[Congressional Record Volume 153, Number 5 (Wednesday, January 10, 2007)]
[Senate]
[Pages S317-S319]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CONFRONTING A CONUNDRUM
Mr. GREGG. Mr. President, I rise to discuss again what I consider to
be the single largest quality-of-life issue we have confronting us as a
nation. That is the issue of how we pay for my generation, the baby
boom generation, which is about to begin to retire and the effect our
retirement as a generation will have on the capacity of our children to
be successful and have a quality of life that is equal to what we have
had as a nation.
We confront a conundrum. The baby boom generation has been the most
productive and most resilient generation in the history of the Nation.
As a result, through each decade of its growth, beginning in the 1950s
when it added a lot of elementary schools, right through the 1960s,
1970s, 1980s, 1990s, and into the 2000s, when it created a huge engine
of economic activity in this country because there are so many of us,
so highly educated and so aggressive as a productive engine for the
whole Nation, we have been able to contribute to society and to our
Nation the highest quality of life in the history of our Nation--in the
history of the world, for that matter.
But now this generation, which is the largest generation in our
history, is going to begin to retire. All of the retirement systems
were built up over the years in order to benefit people who retire in
our Nation, to make sure they can retire with dignity, Social Security,
Medicare and, to a lesser extent, Medicaid. It was based on the promise
that Franklin Roosevelt had, which is that you would have a lot of
people working and a few people retiring. In 1950, the concept was that
you would have, for example, 13 people working for every 1 person
retired, so that the working Americans would be able to not only earn a
good living for themselves but would also be able to support those
people who are retired.
Well, that equation fails in the present projected future because the
baby boom generation doubles the number of retirees from approximately
35 million to 70 million, and from a system which had 13 people working
for every 1 person retired in the 1950s to about 2 people working for
every 1 person retired by 2025. So you go from a pyramid to a rectangle
and you have those working people trying to support the people who are
retired. There are not enough people working to do that. So you create
a huge burden and basically a fiscal crisis of inordinate proportion.
I have a chart nearby that clearly reflects this problem. This simply
shows three costs that the Federal Government incurs, which are Social
Security, Medicare, and Medicaid, the three largest entitlement
accounts, as they are referred to.
Those accounts make up about 8 percent of our gross national product
today. Historically, the Federal Government spends about 20 percent of
GDP. If it gets much above that 20 percent of the GDP, it becomes an
extreme burden for the productive side of our economy and you end up
with people being able to produce less because the Government is taking
so much out of their paycheck and productivity drops and quality of
life drops.
So we have as a nation always sort of maintained within a fairly
small range this concept that the Federal Government should spend about
20 percent of GDP. That goes way back. This chart takes us back to
1962. In times of war, that spikes, and it has historically--especially
in World War II. But that is the traditional amount.
However, the problem we confront is that the cost of Social Security,
Medicare and Medicaid alone--those three items--because of the
retirement of this huge generation and the price which it will take to
pay benefits for that generation, actually will absorb 20 percent of
GDP in the mid 2020 period, which is not that far away. It is within 20
years, which is not that far. We will actually have a situation where
three Federal programs are using all of the dollars which historically
the Federal Government has used in order to support the purposes of the
Federal Government. So that would mean, theoretically, that the only
thing you could pay for would be those three programs. You could no
longer pay for national defense, which is the first responsibility of
Federal Government; you could not pay for education, health care,
environmental protection, or all of the things the Federal Government
does that are significant in improving the quality of our standards of
life.
That, however, doesn't end the problem, because the cost of this
generation continues to go up. In fact, just those 3 programs break
through the 20-percent line and go well up into the high 20 percent--
28, 29 percent of GDP, as projected--as we head out into 2030 to 2040.
Basically, what you see is the fact that we are headed toward a
situation where the cost of these three programs alone will essentially
bankrupt our country. The practical implications of this are that the
younger generation, the people working for a living, our children and
grandchildren, will have to pay a tax burden that is so high that their
discretionary income won't be able to be spent on educating their
children with a better college education, or on buying a home, or on
living a better lifestyle. Their discretionary money will go to taxes
to support the cost of these three entitlement programs.
This is not a sustainable idea. This is not an idea that any
responsible person involved in governance could subscribe to.
Certainly, one generation has no right to pass on to another generation
a set of costs that is going to bankrupt the capacity of the next
generation to live as good a quality of life as the prior generation
was living. It is not right, fair, or appropriate.
Another thing this chart shows is that, as a practical matter, you
cannot tax your way out of the situation. A lot of people say: we will
just raise taxes. You cannot tax your way out of the situation. You
cannot raise taxes high enough to pay for the costs we are going to
incur as a result of these entitlement programs having to benefit so
many Americans.
Why? It is very simple. Historically, Federal taxes have been 18.2
percent of GDP. Today we have Federal tax of 18.4, 18.5. So we are over
the historic norm today. Once you get Federal taxes up above 20 percent
and they head toward 23, 24, 25 percent, or even higher, in order to
accomplish the coverage of these costs, you are essentially going to be
taxing productive Americans at a level where you would reduce
dramatically their productivity..
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It is sort of a downward spiral event. It is akin to killing the
goose that is laying the golden egg situation. You cannot lay a tax
burden on a productive people and expect them to continue to be
productive because human nature, the natural response to something such
as that, is people become less productive. As they see 60, 70, 80
percent of their next dollar they earn going to the Federal Government
or to taxes, they are going to be less inclined to go out and earn that
next dollar because they are keeping so little of it. That is just
human nature.
So it is a downward spiral event. Once you get taxes above a certain
level, they stop producing revenues because people do tax avoidance
activity or, alternatively, they simply stop being productive and
society stops investing, capital formation drops off, jobs stop being
created, and you basically drive yourself into a severe recession or
you become less competitive with the rest of the world, which doesn't
have the same problem.
We cannot tax your way out of this issue. We actually have to address
the fundamental, underlying problem, which is that these programs, as
they are presently structured, are not sustainable in the future, and
we have to figure out a way to make them sustainable.
There are many ways to do this. There is no one solution to this
problem. There is no magic bullet out there, although with Social
Security it is a much simpler exercise in the sense of moving parts.
But there are many ways to continue to deliver high-quality retirement
services in Social Security, Medicare, and Medicaid but have them be
affordable to the generation who is paying for it.
Five years ago, myself, Senator Breaux, Senator Bob Kerrey, Senator
Chuck Robb, Senator Moynihan, and on our side of the aisle, Senator
Craig Thomas and a number of other Senators, came together to develop a
plan for Social Security which was bipartisan, which would have solved
the problem over the long term, which would have continued the benefit
structure which was extremely robust--in fact, a more robust system
than what seniors are facing today--yet put it in a position that was
affordable.
Yes, there were revenues included in that package. Any solution is
going to have to involve benefit adjustments and revenues. There is no
way we can do it on one side. The fact is, we have to face up to this
situation. As a society, we have to face up to this need.
I guess that is my point today. We are running out of time. I have
been delivering this message for a while. The clock continues to run.
We are running out of time. We have an opportunity, a window. It is a
unique window. There are not a whole lot of advantages to the fact that
I am no longer chairman of the committee I used to be chairman of, but
one of the advantages is, from my perspective, we now have a divided
Government. We have a Democratic Congress and a Republican Presidency.
I happen to believe that any solution to this issue has to be
absolutely bipartisan. There can be no question from the American
people that a solution on these issues is not done in a bipartisan way
because if the American people think it isn't fair, they are not going
to be attracted to it; they are going to think it is gamesmanship by
one party or the other.
So anything that has to be done has to be done in a bipartisan way.
We are in a climate where any solution that is going to occur is going
to be bipartisan. That is the good news. But that window of opportunity
isn't going to be open that long. We are going to be heading into a
Presidential election pretty soon, and in both of the last Presidential
elections, we have seen outrageous, despicable, in my opinion,
demagoguery on the issue of Social Security. The well was poisoned
before the day even started in both those campaigns.
The opportunity to aggressively and effectively address this issue,
to develop a bipartisan solution has to occur sooner rather than later,
and it has to be done in a way with which the American people are
comfortable because it is fair.
I put forward a proposal on this issue. I put forward a proposal that
deals a lot with this responsibility package called SOS that has about
30 sponsors. One part of that package was to structure a procedure to
deliver results. I believe we should use procedure to drive policy
because I believe that once you put policy on the table, everybody
takes shots at it, all the different interests in this city sit around
and pick it apart. It makes much more sense to use procedure, and the
procedure I use is a fast-track, bipartisan commission, where you
absolutely have to have bipartisan decisions, you have a supermajority
approval, and you do it on a fast track and have people who are going
to be players sitting around a room to try to work it out.
That is not the only way to approach this issue. There are a lot of
different ways to approach this issue. I hope we, as a Congress, and
our leadership in this body--and I know our leadership is interested in
this issue. I talked with people on the other side of the aisle who are
active on this issue and active in the leadership, and there is key
interest in this issue, but the time to move is now.
We are running out of time, and we have to get on with this.
I wanted to make this point, again. I stand ready, a lot of Members
on my side stand ready to pursue substantive action in this area.
Hopefully, we can do it.
On a second note, this is a point I raised with the assistant leader,
we are about to get a $100 billion-plus supplemental on the war. Nobody
in this Senate in any way is going to vote in a manner that doesn't
give our troops what they need when our troops are in the field--at any
time, especially when they are in the field.
These supplementals are important to make sure we adequately fund
people who are putting their lives on the line for us, but the process
that has evolved is not right; it is just plain not right. This will be
the fourth year--I think it is like the sixth supplemental, maybe it is
the seventh or maybe it is the eighth--I have lost track--that a bill
will have come up designated as an emergency from the Pentagon and
basically bypasses the process of review through the authorizing
committee and, for all intents and purposes, through the Appropriations
Committee and comes directly to the floor and spends tens of billions
of dollars.
It is a shadow budget, as I have described it. We have a budget
process around here. Granted, it is not working that well. Hopefully,
it will work better this year. But we do have a budget process, and the
purpose of the budget process is to give adequate review and fiscal
discipline so that we are responsible stewards of the taxpayers' money.
But when we have this shadow budget that comes up, entirely outside the
budget process and continues to come up and has become almost the
regular order of approach as to how we fund the Pentagon now, you are
essentially saying budgets don't matter, review of the substance
doesn't matter, spending should simply be done as requested, without
any oversight and without any discipline as to how much is going to be
spent. I don't think that is the right way to approach this.
In the last budget, I set aside almost $90 billion for supplementals
for the war. The Pentagon wouldn't give us a number. They sent up a
euphemistic number. They wouldn't even support that number. So we
arbitrarily set $90 billion because that was the average of what the
supplemental requests had been over the prior 3 years. Then we
subjected it to budgetary restraint, so that if it went over the $90
billion, they had to explain it, they had to justify it. We had to have
a supermajority if we wanted to accomplish it, if somebody wanted to
challenge it--but only if somebody wanted to challenge it.
What is happening now is we are looking at $170 billion, not $90
billion, of spending in this year. That is almost $130 billion over
what the Pentagon claimed they euphemistically set up as a throwaway
number, which they wouldn't even defend when we had a hearing on this
subject.
Essentially, what we are seeing is that there has been a decision
downtown to do an end run around the budget process and essentially an
end run around the oversight process. We are also seeing, regrettably,
that they are gaming the system, at least in the last supplemental--and
it is reported that in this supplemental, although I haven't seen the
numbers--there is a fair amount of spending which had nothing--well, it
had something, but it
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was truly tangential to the war effort. It went to the core issue of
the Defense budget, which is still spending over $400 billion. That is
on top of the supplementals. They were using this shadow budget, where
they knew they had no restraints, to basically pick up spending which
should have been in the core budget and had at least gone through the
authorizing process.
There were a number of items in there that fell into that category,
including the whole restructuring of the Army. And now we are hearing
they may even have joint strike fighters in this next supplemental, two
of them potentially. At least that is what has been reported. Maybe
they will be out by the time it gets here because light has been shined
on them.
The fact is, it shouldn't work that way. We know we are in a war. We
know, approximately, what that war is going to cost. We should have a
process which reviews it in an orderly fashion, and that is the way it
was historically done here.
The Vietnam war was appropriated and authorized. Almost all the
spending went through an authorizing and appropriating process. Almost
all the appropriations of the Korean war went through the authorizing
and appropriating process. It is a very predictable number right now,
or within range of a very predictable number. They don't have to send
$170 billion up as a supplemental and designate it an emergency to
fight this war. We know it is going to cost us in that range, and it
should go through the authorizing process and then through the
appropriating process. It shouldn't come up as an emergency.
Sure, there may be some amount on top of that which may occur during
the year, we may need to put in another X number of dollars, and that
may be a legitimate emergency, but the core spending of this war should
be accounted for in the regular order and reviewed so it doesn't end up
being a gamesmanship exercise coming to us from downtown which is
essentially to avoid, ignore, and mute the capacity of the Congress to
have an impact on how the spending occurs, whether it is legitimately
part of the war or legitimately part of the Defense Department.
I am concerned about this situation. I have heard mumbling from the
administration, at least from OMB, that they are going to try to budget
for this stuff that is appropriately not in the war--by ``this stuff,''
I mean things that are appropriately not in the war effort but are in
the Defense Department's underlying budget--and that they are going to
take those out and put them in the underlying Defense budget.
They need to do more than that. They need to structure the budget
they send up here so that if they want to have a separate account for
the war fighting, fine. I can understand that because we don't want to
build it into the base. I am 100 percent for that. But it shouldn't be
a separate budget, an emergency budget, and it should go through the
authorizing and appropriations process.
We have time to do that. We have a strong authorizing committee. I
sit on the appropriating committee, and we have an extremely strong
appropriating committee. We can review the numbers quickly and analyze
whether it is fair and appropriate, and I suspect 95, 98 percent of it
will be approved. But the fact that we are going to approve it doesn't
mean it shouldn't at least be reviewed. Basically, muting and
undermining the legitimacy of the congressional role in funding is,
undermining, in some degree, the commitment to the war effort itself.
It is counterproductive to having popular support for the war effort.
I hope that when they send up this next supplemental that they not
designate it as an emergency and that they ask that it go through the
process, but tell us to do it in a quick way, don't spent a month doing
this; do it in a week and a half, 2 weeks, and we can do that;
otherwise, I believe we will continue on a path that is harmful not
only to the relationship between the executive and the legislative
branches, it is harmful to good governance and the good stewardship of
tax dollars and it is, more importantly, more harmful to the war effort
itself.
Mr. President, I yield the floor, and I suggest the absence of a
quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. LIEBERMAN. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
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