aisle they were opposed to that. In
fact, immediately--as soon as the President sent it up--they started
saying Medicare was going to be slashed--of course, it was still going
to grow at 35 percent--and that senior citizens would be harmed. That
drumbeat immediately met it, as it did when the President suggested we
should do something about Social Security. So no progress was made on
that side with that, and, unfortunately, on our side of the aisle there
was also a fair amount of hesitancy on that issue.
I went to the chairmen of the various committees that the President
suggested do these entitlement changes, and they all said they could
not get the votes on their own committees to pass them out because the
committees are ratioed in a way that means if you have one Republican
who opposes it, you cannot pass out these types of things, and in each
committee there was at least one Republican, unfortunately, who opposed
it.
So it became fairly clear to me, regrettably, that a major
reconciliation bill this year, on the side of entitlements--because it
is an election year--was not going to accomplish much
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other than to give people who were not willing to be constructive on
the issue, and wanted to create a political issue, a sort of free shot
at people who were trying to be constructive on the issues,
specifically the President. So we did not put reconciliation
instructions in this bill. But we still are aggressive in the accounts
which we think are important and which will lead to getting us back to
reducing the deficit in half.
What are some of the other structures of this bill that I think are
positive? Well, specifically, in the entitlement accounts--well, let me
step back. In the area of discretionary spending, the President sent up
a number, which was $30 billion over last year's spending. Last year,
we spent about $843 billion on discretionary accounts. Now,
discretionary accounts--for those of you listening who don't understand
these arcane terms we use around here--discretionary accounts are for
spending we do every year which we do not have to do, but we do it
because it involves the necessity obligations of the Government. But it
can be adjusted each year.
Entitlement accounts, which I was talking about before--Medicaid,
Medicare, Social Security--those accounts spend automatically. They do
not adjust every year. If you meet certain conditions of income, of
economic well-being, of health, of experience, you have a right to
certain payments. Those are called entitlements. To control those, you
have to change the law. That is why you have to have a reconciliation
bill.
To control spending, you have to reduce or adjust the spending in
what is known as an appropriations bill as it comes through the
Congress every year. So the Congress has its most significant impact on
discretionary spending in that the budget can set a limit on how much
money can be spent by the Federal Government under these discretionary
accounts.
Now, discretionary accounts would be things such as national defense,
education, and laying out roads in some instances--although that is
pretty much off-budget now--environmental concerns, some health care
accounts.
The President sent up this number, which was $30 billion above last
year. Last year, we spent $843 billion. This year, the President's
number was $870 billion. It was rescored by CBO to be $873 billion.
So we said that is a reasonable number. We are going to hold that
number. That is called the top-line discretionary cap. So all
discretionary spending in the Federal Government will be held at $873
billion under this cap.
What does that mean? That means, essentially, if anybody wants to
come to the floor and spend more money than that, they are going to
have to get 60 votes to do it because they will be violating the budget
discretionary cap. That is an enforcement mechanism we have around
here, and sometimes the 60 votes are here and it gets waived, but,
hopefully, people will be aggressive in protecting this number.
With that number, defense spending goes up, under the President's
proposal, about $28 billion of the $30 billion. And social spending, or
nondefense spending--not all social spending--basically is held flat.
In fact, in some accounts it actually goes down.
We have aligned ourselves with the President's top-line number in our
bill and recognize we need to make some adjustments in the way it was
allocated, although our committee does not do allocations. That is done
by the Appropriations Committee. We have suggested different
allocations than what the President might have used. We put, for
example, an additional $1.5 billion into education. We put an
additional $1.5 billion into health care. We put an additional $2
billion into border security.
If we were the appropriating committee, that is what we would do. But
we do not have control over this. This is entirely a decision made by
the Appropriations Committee. But it is a statement of what the Budget
Committee believed was a good allocation because we are required by law
to allocate, but our allocations have no force of law. The only
allocation that has force of law is, of course, that done by the
chairman of the Appropriations Committee, Senator Cochran of
Mississippi.
So within the discretionary caps we have moved money around. There
will be a lot of amendments that come to this floor over the next week
as we debate this bill that will try to move the money around again. I
would simply note that most of them will be statements of what people
want but will have virtually no impact, even if they are successful in
what people get because, once again, the budget does not control the
allocations. The Appropriations Committee controls the allocations.
Even if the cap were to be lifted, it would be entirely up to the
Appropriations Committee as to where the extra money would go.
But we feel strongly, or at least I feel strongly, and the
Republicans on the Budget Committee--this was reported out of committee
on a party-line vote, as it has been the last few years--we feel
strongly that rationing, controlling, being aggressive in controlling
the discretionary accounts is critical.
Now, that brings me to the second topic. There is a lot of resistance
to that, by the way. You would think that when you are running these
types of deficits that people would be willing to be fiscally
responsible around here, but, believe me, there is a lot of resistance
because in general terms people are always willing to be fiscally
responsible, but when they get specific, they have programs they want
to see increased, which is human nature, I guess.
Within the budget we have an allocation for defense. But what has
happened recently--and this is an issue I have some concerns about--is
that since the war on terrorism has begun, a war we did not ask for but
which we are prosecuting aggressively, and I strongly support the
President's efforts to fight terrorism--we have felt the need--it is an
absolute need, and I do not think it is argued on either side of the
aisle--to make sure we fully support our military in a way that is
appropriate, and especially in a way that those men and women in the
field in Afghanistan, Iraq, and other places have the things they need
to fight effectively.
So what has happened is we have created this new budget process
around here. We have the basic budget process, which is the core, which
comes under the discretionary account, which I have been talking about,
the $873 billion number, of which approximately half will be defense
money. That is shown in green on the chart. That is what we call the
core defense budget, national defense budget. That operates the
national defense system.
But on top of that, as part of the warfighting effort, there has been
an emergency funding bill every year now for 4 years in a row, which
has been very significant. Traditionally, emergencies used to run
about--we would have emergency spending in the Federal Government of
about $16 billion, on the average, throughout the 1990s. They
represented usually disasters that had to be dealt with. Many of them
were farm disasters. Some of them were floods.
Now we are seeing basically a process where emergency spending has
become what I call a shadow budget, but at a minimum, it is an
alternative budgeting process where you essentially have two budgets
around here. You have the budget, which is fairly aggressively
disciplined through points of order, many of which I have put in place,
some of which were put in place with the cooperation of the Senator
from North Dakota, some of which were put in place by my predecessor,
Senator Nickles, and some of which were put in place by Senator
Domenici, the predecessor of Senator Nickles.
But budget points of order lie in order to discipline us on the floor
so the core spending of the Defense Department and other discretionary
accounts is reviewed. It goes to the authorizing committees. It comes
out of the authorizing committees. It comes to the floor and gets
reviewed. If certain things are not appropriate, in some instances a
budget point of order lies against it.
This second budget which we now have around here--and it is an
entirely separate budget. In fact, the average amount spent annually is
about $90 billion, which would run the State of New Hampshire for about
20 years--one emergency budget. So it is a pretty big budget. That
budget has no controls at all. Essentially, that comes up here as an
emergency. It does not go through the authorizing committee. It goes
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through the appropriating committee, which is very effectively led by
the President pro tempore, who is now presiding.
But the fact is, it does not have any of the controls that have
traditionally gone with regular budgeting, and it has become basically
a fact of life. We are not going to get around it. We are going to be
in this war for a while. It is going to be expensive.
So I feel, and there are others who feel--I think the Senator from
North Dakota agrees with me on this--we have to do something to make
sure there is some review of this that puts it more in the camp of
being a traditional budget rather than an extraordinary emergency
budget which has no discipline to it at all.
So in this bill, we essentially pick a number, $90 billion. Now,
historically, the White House was not sending up any number for these
emergencies. In fact, in the years 2003, 2004, 2005, and 2006 they sent
up zero. They assumed no emergency at all. That was a bit of
gamesmanship, in my humble opinion, to be kind.
Last year, we, as a Budget Committee, put in a figure of $50 billion.
So this year they assumed $50 billion. And when I asked the Assistant
Secretary of Defense why they put in $50 billion, they said they did
not put it in. It was in there only because last year the Congress put
it in, and they felt they needed to have it in there in order to
reflect what the Congress wanted last year and they didn't think it had
any relevance at all.
That being the case, what we decided to do this year is take the
average of the last 4 years and put that in as the number because I
want to get a reasonably accurate number so we have some truth in
budgeting. So we put in a number of $90 billion for emergencies that we
are assuming, which is why--if you go back to the first chart--in our
budget the deficit actually exceeds the President's deficit because the
President, in his budget submission, did not have the full cost of the
emergencies which we know are coming up. I believed we should have it
in there, so our budget deficit is projected as higher.
My hope--and I think it is a reasonable hope--is that this will not
go on forever. We are, hopefully, going to start drawing down troops,
in Iraq especially, soon. And the cost of that war will recede.
Obviously, the cost of Katrina, which was a big part of the cost last
year, is already in place. That is pretty well spent out, or has been
put in place--over $100 billion for the Gulf States.
So, hopefully, this number will come down. But we are assuming next
year, to the extent it comes down, it will be about $90 billion. In
that $90 billion we are assuming a budget deficit that is about $40
billion higher than the President's, based on the additional money we
put in for the emergencies.
Now, in order to put a little discipline into this exercise, we also
put in a new point of order. I want to be very forthright about this.
If we go over that $90 billion, there will be a point of order that
will be put in against emergencies. They really should not be called
emergencies because they are known commodities that are coming up here.
They should be called extra budgeting for the war on terrorism.
What we have done is put in a point of order which says if you go
over the $90 billion, there has to be a more serious justification of
why that money is spent, considering the average is $90 billion over
the last 5 years, and it can be raised with a 60-vote point of order to
try to get that discussion going around here. It is a minor attempt--
not a very big one--to try to put some discipline into this exercise.
In addition, because of the fact that I still believe entitlements
are the biggest issue the Federal Government has to face and
recognizing that I was not successful in convincing my colleagues to do
reconciliation this year, if you look at this chart, you will see the
cost of entitlements going through the roof, especially Medicare. If
you take Medicare, Medicaid, and Social Security and combine them, we
will spend more in 2030 than we spend today on the entire Federal
Government. They keep going up. Basically we would have to radically
increase taxes on working Americans beginning in about 2015 and ratchet
up dramatically by the year 2030 to remain solvent, well over
historical norms, if we are not going to do something about
entitlements before then.
In order to address that, I have asked for a new point of order. I
didn't ask for it. This idea came from Mr. Leavitt, the Secretary of
Health and Human Services. He suggested we put in place a tree which
essentially says that if Medicare, which is supposed to be an insurance
program, everybody goes to work and they get a Medicare insurance tax,
it is supposed to accumulate and you are supposed to be able to pay for
your retirement health care through the insurance tax. Parts of
Medicare don't have the insurance. Part B, Part D are a little
different, but the basic Part A is supposed to be fully insured by
then. If the Medicare accounts dip into the general fund--and they
shouldn't be dipping into the general fund at all--for more than 45
percent of the cost of Medicare so they are basically not an insurance
account anymore, they are basically a general fund account, which means
that the general taxpayer is paying them twice--they are paying at the
workplace, and then they are paying them out of the general fund--then
at that point, if the Medicare trustees tell us that is going to happen
for 2 years in a row, it is going to be more than 45 percent in 1 year
and more than 45 percent the next year, then a point of order arises
which says we need 60 votes to spend money on these entitlements, new
money. The idea is to simply generate the discussion necessary to get
some constructive activity around here on the issue of how we control
spending in light of projected deficits caused by the baby boom
generation retirement.
There is going to be a lot of discussion today about tax policy. It
is important to understand our view of tax policy. Obviously, there are
two ways you address the deficit. You address it through spending and
through revenues. I take the basic view that we are not an undertaxed
society. I think Americans pay a lot of taxes. Whether they get what
they deserve for what they pay in taxes, I am not so sure, but they
certainly pay a lot of taxes. We will see charts from the other side of
the aisle--I can't count how many times I have seen these charts, but
we will see charts coming from the other side of the aisle which will
say that revenues have dropped precipitously since President Clinton
was President and that they have only started to recover incrementally
in the last few years. The representation will be made that the
majority of this drop is a function of cutting taxes which was put in
place by President Bush in the first 2 years of his Presidency.
Let me say that I disagree with that representation. We were in the
biggest bubble in the history of the world. It was a bigger bubble than
the tulip bubble, bigger than the south seas bubble. It was the
Internet bubble of the 1990s when people were speculating and creating
paper money without anything behind it through speculation on stocks
relative to Internet assets. That bubble generated tremendous revenues
as people sold stock and bought stock. But when it collapsed, which it
inevitably would and did--and interestingly enough, there is a great
history of these bubbles, all these bubbles collapsed, and they were
all driven by the same philosophy: Somebody had the belief that the
basic economics had changed and something had been invented which was
going to circumvent the business cycle and there would be no more
business cycles. It is a concept which people believed in in the late
1990s. They generally believed that the technology advantages were
going to cause us to expand revenues that would allow them to invest
and speculate at rates which were massive and historical proportions
never seen before.
When that bubble collapsed, it generated a recession which obviously
contracted Federal revenues. On top of that recession, we had the
attack of
9/11 which generated even a larger recession. The economic damage done
by
9/11 was massive. The reallocation of resources that had to occur, the
basic grinding to a halt and hiatus taken relative to investment for a
while as a result of Wall Street being in chaos for a period of time,
all of this led to an even more severe recession or potentially more
severe. However, prior to that event, the President had put in his
first tax cut. Then after that event, he put in the second tax cut.
Those two tax
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cuts together were the perfect relief, the perfect formula for
basically curing a recession and making it a more shallow recession
than one might have expected. We are fortunate that we didn't actually
fall into a deep and severe recession during that period. The primary
reason we did not was because of the tax cuts.
Another factor of these tax cuts was that they were oriented toward
the productive side of our economy so that they created an incentive
for entrepreneurs to invest. As a result of that investment, they
created an incentive for people to generate economic activity. What
comes from that? Jobs. We have had a massive economic expansion in
jobs. We have had a massive expansion as a result of the incentives
created in the tax law.
Another thing was created by that. When people have more jobs, when
there is more economic activity, we get more revenue. This chart
reflects that dramatically. We see revenues jumping here. In fact, in
2005, we had the largest increase in revenues in our history. If you go
before 2005, you will see revenues coming up. But they are coming up
dramatically, 6 percent, 7 percent. About an average of 6.5 percent is
the projected revenue increase. It is a function of the fact that we
have in place incentives today such as the capital gains and dividends
rates that basically create an atmosphere where people are willing to
go out and invest. As a result of those investments, they generate
capital activity, which creates jobs, which creates taxable events and
creates income to the Federal Government. In fact, as we can see from
this chart, the historical level of receipts for the country is about
18.4 percent of gross national product. Yes, we dropped down
dramatically, but now we are seeing that line come up dramatically. We
will reach a historical level of revenues fairly soon--if not next
year, certainly the year after--and receipts will be back to what they
should be as a percentage of gross national product because we will
have put in place an economic engine to generate revenues, called a tax
code, which creates an incentive for people to be productive and take
risks and create jobs. That is what we wanted.
The other side is going to hold up chart after chart which says, the
tax cut was this big for this group, this big for this group, implying
that what they want to do is raise those taxes. We don't happen to
think raising taxes is the way you keep this economic activity going.
We think the way you keep the economic activity going is to continue to
drive the incentive for people to invest, take risk and, as a result,
create jobs which creates economic activity and basically creates
revenues.
Another thing this chart shows that I believe is true is that you
can't close this gap between expenditures and receipts on the revenue
side unless you are willing to significantly increase the historic tax
burden on the American people. You can't do it. You have to address the
spending side of the ledger. You have to be willing to slow the rate of
growth on discretionary accounts and hopefully soon on the entitlement
accounts of the Federal Government, but you can't get there on the
revenue side. And you certainly can't get there on the revenue side
once the baby boom generation starts to retire because the numbers are
too staggering. You would basically tax the young people, the working
Americans, out of an existence, out of the capacity to have an
existence of a high quality of life which we should be passing on to
them, not taking from them, by creating a burden that is so high in the
Federal Government that they can't afford it.
So the issue is, generate revenues but don't do it by raising taxes.
Generate revenues by creating an atmosphere where people are willing to
take risk, be entrepreneurs, create jobs and, as a result, create
economic activity.
We have a fundamental disagreement between the two sides of the
aisle. That has been obvious for a long time. If you listened to
Senator Kerry when he ran for President, the theme of his campaign was:
If we hadn't had those tax cuts, things would be great in this country.
I take the opposite view. The tax cuts were what gave us less of a
recession and what is giving us a recovery which is continuous and has
created jobs. I think the last job numbers were something like 243,000
new jobs, which is staggering, or a drop in unemployment claims or
something. It was a huge number. We are seeing an economic continuation
of economic activity which has been historic in its robustness and
continuation. It is a function of the fact that we now have a tax code
which to some degree--it isn't a great tax code--addresses what
generates revenue which is that you give people an incentive to go out
there and be risk takers and create jobs.
On another issue of revenue where the Senator from North Dakota and I
do agree--and we have accepted language which he suggested or we are
going to before we finish--we believe strongly there are a lot of taxes
which should be paid the Federal Government that are not being paid. We
had testimony on this before our committee. I am not talking about drug
money; I am talking about people underreporting. The Senator from North
Dakota has been aggressive in pointing this out, and correctly so. We
can collect more money. We don't get the score for that, unfortunately.
Even though we are going to increase significantly the amount of money
that will flow to the general revenue services for the purposes of
audits--and they tell us that is going to generate between 10 and 40,
maybe even $50 billion of revenue we are not getting today--we don't
get the score for that. CBO won't score it. Still it is what we should
do. So on the revenue side we are going to do that.
That brings me to my conclusion so that we can hear from the Senator
from North Dakota. We have an obligation to do a budget. We as a nation
should not go forward without a budget in place; it is not appropriate
to running a fiscal house. A lot of people can disagree with this
budget--and just about everybody who comes up to me seems to--but the
fact is, it is a budget which has made decisions. You can disagree or
agree with them. Over the next 50 hours you can offer amendments to try
and change it. But at the end of the day, a government that is spending
$2.8 trillion needs to have some guideposts as to how it will be spent.
There needs to be a blueprint. There needs to be definition. Every
American who runs a household works off a budget, and it would be
totally irresponsible if we did not have a budget.
I hope the other side of the aisle will offer a budget as their
alternative. There have been some rumblings that they may. In committee
they offered a series of amendments which would have significantly
raised spending and significantly raised taxes. If that is their
budget, fine. But put a budget on the table. We have put our budget on
the table. We think it is reasonable. There are things I would have
done. I would have gone further in accounts if I had had the ability to
pull it off. But independent of that, this budget is a responsible
budget. It addresses spending in a responsible way, and it puts in
place enforcement mechanisms which allow us as a Congress to put at
least warning signs in the road when we start to get off the road of
fiscal responsibility.
I yield the floor and appreciate the courtesy of the Senator.
The PRESIDENT pro tempore. The Senator from North Dakota.
Mr. CONRAD. Mr. President, I thank my colleague, the chairman of the
Budget Committee, for his many courtesies during the budget process and
the budget hearings. There has been full consultation with respect to
the operations of the committee, the hearings that we have held, the
way we have conducted the markup, the way we will proceed here on the
floor. I thank him very much for that set of courtesies. I also thank
him for his professionalism. There are many places he and I agree. I
think both of us would be the first to acknowledge that we are on an
unsustainable course and that the country is going to have to face up
to these growing deficits and debt. And the sooner we do it, the
better.
With that said, I do disagree with this budget. I don't think it
meets the needs of our time. I don't think it faces up to this rapidly
growing debt. I don't think it has the right priorities for the
American people. And I don't think it has the right balance.
If there is one message I would want to communicate, it is this: The
debt is the threat. We hear a lot of talk about deficits, but really
the threat to our country is the growing indebtedness of our country,
an indebtedness that is increasingly being financed by foreigners.
[[Page S1992]]
How did we get into this mess? We can go back to 2001 when the
President told us that if we would adopt his financial plan, everything
would go well. He told us:
[W]e can proceed with tax relief without fear of budget
deficits, even if the economy softens.
That is what he told us back in 2001. Now we are able to check the
record and see, was the President right? This chart shows very clearly
the President was wrong. We had a $236 billion surplus in the year
before he took office, and this is the fiscal record since. The
President's plan has plunged us into deep deficit, the largest deficits
in our country's history.
The next year, 2002, the President revised his position and said:
. . . Our budget will run a deficit that will be small and
short-term. . . .
He retreated from the assertion that we were not going to have
deficits because obviously that proved wrong. Then he said the deficits
are going to be small and short term. That was the next year. Now we
are able to check that statement and see if that was right.
Once again, the President was simply wrong. The deficits have not
been small and short term; they have been large and long term. In fact,
virtually every year, the deficits have gotten worse. In the first year
under the President's plan, we had a $158 billion deficit. In 2003,
that exploded to $378 billion. It increased even more in 2004 to $413
billion. Then we had some improvement in 2005 with $319 billion. In
2006, we are now forecasting once again the deficit going up.
Far more serious than the deficit is the increase in the debt because
the debt is increasing much more rapidly than the size of the deficits.
I indicated for 2006, we are anticipating a deficit now of $371
billion, but the debt is going to increase by $654 billion.
I find very often people are confused on this point. They think the
deficit is the amount by which the debt increases, and that is not the
case. The biggest difference is Social Security funds that are in
temporary surplus that are being used under the President's plan to pay
for other things--to pay for tax cuts, to pay other bills. And when you
add up the deficit and the amount being taken from Social Security,
which has to be paid back, and other trust funds that are also being
diverted and being used for other purposes, what we find is the debt in
this year will increase not by $371 billion, the amount of the deficit,
but instead by $654 billion. That is why I say the debt is the threat.
The next year after 2002, the President, in 2003, no longer made the
argument that the deficits were going to be small and short term
because that was clearly not going to be the case. Now he revised his
argument for the second time when he said:
Our budget gap is small by historical standards.
That is not really right, either, because here is the record with
respect to the deficits in comparison to back in 1970, 36 years of
comparisons. We can see the deficit under the President's plan has been
the largest in dollar terms in our history. In fact, he is in first,
second, and third place. He has the top three deficits in our country's
history.
There is a new report out that says the deficits as reported are
themselves understated. Not only is the debt going up more rapidly than
the deficits, but this is a report about what would happen if we were
under the kind of accounting system virtually every company in America
is under, accrual accounting. Here is what it says. This is a Gannett
News Service report from March 3 of this year:
If the United States kept its books like General Motors and
nearly every other business in the country, the 2005 budget
deficit would be $760 billion and rising, not $319 billion
and falling, as is commonly reported. . . .
They go on to ask the question:
How can two reports on the same budget be so different?
It's a matter of what's counted. The budget figures usually
bandied about in Washington are the amounts the Government
takes in and spends each year. The financial report, which
has been an annual requirement since the mid-1990s, does what
businesses are required to do: include the cost of promised
benefits.
If that were done, the deficit for 2005 would not have been $319
billion, the deficit would have been $760 billion.
I am increasingly persuaded that the language we use in Washington
misleads people. I go back to when President Bush came in and we were
told we were going to have $5.6 trillion surpluses. It was never true.
Much of that money was Social Security money. There wasn't much of a
surplus at all. It was a temporary surplus, but every dollar of that
money was going to be needed.
This shows that if we were on an accrual basis such as virtually
every other institution in this country operates on, we would not have
had a deficit of $319 billion in 2005, we would have had a deficit of
$760 billion.
Then in 2004, the President changed his argument once again. He went
from there are going to be no deficits, to they are going to be small
and short term, to they are small by historical standards. When all of
those proved wrong, then the President said: I am going to cut the
deficit in half over the next 5 years. This is what he said in August
of 2004:
So I can say to you that the deficit will be cut in half
over the next five years. . . .
I think the President will be proved wrong once again. Why? Because
in reaching that calculation, the President simply left out things. He
left out any war costs past 2007. He left out all the costs of fixing
the alternative minimum tax, which will cost $1 trillion to fix. He
didn't put any money in his budget for it past this year.
When we add back in the items the President has left out and we go
beyond the 5 years in his budget to capture the full effect of his
proposed tax cuts, what we see is some modest improvement during the 5
years in terms of the deficit--that is not true of the debt, by the
way; it is true of the deficit--but past the 5 years, things get much
worse as the full effects of the President's tax cuts take effect. Here
is why.
This chart shows the full effect of the President's proposed tax
cuts. The President's budget only goes to this dotted line. But look
what happens beyond the dotted line in terms of the cost of his tax
cut. It absolutely explodes. Of course, not all this is captured in his
budget.
Similarly, none of the costs beyond fiscal year 2006 are in his
budget for fixing the alternative minimum tax. The alternative minimum
tax, the old millionaire's tax, is rapidly becoming a middle-class tax
trap. It costs $1 trillion to fix over 10 years. The President doesn't
have a dime in his budget to do it beyond 2006.
The President has what I would call a rosy scenario. He says he is
going to cut the deficit in half, but it is largely based on a fiction.
It is not really a budget at all.
On the alternative minimum tax, again the President has nothing in
his budget past 2006 to deal with it. Mr. President, 3.6 million
taxpayers were affected in 2005. By 2010, there will be 29 million
taxpayers affected. And the President does nothing to address this
need. There is no money in his budget past 2006 to face up to it.
But that is not the only place the President has understated the
costs. With respect to the war, in 2006 and 2007, the supplementals he
has provided, he has $118 billion budgeted. The CBO says $312 billion
is needed.
Once again, the President is badly understating the true cost to the
country and, as a result, winds up with a misleading budget result.
When I say the debt is the threat--and I hope, if people take nothing
else away from my discussion today, they will begin to understand that
the great threat to this country is the burgeoning debt of our Nation.
The debt is the threat.
As I have indicated, the President has funded the war with a series
of supplementals. The chairman of the committee had this chart up as
well. In 2006, $118 billion; in 2007, he is only asking for $50 billion
at this point. Really, is that what the war is likely to cost? Is all
of a sudden the need for these additional funds going to be cut more
than 50 percent? Or is the President playing hide the ball from us in
terms of these costs?
When I talk about the debt, the President early on acknowledged how
important it is to face up to the debt. This is what he said in 2001:
. . . My 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.
[[Page S1993]]
Future generations shouldn't be forced to pay back money that
we have borrowed. We owe this kind of responsibility to our
children and grandchildren.
The President was exactly right. I agree with every one of these
words in terms of the need to pay down the debt and we should not be
shuffling this responsibility off on our children and grandchildren.
That is what the President said. He said he would have maximum paydown
of the debt.
Let's look and see what has actually happened because, once again,
the President was simply wrong. There has been no paydown of the debt.
This is what the debt was at the end of his first year. We don't hold
him responsible for what happened the first year because he is
operating under the previous administration's budget.
At the end of the first year, the debt was $5.8 trillion. At the end
of this year, the debt will be $8.6 trillion. The President said he
would have maximum paydown of debt. There is no paydown of debt here.
The debt has exploded. And if the President's budget or the budget that
is offered on the floor is adopted, at the end of the next 5 years, the
debt will be $11.8 trillion--a national debt that will have more than
doubled since the end of the President's first year in office, all of
this before the baby boom generation retires.
This President has racked up already more debt than any President in
history and by a large measure. The debt limit has already increased
over $3 trillion: $450 billion in 2002 was added to the debt limit; in
2003, $984 billion; in 2004, $800 billion; now this week, they are
asking for another almost $800 billion increase in the debt limit. That
is why I say the debt is the threat.
And what are the ramifications? Here is one that I find most
stunning. It has taken 42 Presidents--all of these Presidents pictured
here going back to the time of George Washington, through every
President, including the President's father, and then President
Clinton--it took 42 Presidents 224 years to run up $1 trillion of
external debt, our debt held by foreigners. This President has more
than doubled that amount in 5 years.
This is an utterly unsustainable course. It is an absolutely
unsustainable course. Unfortunately, in this budget, nothing is being
done about it except to make it much worse.
The result of these extraordinary debts being held by foreigners--and
there was a recent article in the Washington Post that indicates now
that foreigners hold almost 50 percent of the U.S. debt. It used to be
that we would borrow from ourselves to finance this debt. Not any more.
Now we are borrowing from every country all around the world. We have
borrowed over $680 billion from the Japanese. We have borrowed more
than $250 billion from the Chinese. We have borrowed more than $230
billion from the United Kingdom and, my favorite, we have borrowed more
than $100 billion from the Caribbean Banking Centers. Why, we have even
borrowed $60 billion, more than $60 billion, from South Korea.
This is a course that is utterly unsustainable. Chairman Greenspan
has said it. The Comptroller General of the United States has said it.
The head of the Congressional Budget Office has said it.
Now we have this budget on the floor, and this budget basically is a
stay-the-course budget. It keeps running up the debt. It keeps running
up the debt, and in record amounts.
If that is what you want to support, I would say to my colleagues,
vote for this budget. If you think the appropriate course for the
country is record additions to our debt, then vote for this budget.
Because in this budget, they have left out 10-year numbers, so they
hide the effect of the tax cut proposals of the President. They don't
have funding for the ongoing war costs beyond 2007. They don't fund the
alternative minimum tax reform beyond 2006. They have left out entirely
the President's Social Security privatization proposal.
If we put back some of those things that have been left out, instead
of the chart that the chairman showed with these red blocks with the
budget deficit going down or appearing to go down, if you add back the
omitted costs and you add back the money that is being taken from
Social Security that adds to the debt--all of it has to be paid back--
and you add the associated interest costs, what you find is the debt is
going up each and every year of this budget proposal by more than $600
billion.
In 2007, the debt is going to go up $680 billion. In 2008, it is
going to go up $656 billion. In 2009, it is going to go up $635
billion. In 2010, it is going to go up $622 billion. In 2011, it is
going to go up $662 billion.
Now, unless somebody thinks I am just imagining these numbers, making
them up, let's look at what is in the budget offered by our colleagues,
their calculation, their calculation of how much the debt is going to
go up during this period. And, remember, they have left out war costs
past September 7, 2007. They have left out the need to fix the
alternative minimum tax. They have left out the associated interest
costs. But even their calculations--even their calculations--show the
debt going up this year, 2007, by $663 billion; in 2008, $577 billion;
in 2009, $536 billion; in 2010, $513 billion; in 2011, $539 billion.
This debt is running out of control.
If we look at what are the causes, it is very simple. We are spending
more money than we are raising in revenue. That is why we have
explosions of deficit and debt. We are spending more than we are
raising, and our colleagues on the other side don't want to reduce
their spending to the amount of revenue they are able to provide, nor
are they willing to raise the revenue to meet their spending. The
result is an explosion of deficit and debt.
This shows the relationship between spending and revenue going back
to 1980. The red line is the spending line. You can see during the
previous administration, spending as a share of gross domestic product
came down each and every year. Why do we use gross domestic product? It
is because economists say that is the way to take out the effects of
inflation and real growth, so that you are comparing apples to apples.
With the new President, President Bush, spending went up. Why did it
go up? Overwhelmingly, it went up because of the need for more spending
for national defense and homeland security, and to rebuild New York.
Those are increases in spending that all of us supported on a
bipartisan basis, and that took the spending up to something over 20
percent of GDP. But look what happened to the revenue side of the
equation. The revenue side of the equation went from a record level in
President Bush's first year, and the revenue side of the equation
collapsed. Part of it, as the chairman rightly describes, is as a
result of economic slowdown, but about half of the reduction is because
of tax cuts. Now we can see the revenue in 2004 was actually the lowest
as a share of GDP since 1959--the lowest since 1959.
We have seen a bump-up as we have seen economic recovery. The
chairman is absolutely right; economic recovery does lead to revenue.
Absolutely. The place where we disagree is the notion that some on that
side of the aisle have that tax cuts generate more revenue. I have
heard this so often from the other side: Tax cuts generate more
revenue.
Let's check the facts. What the chairman showed was projections. He
showed what he forecasts or somebody forecasts is going to happen in
the future. Let's not rely on future projections. Let's look at what
has actually happened in the real world to revenue after the massive
tax cuts of this administration. Did we get more revenue? That is a
pretty simple question to ask and a pretty simple question to answer.
The answer is no, we didn't. In 2000, before the big tax cuts, we had
over $2 trillion of revenue. Then we had the massive tax cuts of 2001,
and look what happened to revenue: It went down in 2002. It went down
in 2003. In 2004, it still was well below where it had been in 2000. We
didn't get back to the revenue base that we had in 2000 until the year
2005.
At what point are we going to dispel the myth that tax cuts create
more revenue? They didn't, they haven't, and they won't.
That is not my view. I am taking my view from what has actually
happened in the real world, instead of some ideological belief and
hope. Let's go on facts. Let's go on what has happened. Here is what
Chairman Greenspan says:
It is very rare and very few economists believe that you
can cut taxes and you will get the same amount of revenues.
This is not based on just what Chairman Greenspan says added to the
facts
[[Page S1994]]
of what happened since 2001; here is what an Economy.com report says on
the U.S. macroeconomy:
Economists find no support for the claim that tax cuts pay
for themselves. Four years after income taxes were first cut
and nearly four years after the recession ended, Federal
revenues are still slightly below their early 2001 peak on a
nominal basis; on a real basis, adjusted for inflation,
revenues are down 11 percent from their all-time high.
Therefore there is no support for the Laffer Curve effect:
the view that a tax cut can actually boost government
revenues as workers and entrepreneurs respond with large
increases in effort.
From that, I don't make the argument that the answer to our problem
is tax increases at this point. I do believe revenue has got to be part
of the solution.
Our friends on the other side and the chairman have said it has to be
done on the spending side. Absolutely, the spending side has to be a
very significant part of addressing this problem. But revenue also has
to be a part of addressing this problem, and the first place we ought
to look for revenue is not a tax increase. The first place we ought to
look for revenue is the tax gap, the difference between what is owed
and what is being paid.
The revenue department says the tax gap is now $350 billion a year.
Let me repeat that. The tax gap, the difference between what is owed
and what is being paid, the revenue commissioner tells us, is now $350
billion a year. If we were to just collect revenue due under the
current revenue table, we would virtually eliminate the deficit. We
would still have a problem with the debt because, as I have indicated,
the debt is going up much faster than our deficits. But if we could
collect the amount of money that is actually due, we would make
meaningful inroads into this incredible abyss of deficits and debt, and
we ought to do it.
Also, as the chairman has said--and this is a place I agree--we are
going to have to deal with the entitlements. Entitlements are growing
much more rapidly than the size of the economy, and they are going to
be added to by the baby boom generation. The baby boom generation is
going to change all of this very dramatically. So at some point, we are
going to have to face up to that.
I think it is increasingly clear that the only way this is going to
be faced up to is if we do it together. Republicans can't do it alone;
Democrats can't do it alone. It is going to require Democrats and
Republicans working together to face this challenge of a burgeoning
debt, and the sooner we do it, the better.
On the assertions that the economy is doing great, here is what the
Comptroller General said about our current fiscal path before the
Senate Budget Committee last month:
Continuing on this unsustainable fiscal path will gradually
erode, if not suddenly damage, our economy, our standard of
living, and ultimately our national security. Is anyone
listening? Is anyone listening? Here is the Comptroller
General of the United States telling us we can't stay on this
course, that it threatens our economy and even our national
security.
For those who say the economy is doing fine, I present an alternative
view. Here is what has happened to real median household income. It has
declined for 4 straight years. Median household income has declined for
4 straight years. We have looked at previous recoveries since World War
II. There have been nine economic recoveries from recessions since
World War II. We have compared this recovery to the previous
recoveries. Here is what we found. Growth of the economy lags behind
the typical recovery. On average in the previous 9 recoveries, GDP has
averaged 3.2 percent; in this recovery, it is averaging 2.8 percent.
It is not just economic growth, it is also business investment. Here
is the average. This dotted red line is the average of the nine
previous business cycles in terms of business investment. Here, the
black line is this recovery. Business investment is lagging the average
of the nine previous recoveries by 62 percent. What is wrong here?
Something is wrong. Something has changed from our previous economic
recoveries.
It is not just growth of GDP, it is not just business investment, it
is also job creation. This red line is the average of the nine previous
recoveries from recessions since World War II. The black line is this
recovery. We are running 6.6 million private sector jobs behind the
typical recovery. At this very same period in the cycle, this very same
time period, we are 6.6 million private sector jobs behind the average
recovery since World War II.
We have to face up to what is happening: burgeoning deficits and
debt; a recovery that is not producing the same economic growth, the
same business investment, the same job creation we have seen in other
recoveries since World War II; and then we have a budget that I believe
is also wrong on priorities. This budget says that in 2007, the tax
cuts going to those who earn on average over $1 million a year will
cost $41 billion for the year. Let me repeat that. Under the budget
that is presented here and the budget of the President, the tax cuts
going to those who on average earn over $1 million a year, the tax cuts
for 1 year alone will be $41 billion. Meanwhile, the President says cut
education $2.2 billion, the biggest cut education has ever been asked
to take. I don't believe that is the right priority for the country.
It is not just with respect to education. Veterans are being asked to
take reductions such that it would cost $800 million--$795 million to
restore those reductions, those cuts, in terms of what they receive.
Actually, this $800 million is the $250 annual enrollment fee the
President is asking for and the increase in their drug copayments that
he is asking for--$800 million to eliminate those increased fees and
costs to veterans. But the President's budget says: No, it is 50 times
more important to provide tax cuts to those earning over $1 million a
year. Those are his priorities. I don't think those are the priorities
of the American people.
When I look at law enforcement, I see the same thing. It would cost
about $400 million to restore the COPS Program. The President cuts the
COPS Program that puts police officers on the street. He cuts it about
$400 million, which is one one-hundredth as much as is going to tax
cuts for those who earn over $1 million a year. Are those really the
priorities of the American people? Is it 100 times more important to
give tax cuts to those earning over $1 million a year than it is to put
police on the street? I don't think so.
It doesn't end there. This budget, the President's budget, on local
law enforcement grants, they don't just cut those, they eliminate them.
The Byrne Justice Assistance grants, Safe and Drug-Free Schools--they
eliminate them. They don't just cut them, they eliminate them.
Vocational education--they don't just cut it, they eliminate it. The
COPS Program, as I indicated, is cut 78 percent; firefighter grants,
cut 55 percent; essential air service, cut 54 percent.
I am not talking Washington-talk about cuts. I am not talking about
restricting the rate of growth. I am talking about cutting from what
was provided last year. Weatherization grants are cut 2 percent, Amtrak
is cut 32 percent, community development block grants are cut 20
percent, and the Low-Income Home Energy Assistance Program is cut 17
percent.
This is a budget that I believe is just wrong. I believe it is wrong
for the American people. It is wrong because it explodes deficits and
debt. It is wrong on its priorities. Let me just sum up with what the
National Catholic Reporter wrote on February 17 of this year:
But what has become clear during five years of the Bush
administration is now glaringly apparent in the easily
discerned outlines of its proposed 2007 budget: Cuts in vital
programs that benefit the poor and middle class, continuing
tax relief for the very wealthy.
If budgets are, as some contend and we would agree, moral
documents, then this one suggests we have abandoned a basic
sense of right and wrong and any notion that we are at our
best when we strive to make life better for all, not just
those who manage to accumulate wealth.
I want to end as I began. I believe the fundamental threat of our
time is the growth of the debt. The debt is the threat. This budget
absolutely fails to face up to that growing and burgeoning debt.
I yield the floor.
The PRESIDING OFFICER (Mr. Voinovich). The Senator from New
Hampshire.
Mr. GREGG. Mr. President, just to briefly respond because obviously
the Senator has made numerous points
[[Page S1995]]
here, I agree with some, and with some I disagree. But I think this
focus on the debt is an interesting approach and one which I can
certainly be sympathetic to, and I would be more sympathetic to it if
during the markup on this bill we had amendments offered from the other
side that would have significantly reduced the debt. That is not what
we had. We had amendments which would increase the spending of the
Federal Government by about $150 billion in entitlement accounts, about
$16 billion approximately on discretionary accounts for this coming
year, and then they raise taxes or proposed raising taxes in order to
meet those new spending initiatives.
If you are going to reduce the debt, you can do it, of course, by
raising taxes. The last group of charts the Senator highlighted would
be one way, and maybe the alternative they could seek on their side of
the aisle would be where they would raise taxes by $41 billion on one
segment of Americans, or they can raise taxes across the board, or they
can raise taxes on specific groups. All of that is possible to reduce
the debt, but that is not what they offered in committee. What they
offered in committee was to increase spending on all sorts of
initiatives and then raise taxes to cover the spending, which does
nothing significant to reduce the debt.
You can also reduce the debt by reducing the deficit because every
deficit dollar is added to the debt. That is what we have attempted to
do in this bill. We will attempt and we intend to reduce the deficit in
half over 4 years on this bill, and we do it by aggressively addressing
discretionary spending.
The Senator is suggesting there are other places not mentioned in
this bill, such as the AMT. Yes, we do not address the AMT. I believe
the AMT, if it is going to be addressed, should be addressed in the
context of tax reform where it is a revenue-neutral event. I would also
point out the vast majority of AMT is paid for by people in high
incomes; 75 percent of the AMT tax, I believe, comes from people with
incomes over $100,000.
First they put up a chart that says high-income individuals should
have their taxes increased, and then they put up a chart that says we
don't account for cutting taxes on high-income individuals. There is a
little bit of inconsistency there, in my opinion. But the AMT fix
should not be done in a vacuum. It should not be a hit on the Treasury
to the tune of almost $1 trillion. It should be done in the context of
major revenue reform, which allows us to adjust it so if low-income
people or moderate-income people--there are no low-income people
covered by AMT, but if moderate-income people find themselves falling
in the AMT, the tax laws will be adjusted so they will be taken out of
that, but at the same time we adjust in other areas to make the laws
more fair and maintain the revenue base. That is the way to address
that. You don't just unilaterally act on that. So I don't find that to
be a compelling case they are making.
They make the case on Social Security. We would have been happy to
put Social Security in here if the other side of the aisle had not shot
the idea down of any Social Security reform--which we really need, we
need Social Security reform--shot it down before it even got up to the
Congress.
The President went around the country talking about a variety of
ideas. He put everything on the table, and the other side of the aisle
just started attacking him for even addressing the issue of Social
Security. We know Social Security is a serious problem. We know it. But
there is no point in moving forward on it if the other side of the
aisle has an attitude that we are not going to do anything, we are just
going to use it as a political club, which was exactly the approach
that was taken when the President addressed it. So that is hard to
accept as a valid thing that should be in this budget, Social Security.
This budget does not assume the present tax increases after the
budget window, which is different from the President's budget, so it is
a different approach we have taken in this bill.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. GREGG. How could my time possibly expire? I think I have 25
hours.
The PRESIDING OFFICER. The time until 11:30 was evenly divided. So it
is out before 11:30.
Mr. GREGG. It is only 11:25.
The PRESIDING OFFICER. The Senator from North Dakota has the
remainder of the time.
Mr. CONRAD. I will be happy--maybe we can make an adjustment here, so
the Senator can finish his thoughts and then I would have a brief time
to respond.
Mr. GREGG. That sounds good to me. Why don't we extend this for 15
minutes? Divide the time equally?
Mr. CONRAD. Could we do it for 12?
Mr. GREGG. Whichever. Twelve is fine to me.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. CONRAD. We can split the time so the Senator has a chance to
conclude his thoughts.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GREGG. The context of my comments are basically directed to the
issue of debt. I believe debt should be reduced. I believe the way you
reduce debt is to begin by reducing the deficit, which is what the
budget does. But the presentation that this budget uniquely aggravates
the debt is really not viable in the context of the solutions which are
being offered by the other side because none of the solutions being
offered by the other side would reduce the debt, either. They are
basically offering--or at least they did in committee--amendments which
increase spending and increase taxes, thus taking resources which
logically the other side would want to use to reduce the debt but
isn't, and spending the money. In the end, that doesn't reduce the debt
at all.
I didn't see in the markup at all any proposals that would reduce the
debt coming from the other side. We look forward to them offering a
budget which accomplishes that. I would be most interested in such a
budget because I do think it is important we do that. We tried to do it
in our bill by reducing the deficit in half over the next 4 years,
which does take money and reduce the debt because any time you reduce
the deficit, you reduce the debt. You are not adding to the debt.
Mr. President, I ask unanimous consent that the use of calculators be
permitted on the floor Senate during consideration of the budget
resolution.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GREGG. Mr. President, I ask unanimous consent the following staff
members from my staff and from Senator Conrad's staff be given all-
access floor passes for the Senate floor during consideration of the
budget resolution. From the Republican staff: Cheri Reidy, Denzel
McGuire, Jim Hearn; from the Democratic staff: John Righter, Steven
Posner, Sarah Kuehl.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GREGG. Mr. President, I ask unanimous consent that the staff of
the Budget Committee be granted the Senate floor privileges for the
duration of the consideration of the budget resolution:
Amdur, Rochelle; Bailey, Stephen; Bargo, Kevin; Binzer,
Peggy; Brandt, Dan; Cheung, Rock E.; Delisle, Jason;
Donoghue, Samuel; Esquea, Jim; Fisher, David; Forbes, Meghan;
Friesen, Katherine; Green, Vanessa; Gudes, Scott B.--Staff
Director, Full Access Pass; Halvorson, Dana; Hearn, Jim;
Holahan, Betsy; Isenberg, Cliff; Jones, Michael; Kermick,
Andrew.
Klumpner, James; Konwinski, Lisa--General Counsel, Full
Access Pass; Kuehl, Sarah; Kuenle, Jason; Lewis, Kevin;
Lofgren, Michael; Mashburn, John; McGuire, Denzel; Millar,
Gail--General Counsel, Full Access Pass; Miller, Jim; Mittal,
Seema; Morin, Jamie; Myers, David; Nagurka, Stuart; Naylor,
Mary--Staff Director; Full Access Pass; Noel, Kobye; Olivero,
Tara; O'Neill, Maureen; Page, Anne; Pappone, David.
Parent, Allison; Pollom, Jennifer; Posner, Steven; Reese,
Ann; Reidy, Cheri; Righter, John; Seymour, Lynne; Smith,
Conwell; Soskin, Benjamin; Turcotte, Jeff; Vandivier, David;
Weiblinger, Richard; Woodall, George; Wroe, Elizabeth.
The PRESIDING OFFICER. Without objection, it is so ordered.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. CONRAD. Mr. President, I go back to where I started. The debt is
the threat. This budget before us increases the debt $600 billion a
year, each and every year of its term. That is the reality. That is the
budget we have before us. It is the obligation of the majority to offer
a budget, and they have
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done so. It is our obligation to comment and critique their budget,
which we have done.
The most important critique that I offered is that this budget
explodes the debt. It is undeniable. It is clear. Their own numbers
show that it explodes the debt.
Beyond that, the chairman references what happened in the committee.
I believe he didn't mention our first amendment--it will be our first
amendment on the floor--which is a pay-go amendment to restore budget
discipline to require that if you want to have more mandatory spending,
you have to pay for it. And if you want to have more tax cuts, you have
to pay for them. But they defeated that budget discipline. They
defeated that budget discipline, and they proposed this budget that
explodes the debt.
In addition, every one of our amendments--I don't know where the
chairman got his number--that cost $128 billion in committee, we
provided $134 billion of funding for those amendments.
We reduced the buildup of deficit and debt by $6 billion. But that is
not the point. The point is, what needs to be done--and I think the
chairman might agree with this--is to take on this debt threat. The
only way it is going to happen is if we do it together. Your budget
doesn't do it. We are not going to offer a budget that is going to do
it because if you offer one on your own, you couldn't pass another one.
If we offered one on our own, we couldn't pass it on our own--certainly
not in the minority.
I have come to the conclusion--I have talked to colleagues over the
weekend, and I believe the chairman may share this view--that the only
way we are going to take on this debt is to march together. It has
become so serious and so big that neither party can do it alone. That
is the truth.
Again, we didn't offer tax increases in the Budget Committee. We did
offer to more aggressively close the tax gap to pay for these measures.
And the biggest spending measure that we offered--in fact, nearly all
the increase in the spending, or a significant majority of it--was in
one amendment, and that was to take veterans' benefits from the
discretionary side of the budget to the mandatory side of the budget.
We do not believe veterans' benefits should be considered
discretionary. It is not discretionary. It is mandatory that we provide
for these veterans. That amendment cost $104 billion. But we paid for
it.
Unless anybody wonders if there are tax loopholes out there to close,
let me tell you about one of the most recent scams which was uncovered
where companies in the United States are buying sewer systems of
European cities, depreciating them on their books in the United States,
and then leasing the facilities back to European cities.
Is that a tax increase to take away that scam? I don't think so. Is
it a tax increase to take away the scam that allows a five-story
building in the Cayman Islands to be home to 12,500 companies which
claim they are doing business in the Cayman Islands? They have a five-
story building down there that is the home to 12,500 companies. Is it a
tax increase to end that scam because there are no taxes in the Cayman
Islands and that is where those companies want to show their profits?
Shame on those companies, shame on the Cayman Islands, shame on us
for allowing that to happen, and shame on us for not collecting the
revenue that is due under the current system. The vast majority of us
pay what we owe. The vast majority of companies pay what they owe. But
we have an increasing number of individuals and an increasing number of
companies that aren't, and we ought to go after them. It is $350
billion a year. The revenue commissioner said we could get at least $50
billion to $100 billion of that amount without fundamentally changing
the relationship of the revenue service to the taxpayers of the
company.
Social Security reform: What the President proposed is not what I
would consider Social Security reform. Once again he was going to
borrow the money. He was going to borrow hundreds of billions of
dollars to change the Social Security system. Of course we opposed
that. Not only was he going to borrow hundreds of billions of dollars,
but he himself was going to cut benefits. We oppose that. I am proud to
have opposed that.
I am not for any more of these plans that explode the debt of the
country. We have had enough of that. The debt does represent an
enormous threat to the economic security of America. I believe that.
Could I be advised of the time remaining, how it is divided?
The PRESIDING OFFICER. The Senator has 3 minutes 50 seconds, and the
Senator from New Hampshire has 3 minutes 40 seconds.
Mr. CONRAD. Mr. President, at this point, would the Senator join me
in yielding that time?
Mr. GREGG. Take it off the bill.
Mr. CONRAD. We yield the time remaining.
The PRESIDING OFFICER. The time is yielded.
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