[Congressional Record Volume 155, Number 34 (Thursday, February 26, 2009)]
[Senate]
[Pages S2545-S2547]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     PRESIDENT OBAMA'S FIRST BUDGET

  Mr. GRASSLEY. Mr. President, today our President sent his budget to 
the Hill. On Tuesday night, in a joint address, our new President, with 
his usual eloquence, sketched out his fiscal policy goals.
  First off, as ranking Republican on the Finance Committee--and I am a 
senior Budget Committee member--I wish to point out that Republicans 
were happy to hear the President make deficit reduction a very high 
priority. If I heard correctly, the loudest bipartisan applause, in 
terms of responses to the President's policy proposals, greeted that 
policy point. We Republicans want deficit reduction on our future 
fiscal path. As we come out of the recession--hopefully sooner rather 
than later--we need to get the deficit down.
  While we Republicans agree with the President on that goal, we 
disagree on the degree to which the Democratic leadership has 
dramatically expanded the deficit and added to the debt. A couple of 
weeks ago, Republicans and Democrats disagreed on what is referred to 
as a stimulus bill. In both bodies, only three Republican Members 
supported that conference report. We parted ways on the stimulus bill 
for many reasons. Most on our side disagreed that we should put $1 
trillion of

[[Page S2546]]

taxpayers' money into an effort to grow the economy by priming the 
Government pump. We also would have shut off that spending spree once 
the recovery occurred, as opposed to half of the spending money in that 
bill being spent in years beyond 2010--supposedly the end of the 
stimulus effort to the economy.
  But what disturbed most of us on this side was the hidden fiscal 
burden built into the bill--in other words, that period of time of 
spending beyond 2010. Although advocated as a $787 billion bill, the 
real cost--the real cost--is much higher. Unfortunately, many in the 
media accepted the $787 billion score on its face. By contrast, most in 
the media looked much deeper when the bipartisan tax relief bill of 
2001 to 2006 was scored. Of course, I remember that because during that 
period of time, or most of it, I was chairman of the Finance Committee 
and involved in that tax relief. So they looked very deeply into what 
we did in tax relief, and in a bipartisan way, but they seem not to be 
as concerned about the impact on the deficit of that $787 billion score 
that is in the stimulus bill. So I would encourage the punditry and 
other opinion makers to apply the same tough fiscal standards to the 
hidden spending in the stimulus bill as they applied to the tax relief 
packages in an earlier part of this decade.
  Soon, I am going to have some charts that will demonstrate this 
difference between tax issues versus the spending issues of the 
stimulus bill.
  According to the nonpartisan Congressional Budget Office, if popular 
new programs in the stimulus bill are made permanent, the cost will be 
$3.3 trillion. I have a chart here that lays out what the Congressional 
Budget Office says the total cost of the bill is--this column right 
here. Let's move from the left to the right of the chart. First, we 
have the basic cost of the bill--$820 billion. If the making work pay 
refundable tax credit is extended, there is $571 billion--the second 
column here. If the new entitlement spending is made permanent, then 
the cost of the bill more than doubles; that is, there is almost $1 
trillion in new hidden entitlement spending right here--the third 
column. Over here in the fourth column, if the appropriations increases 
are baked in the cake, then there is $276 billion in new nondefense 
discretionary appropriations in the bill. That is the fourth column. 
And finally, CBO tells us that the interest cost on the overt new 
spending and the hidden new spending totals $744 billion. Total it all 
up, and you come out right here at $3.3 trillion. You don't come out at 
$787 billion; it is $3.3 trillion. And these are Congressional Budget 
Office figures. They are not from some conservative think tank. They 
are not from Senate Republican sources. CBO estimated this hidden 
spending.
  There is one way, and only one way, for stimulus bill supporters to 
dispute what I have said. The Democratic leadership in the House and 
Senate could pledge to keep temporary spending temporary--basically, 
the money spent in 2009 and 2010 is the end of it. If the Democratic 
leaders pledge to support leaving the bill as written and would not 
push to extend the new entitlements and new appropriations spending, 
then we could go back to the figure many in the press are reporting on 
the cost of the bill. If the Democratic leadership makes a pledge to 
keep temporary spending really temporary--in other words, for the 2 
years of jump-starting the economy--we on this side would agree that 
the bill does not cost this $3.3 trillion. Otherwise, as Members of the 
loyal opposition--with emphasis on ``loyal''--it is our duty to let the 
taxpayers know the true cost of the stimulus bill.
  Unfortunately, stuffing all of that understated new spending into the 
stimulus bill will make it harder for Democrats as well as Republicans 
to reach the bipartisan goal of fiscal discipline, and I have another 
chart which shows how hard it will be.
  This chart shows the trendline from President Clinton's era through 
George W. Bush's era and for the current fiscal year of the deficit as 
a percentage of gross national product. As this chart shows, President 
Clinton's era saw deficits decline in the early years. Once Republicans 
won control of the Congress and entered the scene, making fiscal 
discipline a priority, the deficits turned into surpluses during those 
years. In the George W. Bush era, deficits occurred during the economic 
downturn of 2000, with the tech bubble burst, the corporate scandals of 
2001, and, of course, the economic shock of the terrorist attacks of 9/
11. So we have a downturn, or we have an increase in the deficit is the 
easiest way to say it.
  Now, fortunately, during 2001 to 2003, we had bipartisan tax relief 
that kicked in, the economy recovered, and deficits started to come 
down during this period of time right here.
  Now we find ourselves dealing with the housing and financial sector 
problems. Those problems matured during the period of divided 
government--the last Congress--for the years 2007 to 2008. During that 
2-year period, Democrats controlled Congress and, obviously, we had a 
Republican President. The response of the Republican White House and 
Democratic Congress was the Troubled Asset Relief Program, TARP, and 
other stimulus legislation. Those bipartisan actions led to the large 
deficit here in 2009, and that was the deficit that awaited President 
Obama. That is over $1 trillion.
  Two nights ago--Tuesday night--President Obama pointed this fact out, 
and Democrats lustily cheered. I found the partisan cheering just a bit 
odd. I saw people leading that cheer vigorously clapping their hands. 
This enthusiastic applause from the other side would make you think 
President Obama was somehow predicting we would have a Mets-Yankees 
Subway Series in 2009. But, no, the President wasn't making a sports 
prediction; President Obama was noting that he had inherited a record 
deficit. Not many on our side find much to cheer about a record 
deficit, and I doubt that many taxpayers find much to cheer in it 
either. That is why you didn't see much applause from the Republican 
side of the aisle Tuesday night as the President was speaking to us. 
Big deficits aren't anything to applaud about. I was scratching my head 
on that one. Maybe the Democratic leadership forgot they were running 
the show here the last Congress. Maybe they looked at some polling data 
and inferred from that polling data that voters didn't realize 
Democrats ran the Congress in the last couple of years and were authors 
of the budgets for that period and last year's stimulus and the TARP 
deal. Maybe they figured that the President was taking a sharp and 
effective political shot, but you must be careful because history says 
otherwise. The TARP legislation was cut by Democratic congressional 
leaders, ably led by Chairman Barney Frank in the House and our able 
chairman from Connecticut, Chris Dodd in the Senate. In the key 
negotiations on one fateful fall Saturday night, there was only one 
Republican Senator in the room. There were at least four Democratic 
Senators in the room. I find it curious that Democrats lustily cheered 
when President Obama, Tuesday night, rightly pointed out that he 
inherited a $1.2 trillion deficit. There is no doubt he did inherit 
such a deficit. We on our side do not dispute that. But for the 
congressional Democratic leadership to pretend that they did not play a 
key role in creating the deficit, at least from the standpoint of 2 
years of their budgets as well as the TARP legislation and other 
stimulus things, is beyond being absurd. To be giddy about the record 
deficits is almost Kafkaesque.

  Yet that incorrect partisan assertion is, like this $787 billion 
figure I am referring to, somehow accepted as fact by opinion makers 
and pundits. If we go to the last column of this chart, the one with 
the red line, we see the real fiscal damage of the stimulus bill. In 
the first few weeks of this Congress the inherited deficit, which was 
bad enough at 8.3 percent of GDP, was made much worse. It is now 13.5 
percent of GDP. We have not had deficits that high since the World War 
II era.
  If you go back over the debate in committee, on the floor and on the 
conference agreement, you will find that Republicans opposed the bill 
because, in general, we believed the bill failed National Economic 
Council Director Summers'--Dr. Summers of Harvard University--three 
``t'' tests: that it needed to be timely, it needed to be targeted, and 
it needed to be temporary. Those are words directly from, I think, a 
December 28 Post article that Dr. Summers wrote. It was failure in that 
third ``t,'' the ``temporary''

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test, that was most troubling to those of us who voted against it. I 
have laid out the degree of that failure in the comments today.
  The response from many on the other side is that Republicans are in 
no position to criticize of because the deficits of the years 2001 
through 2006. I put this chart back up here again. As I have shown, 
while briefly rising in 2004, the deficits consistently came down for 
budgets produced and implemented in the period 2004, 2005, and 2006. 
Most often the critics from the other side make the widespread 
bipartisan tax relief of this era the culprit for our deficit. Let's 
take a minute to put that characterization in context.
  I have a chart that compares the revenue loss of the bipartisan tax 
relief with the full effect of spending in the stimulus bill. On the 
left side of this chart, over here, you will see all the tax relief 
enacted in various bills in the period 2001 through 2006. There were 
quite a few major tax relief bills in this period of time. They yielded 
tax relief for virtually every American taxpayer. We cut marginal tax 
rates, we doubled the child tax credit, we greatly expanded education 
tax incentives, we created the largest retirement savings incentives in 
a generation and provided significant relief from the confiscatory 
reach of the death tax, and we protected tens of millions of families 
from the alternative minimum tax.
  In this major tax relief program we made the Tax Code--now everybody 
is saying this is counterintuitive--but we made the Tax Code more 
progressive in those pieces of legislation. But, as would be expected, 
the Joint Committee on Taxation assigned significant revenue loss to 
these packages. That is up here on this side of the chart where you see 
what the Joint Tax Committee says. It scores at $2.2 trillion. As I 
understand it, for some folks that figure raises their blood pressure. 
It would raise mine too if I liked to hike taxes and keep taxes high. 
You can understand it from the perspective of those critics--those 
taxes represent $2.1 trillion that folks in this body and the other 
body would rather spend. But we all know that tax relief did a lot of 
good.
  I have another chart about tax relief doing a lot of good. For a 
family of four at $50,000 a year of income, we have $2,300 more for 
that family budget to operate under. For a single mom with two kids it 
means she keeps $1,100 for her to spend instead of 535 Members of 
Congress spending.
  From what we heard on the campaign trail a few months ago, and we 
heard a couple of days ago here in the Capitol building, President 
Obama agrees with most of this tax relief program. He said his first 
budget will retain most of that tax relief that is in those various 
bills.
  For purposes of this discussion, let's assume the merits--I want to 
assume the merits of the arguments of the critics of the bipartisan tax 
relief program; that is, let's assume all of the $2.2 trillion was 
policy that, despite what President Obama will propose, is policy these 
critics disagree with. For a fiscal damage assessment, let's compare 
the revenue loss of this widespread tax relief, leaving money of $1,100 
in the pockets of a single mom or $2,200 in the pockets of a family of 
four--let's assume the real cost. So, for fiscal damage assessments 
let's compare the revenue loss of this widespread tax relief with the 
real cost of the stimulus bill signed last week by the President.
  I am going to go back to the chart that makes the comparison. So here 
it is. On the right side you will see that CBO estimates the 10-year 
cost of the bill if the temporary proposals are made permanent. Guess 
what, it is higher than it is over here. The total is $2.5 trillion. 
This one stimulus bill costs about 10 percent more than the full effect 
of the tax relief bills passed between 2001 and 2006. For a lot of 
those bipartisan tax relief bills, again, virtually every American 
taxpayer benefits from these tax relief bills. On average, the American 
taxpayer's tax bills would be 10 percent higher today if this 
bipartisan tax relief plan were not in effect. We heard a lot from the 
critics of tax relief about fiscal discipline. Where are those same 
people today? Why are they not applying the same standard to the one 
partisan spending bill that they applied to the widespread bipartisan 
tax relief bill?
  It was good to hear my President, President Obama, raise the 
important goal of deficit reduction Tuesday night. He got applause from 
our side of the aisle. He was right that he inherited a serious budget 
deficit. The Democratic leadership applauded that line because they 
falsely claim that only Republicans bequeathed the deficit to President 
Obama. The reality is that a Democratic Congress as well as a 
Republican President bequeathed the deficit from bipartisan policies 
they jointly developed. To those who claim Republicans have no right to 
discuss deficits, they need look no further than their own actions. 
They need to take a look at the fiscal effects of the stimulus that was 
crafted early in this new Congress and compare the costs in that bill 
with all of the bipartisan tax relief that they criticize.
  In other words, compare this here, what happened in 2 weeks, with 
what happened over a period of 5 or 6 years of deficit reduction. The 
partisan stimulus bill's costs exceed that of the bipartisan tax 
relief.
  As we examine President Obama's first budget, let's take a cue from 
his speech Tuesday night. Let's make deficit reduction a priority and 
let's do it in an intellectually honest fashion. A lot of fiscal damage 
was done in the stimulus bill enacted a few days ago. That is not so of 
what was assigned to the years 2009 and 2010, but what was assigned way 
out into the future years, as if somehow the stimulus bill were a 
platform for the subterfuge of getting things done in 2 weeks that 
ought to have the very crafty look-see that goes on in the very 
sophisticated appropriation process between April and September, 
weighing one priority against another priority.
  As we proceed, then, to write a budget in a couple of weeks, let's do 
it in an intellectually honest manner. Let's take off the political 
blinders and deal with the cold, hard fiscal facts. Let's be realistic 
about expiring tax relief, its merits, its economic growth effect. That 
is shown by that one chart where the deficit went down an extreme 
amount, even though we had cut taxes, which I know to most people 
sounds as though it can't happen. If you reduce tax rates, you have to 
reduce revenue. If you raise tax rates, you are going to bring more in. 
But I think our history over the last 6 years shows that you can reduce 
taxes and still reduce deficits.
  Let's take off the political blinders and deal with cold, hard fiscal 
facts. Let's be realistic about expiring tax relief, its merits, its 
economic growth effect and its political popularity. Let's sharpen our 
pencils, get out our yellow notepads and rev up our calculators as we 
consider new nominally temporary spending or tax cuts. We owe it to the 
American people who send us here.

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