[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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