[Congressional Record Volume 155, Number 50 (Tuesday, March 24, 2009)]
[Senate]
[Pages S3622-S3625]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               THE BUDGET

  Mr. ALEXANDER. Mr. President, I will comment on the Republican 
leader's remarks. I agree with him that this budget borrows too much. 
We say that publicly on the floor and we say that privately in our 
discussions. Many of us are afraid that this 10-year budget is a 
blueprint for our country that our children and grandchildren simply 
cannot afford.
  First, I will say a word about the President's press conference this 
evening. I hope that during his press conference, the President will 
reject the bill passed by the House of Representatives last week about 
the AIG bonuses as not the kind of thoughtful and mature response that 
the American people deserve from Congress in a time of crisis. It is 
certainly not worthy of approval from the President of the United 
States.

  I hope the President will focus attention on something that is a 
mature and thoughtful response and is worthy of the attention of the 
President of the United States, and that is Secretary Geithner's 
proposal yesterday to use a partnership of public and private resources 
to begin to get the toxic assets out of banks, fix the banks, and get 
credit flowing again.
  I voted last October and then again on January 15 to give, first, 
President Bush and, next, President Obama the money he needed to fix 
the banks. I could say, at this point, the proposal of the Secretary 
yesterday at first blush seems to me to be underfunded, 
undercapitalized by tax dollars and too late. But it is more important 
to say I believe it appears to be on exactly the right track, that it 
appears to be well thought out, and that at first blush it seems to be 
attracting support from the private sector, which it needs to do to be 
successful.
  History shows us some lessons about when we have bank problems--and 
we have had plenty of them. When I was Governor of Tennessee in the 
1980s, dozens of banks failed because of a problem with the Butcher 
brothers, who were basically kiting banks. But the Federal Deposit 
Insurance Corporation came in and over the weekend usually 
recapitalized the banks, got rid of the bad assets, put them back out 
there, and our economy grew again. That is harder to do today because 
the businesses are bigger and the crisis is much larger. But the 
fundamental solution to our economic troubles is the same.
  We need to fix the banks and get credit flowing again, and the way to 
fix the banks is to get enough of the toxic assets out so they can have 
confidence to lend money, and business can start growing, and people 
can get jobs again. That is the history lesson.
  There is another history lesson, and that is that we need the 
President of the United States to focus his full attention on fixing 
the banks and getting credit flowing again. I have used the example of 
President Eisenhower going to Korea. Someone said to me: Senator 
Alexander, no one pays attention to history. Well, they ought to.
  President Eisenhower said in October of 1952: I shall go to Korea to 
fix the Korean war. That was in October. He

[[Page S3623]]

was elected President, and within weeks he went to Korea. He said: I 
will concentrate my full attention on this problem until it is 
honorably ended.
  President Eisenhower was a very capable man. He was capable of doing 
more than one thing at a time. But he knew the country needed him to do 
one thing and the country needed to have confidence he would do it.
  President Obama is extraordinarily capable as well. When I, or 
others, have suggested he is doing more than one thing at a time, he 
often says: I can walk and chew gum at the same time. I don't doubt 
that. I think we may not have had a more impressive President in terms 
of intellectual ability, and he has impressive people around him.
  What we need for the President to do--and tonight would be a good 
time to start--is to assure us, as President Eisenhower did when he 
said ``I shall go to Korea,'' and say: I shall fix the banks and get 
credit flowing again. We know that a President this impressive and this 
talented, if he decides to throw himself into this problem with 
everybody he's got for as long as it takes, he will wear everybody else 
out and he'll get the job done. From the day he makes that clear, 
confidence in this country will begin to recover at a fairly rapid 
rate. I say that with great respect to the President and to the 
proposal Secretary Geithner made yesterday, which I think is mature and 
thoughtful and the kind of proposal we ought to be focusing on in a 
bipartisan way.
  As to the budget, the budget also makes a difference to whether the 
economy recovers. It is hard for the economy to recover if the Congress 
spends too much, if the Congress taxes too much, and especially if the 
Congress borrows too much. The Republican leader pointed that out in 
his remarks.
  This 10-year budget is a blueprint for a country our children and 
grandchildren cannot afford. It doubles the public debt in 5 years, and 
nearly triples it in 10. It grows the public debt to 82 percent of the 
gross domestic product by 2019. The gross domestic product is the sum 
total of all our efforts in a year, all the money we produce, and we 
produce 25 percent of all the money in the world each year, more or 
less.
  This 10-year budget creates more new debt than all the Presidents of 
the United States from George Washington to George W. Bush combined. 
Let me say that again. All the Presidents of the United States, from 
George Washington to George Bush, did not run up as much debt as this 
President proposes to do in the next 10 years.
  By the year 2019, we will be spending more than $800 billion just on 
interest payments on our debt every year. We only spend $720 billion on 
Defense in that year. We will be spending more on interest than we do 
on defense, and we will have enough left over to fund all the Federal 
spending on education. That is too much borrowing.
  What do we do about that? There are a number of things we can do. I 
suggest we put a limit on runaway debt so that it cannot be more in any 
year than 90 percent of our gross domestic product. Another idea would 
be to enact a bipartisan Conrad-Gregg proposal which would say to 
Congress and the President: We need to set up a special mechanism to 
deal with entitlement spending--the runaway spending for Medicare, 
Medicaid, and Social Security, which is the biggest part of our debt 
problem. The proposal would set up a special commission that would 
figure out how to bring entitlement spending under control, make 
recommendations to the Congress, and we would vote it up or down, and 
act in the same way we close defense bases, which is also very hard to 
do. The Conrad-Gregg proposal has broad support in the Senate. It has 
broad support in the House. The President of the United States says he 
wants to control entitlement spending.
  The Republican leader of the Senate, Senator McConnell, in his first 
address this year, went to the National Press Club and said: Mr. 
President, I am ready to work with you on entitlement spending. In 
other words, he wants to bring the debt down in the outyears. But so 
far we have not seen that priority.
  I think the priority today ought to be to fix the banks and get 
credit flowing again. I support the President's objective to reform 
health care this year. I think health care has to be reformed in order 
to bring entitlement spending under control. But why can't we go ahead 
and work on Social Security? Why can't we pass the Gregg-Conrad bill? 
Why can't we send sub-signals that we are serious about reducing 
entitlement spending? Instead, this budget would move $117 billion of 
funding for Pell grants from discretionary spending to entitlement 
spending; in other words, move it from the area where we would spend it 
only if we can afford it to the area where we automatically spend it 
without having to vote on it. We shouldn't be adding anything to 
entitlement spending this year.
  Finally, new taxation is not good, for this year especially. I care 
about climate change, but now is not the time to impose a $600 billion 
tax on electric bills and gasoline prices in the middle of a recession.
  Republicans will offer a clean energy agenda based on conservation, 
nuclear power, electric cars, finding more natural gas, aggressively 
funding research in solar energy, and finding ways to capture carbon. 
We can do all that without imposing a new tax on the American people in 
the middle of a recession.
  I look forward to the President's remarks tonight. I hope, as I 
believe most Americans do, that he rejects the House bill of last week 
and expands on Secretary Geithner's proposal. I applaud him and I 
applaud the Secretary for a mature, thoughtful proposal, and I hope the 
President will, as Presidents must, select the most urgent issue before 
us and focus on it with all he has until he fixes the problem. He can 
do that. Only a President can do it, and this President is especially 
talented. I believe if he makes clear he intends to do it, the country 
will have confidence that he will get the job done.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from New Hampshire is 
recognized.
  Mr. GREGG. Mr. President, I wish to speak and continue the discussion 
which was raised by the Senator from Tennessee and the Republican 
leader earlier on the issue of where the budget that has been proposed 
by the President is going to take us. There are a lot of concerns 
raised by this budget.
  Most of us have been willing to say we understand the President has 
inherited a very difficult financial situation; that, therefore, we 
accept the fact, in the short run this year and for much of next year, 
potentially a lot of money is going to have to be spent very quickly in 
order to try to refloat the economy. The Federal Government is the only 
place where there is liquidity right now, and that liquidity is being 
used aggressively to try to get the economy going again.
  The problem the President's budget has is, as we get past this next 
year, year and a half of recession and we get further down the road in 
his budget, the budget he has sent up to us continues to dramatically 
increase spending, dramatically increase borrowing, and dramatically 
increase taxes.
  As we get into the third and fourth year of this budget, instead of 
seeing the numbers come back down to something that is manageable, we 
see a deficit running in the 4- to 5-percent range of GDP. We see a 
public debt-to-GDP ratio in the 60- to 80-percent range. These are 
numbers that cannot be sustained. They add up to massive debt.
  This chart shows the situation in fairly stark terms. Historically, 
the national debt has been around 35 percent of GDP. That is a 
sustainable level. I think if you talk to most people in the economic 
area, they will say a government can do quite well if its national debt 
can be contained at that level.
  Unfortunately, under President Obama's proposal, that debt goes 
straight up, and by the end of the 10-year window which his budget 
covers, it is at 80 percent of gross national product. That is not 
sustainable. That essentially means we are putting on the books a debt 
which we have to pay as citizens of this country, which is unaffordable 
for the citizens in this country. It has a lot of practical 
implications which are all very serious and about which we should be 
concerned.
  The most obvious is that when we run up this much debt, somebody has 
to pay it and that means our kids and our grandkids. They are going to 
have to pay this debt off. Instead of maybe being able to buy a house, 
send their

[[Page S3624]]

kids to college or live the lifestyle our generation has lived, they 
are not going to be able to do that because the debt burden on them is 
going to be so high that burden will overwhelm their ability to live 
the same quality of life that we have.
  Equally important is the effect it probably will have on the value of 
the money of the United States, the dollar. There are only two ways you 
can handle it when you run debt up such as this. Either you 
dramatically raise taxes--and you basically make it virtually 
impossible for Americans to be productive if you raise taxes as much as 
this debt would cost to pay off--or you do something called monetizing 
the debt, which is a technical term for creating inflation. Inflation 
is a pretty big evil. If you get on a course of inflation, you quickly 
go into a spiral that is downward as a nation and as an economy. This 
debt on this present path, as proposed by the President, will lead us 
to that spot.
  There is another problem this creates, equally significant and about 
which we are already hearing, and that is, for people who are observant 
and people who look at our Nation, especially if they are lending us 
money--and the whole world is lending us money, especially the 
Chinese--they look at our debt and they say: Is it manageable? Can the 
United States maintain this level of debt and still be a productive 
country, still be able to be prosperous?
  There are beginning to be signs of people saying: No, we are not so 
sure that is true. We are not sure that is going to be the best thing 
to happen. So the value of the dollar starts to change and gets 
decreased. Equally important, people become restive about buying our 
debt, about financing this great spending spree which this 
administration has proposed by lending us money. In fact, we have now 
heard two major statements from the Chinese leadership. The Premier of 
China has specifically said that he is concerned about the value of his 
investments in the United States. Remember, China holds the majority of 
our debt. Now we see, from Mr. Zhou--I believe that is how he 
pronounces his name--the head of their Federal Reserve, essentially 
that they are so concerned about our debt situation and our lack of 
management of our fiscal house that they want to change what is 
basically known as the world currency reserve from dollars into some 
other currency. They are suggesting it be something controlled by the 
IMF, a currency produced by the IMF. That is not a vote of confidence 
in where we are going as a country by our biggest creditor.
  It is unfortunate, very unfortunate, that we have to listen to the 
views of China and take them seriously on this issue. It did not used 
to be that way. But, regrettably, whether we like it or not, as we run 
up all this debt we have to find somebody to buy it because this debt 
is operating our Government and we as a nation do not have the 
wherewithal to buy it, we have to sell it to other nations, and the 
primary nations with currency reserves today are China and Russia and 
some of your oil-producing states in the Middle East. These are not 
necessarily nations which are all that sympathetic to our problems, 
especially when our problems are fairly self-inflicted--and by self-
inflicted, I mean this administration has sent up a budget which 
dramatically increases spending and dramatically increases taxes at the 
same time it borrows a huge amount of money.
  Trying to put this in real-world specifics, if you take all the debt 
that has been run up in the United States since our Government started, 
since George Washington--he is over here--through all the Presidents, 
including George W. Bush, the amount of debt they have put on the books 
of the American Government, the amount of debt they put on our backs as 
American taxpayers is $5.8 trillion. In the 10-year budget President 
Obama is suggesting, he is going to double that number. Essentially, 
President Obama's proposal puts more debt on the books--actually, in 
the first 5 years of his administration--than has been put on the books 
since the beginning of our Government through George W. Bush. That is 
how quickly and massively the debt of the United States expands under 
this budget.
  At the same time, the tax burden increases significantly under this 
budget. There is $1.8 trillion of new taxes proposed in this budget. I 
understand it is the philosophy of the Government that now is the 
majority in this Congress and in the White House that Americans should 
pay more taxes. I understand that. I do not happen to agree with it. I 
think the American people are not undertaxed. I think basically we are 
a country that has some problems, but they primarily go to 
overspending. But even if you accept the fact that we have to raise 
taxes on the American people, which is what is proposed in this 
budget--there are two major tax initiatives. One would hit small 
business and one would hit every American. We call it the light switch 
tax or the national sales tax on energy. You would presume that they 
would take those revenues and, as good stewards, use them to try to 
reduce this deficit we are facing which is driving this debt up. But, 
no, that is not what happens here. They take all these revenues and 
they use them to expand the size of Government, so Government grows 
dramatically.
  Of course, they have now used up the resources which you might be 
able to use to try to bring this debt down for the purposes of 
increasing the size of the Government. They are increasing the size of 
Government so fast that even though they have the largest tax increase 
in history built into this budget, their spending increases so much 
quicker than that, the debt skyrockets.
  President Clinton when he came into office raised taxes 
significantly, too, because that was also his philosophy, but he took 
those tax dollars and used them--in conjunction, at that time, with a 
Republican Congress--to reduce the deficit and reduce the debt of the 
United States. That was proper. If you are going to raise taxes, that 
is what they should be used for. You should not use them to explode the 
size of the Government.
  Where is this Government explosion occurring? Primarily, the 
President has proposed to take the spending of the Federal Government, 
which has historically been about 20 percent of the gross national 
product, up to 23 percent of the gross national product. That spending 
increase is not for the short run. In the short run, he takes it up to 
28 percent. That spending increase begins in the second and third year 
of his budget and it goes on forever--23 percent, actually creeping up 
every year, spending by the Federal Government. Over the last 40 years, 
the Federal Government has only spent about 20 percent of gross 
national product. That difference between 20 percent and 23 percent on 
our economy is a massive increase in spending. The amount of deficits 
run up because of that spending over the next 10 years will be over $9 
trillion.
  Just the interest on the Federal debt in the year 2018, as a result 
of this huge explosion of spending which is proposed in this budget, 
will be $816 billion. That is just the interest on the Federal debt. 
Put that in perspective. In that same year, we will be spending less--
around $700 billion--on national defense. So we will actually be 
spending more on financing the deficit and financing the debt than we 
will on national defense. In the same period, we will be spending 
probably somewhere around $100 billion on education, if you include 
Pell grants and student loans. So we will be spending maybe eight times 
what we spend on education on financing this debt. That is money that 
is being sent out of the United States. Hopefully, people will still be 
buying our debt. But it is money being sent out of the United States to 
people who own our debt. This is just out of control.
  Some people have been saying the Republicans are being terrible 
naysayers about this budget. Yes. Yes, we are, because one generation 
does not do this to another generation. It is not the tradition of our 
Nation that one generation goes out and borrows massive amounts of 
money which have to be repaid by the next generation at a rate which 
can't be afforded by the next generation and then turns the country 
over to that next generation and says: Here, we are going to give you a 
country which has less opportunity for you than we received from our 
parents because this country is going to have such a huge debt burden 
on it as a result of all this spending and all this borrowing, and the 
taxing, which doesn't go to basically reduce the deficit at all; it 
goes to expand the size of the Government.

[[Page S3625]]

  It is not fair, really, for us, our generation, to do that to the 
next generation. That is why we suggested--OK, we will accept the fact 
that in the short run, over the next 2 years, there is going to have to 
be a spike in Federal spending and in the debt. But after that occurs, 
let's get back to what is an orderly process. Let's get back to numbers 
which are acceptable and responsible. Let's bring the public debt down 
from 80 percent of GDP, which is where it is when we get out here in 
2016, 2011, and that period--not too far away--down to 40 percent of 
GDP, where it has historically been, down here. Let's take the deficit 
down from 4 and 5 percent down to 2 percent, which is where it 
historically has been. Let's put in place responsible policies, not 
take the spending up to such levels that they simply cannot be afforded 
because of the amount of debt that goes on the backs of the American 
people that becomes grossly excessive and unaffordable. This is not an 
unreasonable request. We are not suggesting that the administration 
trim its sails this year. We are suggesting that in the outyears there 
be a responsible budgeting process around here that leads to a fiscally 
sound policy.
  Why do the Chinese not have confidence in our currency? Why are they 
talking about changing from our currency? Why are they asking whether 
they should continue to invest in our debt? Because they don't see any 
policies coming down the pike from this administration which discipline 
in any way or limit in any way the spending of the Federal Government. 
Just the opposite--it is an explosion of spending on the entitlement 
side by over $1.2 trillion and an explosion of spending on the 
discretionary side by almost $1 trillion.
  If we did something constructive around here such as set up the 
process--which I proposed along with Senator Conrad, and many people in 
this Chamber support--which would put in place a disciplining event on 
our entitlement spending, then these different nations would look at 
us--and our people could say: Listen, Congress is serious about getting 
this under control in the outyears. They are not going to pass this 
massive debt on to our kids. They are actually going to try to put in 
place some systems to try to address this.
  But nothing like this is happening. This budget has none of that in 
it. Instead, this budget simply expands the costs of the Government and 
the borrowing of the Government, and then it raises taxes and spends it 
instead of using it to reduce the size of the debt. It is a policy 
which is not sustainable.
  The term ``not sustainable'' is used around here occasionally. What 
does it mean? Basically it means that when this policy comes to its 
fruition, after this budget is passed--and it will pass. The simple 
fact is, it needs 51 votes and there are 58 Members on the other side. 
It is going to pass. After it passes and the policies underneath it 
come in place, the term ``not sustainable'' means we are going to pass 
on to our kids a government they cannot afford and which will reduce 
the quality of their life and which may put at risk the value of our 
dollar and the ability to sell debt, according to the people who are 
buying it right now, the Government of China.
  This is serious. This is very serious. We need to take another look. 
We need to reorient. We need to sit down and say: How can we do this 
better? How can we make this work better? How in the outyears--and it 
is not that hard in the outyears--so we start to close these numbers on 
the deficit and bring down this rate of growth in debt so that it 
flattens out? How can we do that?
  We are ready to do that on our side of the aisle in a bipartisan way, 
whether it is something like the Conrad-Gregg bill or something in the 
area of entitlement reform or whether it is a freeze on discretionary 
spending as we move into the outyears; whether it is, if you are going 
to raise taxes, using those taxes to reduce the debt rather than expand 
programs; living within our means in the area of health care. We are 
willing to look at all those ideas because if we do not, basically we 
are going to pass on to our kids a government that will fail them and a 
government that will obviously not give them the lifestyle that they 
deserve and that one generation should pass on to the next generation.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Virginia is 
recognized.

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