[Congressional Record Volume 152, Number 77 (Thursday, June 15, 2006)]
[Senate]
[Pages S5958-S5961]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GREGG (for himself, Mr. Frist, Mr. Allard, Mr. Enzi, Mr. 
        Sessions, Mr. Crapo, Mr. Ensign, Mr. Cornyn, Mr. Alexander, Mr. 
        Graham, Mr. Kyl, Mr. Thomas, Mr. Craig, Mr. Brownback, Mr. 
        Isakson, Mr. DeMint, Mr. McCain, Mr. Vitter, Mr. Thune, Mr. 
        Chambliss, Mr. McConnell, Mr. Bunning, and Mr. Domenici):
  S. 3521. A bill to establish a new budget process to create a 
comprehensive plan to rein in spending, reduce the deficit, and regain 
control of the Federal budget process; to the Committee on the Budget.
  Mr. GREGG. Mr. President, I rise to introduce a bill which is 
sponsored by myself and 20 other Members of the Senate.
  The purpose of this bill is to put some control over spending--or at 
least put procedures in--to allow us as a Congress to begin to control 
spending.
  I think we all recognize that in the short run we are headed toward a 
budget that looks like it may actually move toward balance. We have 
seen some very significant, positive gains. A deficit that was supposed 
to be about $425 billion this year is down to about $300 billion, and 
it may well go below that. That does not solve our problem even though 
we have gotten things moving the right way because in the outyears we 
face a fiscal crisis. That is reflected in this chart.

  The fact is, there is facing this country a situation where we have a 
generation known as the baby boom generation which is such a large 
generation that it has basically overwhelmed the systems of America at 
each point in its evolution. It started out in the early 1950s and late 
1940s. It overwhelmed the school systems it was so big. As it moved 
forward in the 1960s, it created the civil rights movement, and in the 
1980s and 1990s it created the greatest prosperity in the history of 
our country as a result of its size and productivity.
  But now that generation is beginning to retire. It will start to 
retire in the year 2008. It will be fully retired by the year 2020. It 
will be the largest retired generation in the history of our Nation by 
a factor of two. There will essentially be 70 million people retiring 
during that period.
  What are the implications? The implications are rather severe for our 
Nation's fiscal policy, and especially for our children. All of our 
retirement systems in this Nation--Social Security, Medicare, 
Medicaid--all our major safety nets were built around the concept 
created by FDR, Franklin Delano Roosevelt, that there would always be 
many more people working than retiring.
  In fact, in the early 1950s there were about 12 people working and 
paying into the Social Security system for every one person taking it 
out of Social Security. Today there are about three and a half people 
working for every one person who is retired. By the years 2020 to 2025, 
there will only be two people working for every one person taking out 
of the system. That means this pyramid concept goes to a rectangle, and 
our children and our grandchildren who will then be the working people 
in America will not be able to support the benefit structure which is 
in place for the retired.
  This chart reflects the dramatic effect of this situation rather 
starkly. The blue line represents what percent of gross national 
product the Federal Government usually spends. Historically, since 
World War II, the Federal Government has spent about 20 percent of the 
gross national product. The red line represents three programs in the 
Federal process: Social Security, Medicare, and Medicaid. The red line 
grows dramatically beginning in about the year 2008 and proceeds at an 
exponential rate of growth, so that by the years 2025 to 2028 those 
three programs alone will actually cost more than 20 percent of the 
gross national product of America.
  What does that mean? It means if we were to spend the historic amount 
we have spent on the Federal Government, those three programs would use 
up all that money and there would be no money available for education, 
for national defense, for laying out roads, for health care for 
everyone else, other than those who are retired, or for anything else 
the Federal Government is supposed to do. Everything would have to be 
spent on Social Security, Medicare, and Medicaid. It does not stop 
there. It continues up at a rather dramatic movement.
  The point, of course, is that our children will have to pay the cost. 
They will find themselves confronted with a dramatic increase in tax 
burden unless we address the cost of those programs from the spending 
side.
  The point, also, is we really cannot tax our way out of this problem. 
We cannot possibly raise taxes high enough to keep up with the cost of 
these programs and still have a viable country. If we did that, we 
would eliminate the ability of our children to buy a new home, to send 
their kids to college, to even buy cars. The lifestyle of an American, 
our children and our grandchildren, would be dramatically reduced--
their quality of life--were we to raise taxes to try to keep up with 
this rate of growth of spending.
  Again, it is not a revenue problem; it is a spending problem. That is 
important to stress. In fact, if you look at the revenues over the last 
few years, this reinforces this point. Revenues dropped precipitously 
at the beginning of this President's term for two reasons. One, we had 
the largest bubble in the history of the world, the Internet bubble, 
back in the late 1990s, where we were essentially producing false 
income, paper returns through the issuance of stock which wasn't backed 
up by productive companies. This bubble burst, and it was the biggest 
bubble in history, bigger than the tulip or south seas bubble. And the 
effect of it was to cause our economy to retrench.
  Then we had the attack of September 11, which dramatically impacted 
our psyche as a nation. Obviously, it had a horrific effect in the area 
of loss of lives, but it had a dramatic effect on our economy. Those 
two back-to-back events basically forced a significant drop in 
revenues.
  So President Bush came in and said: Let's try to get out of this 
recession--and it was a shallow recession but would have headed a lot 
deeper--by cutting taxes and giving people an incentive to be more 
productive. We have heard a lot from the other side about how it is 
terrible we cut taxes at the beginning of this administration. But what 
those tax cuts did was create an atmosphere where people who wanted to 
be entrepreneurial, who wanted to go out and take risks, who were 
willing to put their own personal efforts and their dollars behind an 
effort to be productive, and, thus, create jobs, did exactly that.
  Then the economy started to recover. We had 39 straight months of 
recovery. We had one of the largest expansions of the post-World-War II 
period. The practical effect of that is that we have created more 
economic activity, created

[[Page S5959]]

more jobs, and created more revenue to the Federal Government. So in 
the last 2 years, the revenue to the Federal Government has actually 
jumped greater in a 2-year period than at any time in the post-World-
War II period. Each of the last 2 years has had historic increases of 
revenues for the Federal Government.
  We are at a point where revenues are essentially at the same place 
they would be over history as a percent of gross national product. We 
are essentially generating about the same amount of revenue we have 
always generated to the Federal Government.
  The other side of the aisle says: Let's raise taxes some more. That 
is not going to help because we are already generating as much revenue 
as we usually generate. We are doing it the right way, with a fair tax 
system, telling entrepreneurs to make jobs and create risks. We have 
created jobs and given revenues to the Federal Government.
  The real issue is, you have to be willing to address spending, which 
is what the chart shows. A group on our side of the aisle said: How do 
you do this? Probably the way to do it is to put in place a series of 
processes in the Senate and in the House, which basically forced the 
Congress to address the public policy issues of reducing the rate of 
growth and spending for the Federal Government. This is very difficult 
for an elected body. We know it is a natural tendency of an elected 
body to spend more money because people come to you and say: We need 
this for that. Usually the stories are compelling and the purposes are 
good.
  The simple fact is, we cannot afford to spend all the money that 
people want to spend, and we need to have some mechanisms around here 
which energize an atmosphere of producing fiscal responsibility, 
delivering government that is efficient, delivering government that is 
effective, delivering government that people get what they expect, and, 
also, get their dollars used efficiently and effectively to produce a 
government that works.
  So we are suggesting a program that basically renews, redesigns; it 
reforms, it rebuilds the Federal system relative to how we are going to 
spend money and makes sure we spend it effectively so we give people an 
affordable government, something that delivers the type of services 
they need but does it in a way that can be afforded. That is our goal. 
Our goal, essentially, is to contain spending so that we are able to 
deliver quality government and still pass on to our children a 
government that is affordable, a tax burden they can afford that won't 
overwhelm them and will give them the opportunity to have as good a 
life as we have had.
  The proposal we have come up with has a variety of different elements 
to accomplish this. First, we follow the ideas put forward by the 
President, which has eight basic elements. It is a very extensive 
reform package, renewal package, redesign package, rebuilding package.
  The first element is what I call fast-track rescission. I suppose 
that is too technical. The President calls it the line-item veto. But 
it says the President has the opportunity to look at bills we have 
passed in the Senate and say: Listen, we do not need to spend money on 
that item. That is really an item of earmark, or maybe you might call 
it pork, or it is just simply not what we need. It is not what the 
American people have to have their dollars spent on. He gets to put 
together a package of items, and he sends them to us. He says: These 
are the items I don't think we need. We think the American people don't 
need them. We don't think the Government can afford them, and you, the 
Congress, can take another look at them and vote them up or down. Fast-
track rescission. We have to take the vote. It is an opportunity for 
the executive branch to have a say and for the legislative branch to 
take a second look. We have done it in a way so neither branch is 
prejudiced as to our constitutional role which is very important.
  The second thing we have done is we have reinstated statutory caps. 
What is that? It means that we say every year how much the Federal 
Government is going to spend and we lock it down so that if we spend 
over that amount we have to go back and cut somewhere else to bring us 
down to that number.
  What has happened around here, we have said we are going to spend X 
dollars. That is called a cap. But we have not had any enforcement 
mechanism behind the cap. Those lapsed in 2002. So when we exceed the 
cap, you get 60 votes and people say: Fine, we will spend the money 
anyway, even though we said we were not going to spend that much money, 
and it is ignored. This puts in place a system where we have to be 
responsible to the number we set out as to what the Federal Government 
should spend. It is basically truth in budgeting and forces budgeting 
to be effective and responsive.
  The third item we put in, we reduce the deficit so it will move to 
zero by 2012. This is done by saying essentially this: The deficit 
today is X percent of gross national product. We are going to say that 
the deficit should be dropped as a percent of gross national product 
every year until we get to about 2012 where we expect it to be 
basically no deficit. If we exceed those numbers--in other words, if 
the deficit exceeds that percent of gross national product which we set 
out in the bill--and these numbers are historical numbers and they are 
obtainable numbers.
  In fact, in the first 2 years, the numbers we have set out are 
basically above where the actual deficit looks like it will hit, and it 
is about the third and fourth year we may have some issues to keep the 
deficit moving down--but if the deficit is not moving down, we put in 
place a process called reconciliation, directed at entitlement 
spending.
  The problem we have as a Federal Government isn't the discretionary 
side of the ledger. That is spending that occurs every year. Every year 
you have to spend X dollars on defense, X dollars on education, and you 
can make a choice regarding how much you will spend here, how much you 
spend there. Nondefense spending in those accounts has been flat for 
the last few years, essentially flat if you factor in inflation. The 
real growth of the Federal Government has been in these accounts that 
are entitlement accounts, mandatory accounts which I had on the first 
chart, three of the major ones. They represent, along with the Federal 
debt, about 60 percent of Federal spending.
  What this bill says is that essentially you have to go back and take 
a look at those accounts if we are not meeting our deficit targets and 
bring them into line so we will meet those deficit targets.
  Now, in order to help accomplish this, this proposal also includes an 
entitlement commission. There have been a lot of commissions around 
here and everyone is a little tired of commissions. This commission is 
different. This commission says take a look at the entitlement accounts 
of the Federal Government, report back to the Congress, and Congress 
must act on your proposal. We actually put in place a policy procedure 
to try to correct the entitlement issue. Then we put in place a 
budgeting procedure which allows us to legislate changes if the 
entitlement improvements are not accomplishing our goals.
  The purpose is to make these entitlement programs affordable for our 
children while they still maintain a quality lifestyle for those who 
are retired. That can be and should be able to be accomplished. But it 
takes a Congress being willing to step up to the plate and doing it. So 
far, we have not been willing to do that. We have been burying our head 
in the sand on that issue.
  Another element in this proposal is a BRAC commission, a proposal 
from Senator Brownback, which essentially looks at the whole 
Government, independent of the Defense Department, which was looked at 
under its own BRAC commission. And if you recall, it looked at the 
entire Defense Department and decided what the Defense Department 
needed and didn't need and set up a package and we voted on it as a 
package.
  This is a ``BRAC Commission'' for the Government with very strong, 
thoughtful people being appointed to the Commission, the same way the 
BRAC Commission was set up relative to the Defense Department. We will 
be able to take a look at functions of the Government which maybe 
should be eliminated or reduced or significantly changed.
  It is a good proposal. It is also a proposal that includes biennial 
budgeting--an idea that is strongly supported by the Senator from 
Alabama, Mr. Sessions, who is managing the bill on the floor right now, 
and the Senator

[[Page S5960]]

from New Mexico--so we can have a budget process where we are not 
always looking at the budget every year and everybody spinning their 
wheels around the budget but, rather, having a year where we develop a 
budget and a year where we do a lot more oversight. That is the theory 
behind that, so we can become more efficient.
  Finally, it has reforms to what is known as the reconciliation 
process. The reconciliation process is the teeth under which we 
accomplish savings in the budget process. But it can also, 
unfortunately, be used for expanding spending if it is not handled 
properly. So these reforms make it clear that reconciliation is 
primarily for the purposes of controlling spending, not of expanding 
spending.
  So the goal is simple. The goal is to put in place a package which 
will allow us as a Congress to step up and address the issue of 
overspending. That is why we call it SOS, ``stop overspending.'' The 
purpose of that goal is to be able to pass on to our children a 
government that is affordable, that continues to deliver the services 
people expect, continues to give high-quality services but does it in 
an affordable way so our children's quality of life is not overwhelmed 
by the burden of a government that is trying to support a retired 
generation that is huge.
  Again, I must stress, that you cannot do this on the tax side. You 
cannot solve the issues of the deficit, you cannot solve the issues of 
entitlement concerns on the tax side. There is simply too much 
programmatic commitment in the pipeline to accomplish that.
  Let me give you a couple numbers to highlight that fact. The General 
Accounting Office--the comptroller of the Government--has told us there 
is presently pending relative to entitlement responsibility for retired 
people an obligation which we don't know how we are going to pay for--
that is called an unfunded liability--of $46 trillion; and that is 
``trillion'' with a ``T.'' So that is $46 trillion of responsibility 
that we have put on the books in costs that we don't really know how we 
are going to pay for.
  I don't know what $1 trillion is. It is very hard to comprehend $1 
trillion. But just to put it in some sort of context, since the 
beginning of this country, since our Revolution, we have paid something 
like $43 trillion in taxes. So all the taxes paid since this country 
started would not pay for the bills we have on the books for our 
upcoming retired generation. Or to put it in another context, if you 
took all the assets owned in America today--all the cars, all the 
homes, all the stock, all the small businesses, all the big 
businesses--and totaled them up, their total is about $47 trillion in 
net value. So we have on the books a liability that is essentially the 
same as the net worth of our Nation. That is a serious problem, and you 
cannot deal with that problem by simply raising taxes.
  The other side of the aisle has not put forward any substantive ideas 
in this area relative to spending. They have suggested a proposal 
called pay-go, which is a stalking-horse for tax increases. Fine. That 
is their position: We should raise taxes to address all problems. But 
we know from the numbers that are now coming in at the Treasury that we 
are already taxing Americans at a level which is at our historic level, 
our traditional level, and that revenues to the Federal Government are 
jumping significantly because of the good tax policies we have in 
place, the fair tax policies we have in place.
  So we know you cannot solve this problem by continuing to raise taxes 
on the American people. The total tax burden to the American people 
today, including State, local, and Federal, is almost at a historic 
high. How much higher can you put that tax burden on the American 
people? No, you cannot do it on that side of the ledger. In fact, what 
we have proven is you generate more revenues by giving people an 
incentive to be productive and to go out and create jobs by having a 
fair and reasonable tax rate rather than jumping tax rates to the point 
where people have a disincentive to be productive and thus start to 
reduce revenues to the Federal Government.
  That was proven by John Kennedy, confirmed by Ronald Reagan, and now 
confirmed again by George W. Bush. It should be accepted policy around 
here, but it is rejected by the other side of the aisle, which still 
subscribes to this 1930s philosophy of governance, which is that you 
can always raise taxes to meet any problem. No. The problem is that we 
need to be willing to step up and address spending.
  This package, if it were to pass in its entirety--I hope the other 
side will not obstruct it coming to the floor. We hope to mark it up in 
Budget next week and report it out, and hope the other side will let us 
take it up. Let's have a free-flowing debate out here on the floor 
about how you address this issue.
  The outyear threat to our children--which is a function of the fact 
there is a baby boom generation floating around here that is huge--is 
not going to go away and is going to demand significant services which 
will cost a dramatic amount of money.
  Our proposal is comprehensive and extensive. It is a rebuilding, 
retooling approach toward how we manage this Congress and especially 
our budgets. It is a constructive approach, one that is committed 
toward delivering an affordable and effective government and a 
government that does not overburden our children and our grandchildren 
with taxes. So it will lead to a balanced budget, and it will lead to a 
government that is affordable.
  I thank all my colleagues who have joined me in this effort, and I do 
hope we can move it forward.
  Mr. SESSIONS. Mr. President, will the Senator yield for a question?
  Mr. GREGG. Mr. President, I yield to the Senator from Alabama.
  Mr. SESSIONS. First, I wish to say to any Americans listening and all 
our colleagues, when Chairman Gregg speaks about long-term financial 
challenges facing this Nation, we ought to listen. ``E.F. Hutton'' 
speaks. So our ``E.F. Hutton'' is speaking, and I could not be more 
proud of the package he has proposed because all of those proposals, in 
my view, are not only workable but they will work.
  What we tend to do around here a lot is we propose packages and 
ideas, and the ones that pass will not actually work.
  I say to Chairman Gregg, you had a chart that showed a declining 
deficit. Would you put that up? I just want to raise one point about it 
because it, perhaps, raises a misconception. It shows a reduction of 
the deficit and, in effect, a zero deficit. But you do not mean by that 
that to achieve that huge reduction in our current deficit, we have to 
cut spending; is that correct?
  Mr. GREGG. No.
  Mr. SESSIONS. Is it necessary we actually cut the current rate of 
spending to achieve that?
  Mr. GREGG. Absolutely not. In fact, under most scenarios, the current 
rate of spending on almost all of these major programs--such as 
Medicare, Social Security, and Medicaid--would rise significantly; they 
just would not rise as fast. Medicare, for example, would probably, 
over this 5-year period, rise by about 40 percent, instead of 43 
percent--something like that. Those are numbers off the top of my head, 
but those are the types of numbers we are talking about. You are 
talking about increased spending but at a slower rate and affordable.
  Mr. SESSIONS. And even with this long-term 20-, 30-, 60-year 
projection of larger deficits, if we just contain the growth in the 
entitlement programs by a realistic amount, we could have a great 
impact on reducing those projected deficits; isn't that correct?
  Mr. GREGG. Mr. President, the Senator from Alabama is absolutely 
right. We do not have to cut anywhere. All we have to do is slow the 
rate of growth so it is an affordable rate of growth because the 
compounding effect of slowing these rates of growth is huge.
  Mr. SESSIONS. That is such an important answer.
  Let me ask the Senator this.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. SESSIONS. Mr. President, I ask unanimous consent for 2 minutes.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. SESSIONS. With regard to the growth of revenue to our 
Government--and you had a chart which showed that--as I recall, last 
year we showed over 14 percent growth, and with this year almost half 
gone, we are looking at in excess of 11 percent growth. That is after 
taxes have been cut. Is that correct?
  Mr. GREGG. Mr. President, the Senator from Alabama is correct. The 
rate

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of growth of revenues to the Federal Government last year was about 14 
percent. This year, through the first 6 months, it was about 11 percent 
and continues to grow dramatically. That is a function of the fact that 
we now have a tax policy which encourages people to go out and take 
risks and create jobs, which creates revenue.
  Mr. SESSIONS. I thank the Senator because he has given us optimism 
and hope that we can reduce this deficit, and he has shown us we can do 
this without slashing our social programs or any other spending but 
just contain the growth.
                                 ______