[Congressional Record Volume 156, Number 14 (Monday, February 1, 2010)]
[Senate]
[Pages S365-S366]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               THE BUDGET

  Mr. KYL. Mr. President, during the past few weeks, President Obama 
has repeatedly professed a commitment to clamp down on out-of-control 
spending and on deficits. That new development, of course, appeals to 
many Americans who have become increasingly frustrated with the 
trillions of dollars in new debt that has been racked up by this 
administration.
  The President's newly released budget tells a different story, and it 
is not one of fiscal responsibility. Just look at the front-page 
headlines from many of today's morning newspapers and you will see a 
helpful review of what they think of the budget.
  The Wall Street Journal: ``U.S. Deficit to Hit All-Time High.''
  The Washington Post: ``White House Expects the Deficit to Approach a 
Record $1.6 Trillion This Year.''
  The Washington Times: ``White House Says the Government Will Run Huge 
Deficits for the Foreseeable Future.''
  The publication Politico: ``Five Years, $5.08 Trillion in Debt.''
  In other words, this $3.8-trillion budget is another sea of red ink, 
more of the same record spending and debt that have come to 
characterize this administration.
  Let me go over some important numbers. Under the President's budget, 
the deficit, which is the gap between total revenues and total spending 
in a given year, will reach a whopping $1.56 trillion for the fiscal 
year 2010. For fiscal year 2011, the deficit is projected to be $1.3 
trillion. That will mark the third year in a row of trillion-dollar-
plus deficits, beginning in 2009. These 3 years of deficits are more 
than the total accumulated debt from George Washington to George W. 
Bush. The President's budget also virtually doubles the debt held by 
the public over 5 years and virtually triples it over 10. It exceeds 60 
percent of the GDP as a share of the economy this year. That surpasses 
last year's 50-year high.
  Interest payments will more than quadruple by the end of the decade,

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reaching $840 billion in the year 2020. That is $311 billion more than 
we spend on education, roads, and all other nonsecurity discretionary 
spending. That is just to pay the interest on the debt.
  Overall spending will remain well above the historical average as a 
percentage of GDP. By the end of the 10-year budget window, debt will 
consume 77.2 percent of our economy. As Congressman Paul Ryan, ranking 
member on the House Committee on the Budget, pointed out recently, even 
European Union countries--hardly exemplars of fiscal rectitude--are 
required to keep their debt levels below 60 percent of their GDP.
  I wish to mention a finding from a new paper entitled ``Growth in a 
Time of Debt'' by two economists, Kenneth Rogoff of Harvard and Carmen 
Reinhart of the University of Maryland. In their paper, they study the 
relationship between GDP growth and debt, and they find that nations 
carrying an excessively large debt burden of more than 60 percent of 
GDP produce a negative effect on short-term economic growth. They 
write:

       When gross external debt reaches 60 percent of GDP, annual 
     growth declines by about 2 percent. For levels of external 
     debt in excess of 90 percent of GDP, growth rates are roughly 
     cut in half.

  This only makes sense because you have less money to spend on those 
things which provide capital, which provide growth in your economy, 
because you are paying more and more of your income to service the 
debt.
  Remember, our debt will consume 77.2 percent of our economy by 2019. 
This is important because there are really only four ways to pay down 
or pay off your debt. The first is to raise taxes. You do not do that 
when you are in the middle of a recession, and, in fact, it is 
counterproductive to economic growth in the first place. Second, you 
cut spending. Well, that is very hard for Congress to do. Third, 
inflate the currency. Of course, that wipes out savings. It is the 
least good of the bad alternatives. Fourth, you can grow your way out. 
Growing your way out is the way to do it, obviously. It is like your 
family: If you have a lot of debt, you can cut some on spending, 
sometimes you can make a little more money. You cannot inflate your way 
out the way the government can. But the preferred way is to grow your 
way out of debt by, over time, making more money and by being able to 
pay it down. But there is a point at which, according to these studies, 
even that does not work--when you have so much debt that you do not 
have enough money to put back into the system to create the growth we 
are talking about. And that is what this debt burden and interest cost 
does.
  The administration has been touting a spending freeze worth about 
$250 billion over a decade to help allay concerns about spending and 
debt, but it does not start until next October. Therefore, to me, it is 
a little bit like the alcoholic who says: Well, I am going to quit 
drinking right after I have my next drink. If it is a good idea--and it 
is--we should begin now. I applaud any move toward fiscal 
responsibility, but this proposal will really do little to seriously 
attack the debt and will not even erase the massive debt accumulated 
during President Obama's first year in office. As columnist Robert 
Samuelson put it recently, ``Any savings would be mostly a rounding 
error in the decade's projected deficits.''
  The point is, we have to do a lot more than this. Let's remember that 
the proposed spending freeze only applies to 17 percent of the budget. 
Programs targeted for the freeze have already seen a 22-percent 
increase in their annual appropriations in the past 2 years, plus 
another 25 percent increase including the stimulus. So it is hard to 
argue that tough choices are being made when you increase these 
programs by 22 percent, plus another 25 percent, and then say: OK, now 
I am going to stop.
  Finally, of course, why propose a budget in February with a more than 
$1.5 trillion deficit and a spending freeze that will not even take 
effect until October? Maybe another analogy is, it is like the dieter 
who wants to start the diet tomorrow but never today. The spending 
freeze is a good idea. So let's not start it in the future, let's start 
it with this year's appropriations bills.
  I would also suggest other stronger measures right now. We can start 
with the TARP money, for example. Rather than using the TARP money to 
pay for another stimulus bill, as some of my colleagues have suggested, 
let's use it to pay down the debt. That money, remember, was borrowed 
in the first place. We did not have $700 billion lying around. We went 
to the markets to borrow that, and we have to pay interest on it. A lot 
of it came from China. We have to pay it back. Let's do that--pay the 
money back. Do not use it to pay for yet another stimulus program. 
Remember, it will ultimately have to be paid back.
  Second, let's end unlimited funding for government-sponsored 
enterprises such as Fannie Mae and Freddie Mac. Right now these two 
entities can spend as much as they like even without congressional 
authority. I find it interesting that when the President, in his State 
of the Union speech, said we are going to impose a tax on the banks, he 
was talking about banks that either never took TARP money or banks that 
have paid it back. The tax does not apply to Fannie Mae or Freddie Mac. 
They haven't paid back the money. It does not apply to AIG. It does not 
apply to General Motors. None of them have paid the money back.
  If we are going to have a tax, impose it on those who haven't paid 
the money back. Don't put it on those who either never needed the money 
or didn't take it, but, in any event, who have paid it back.
  Third, let's rescind unobligated stimulus money. The stimulus has 
already proven, by most accounts, to be a failure in terms of creating 
jobs for the money spent. That is even using the administration's own 
standards to measure its success. Let's use the money that has not yet 
been spent or obligated to pay down the debt. Again, remember, most of 
that money has to be borrowed and, therefore, let's not spend it in the 
first place, thus reducing future debt included in the President's 
budget.
  These are just three specific ways, three relatively easy ways that 
we could employ to start getting hold of spending and debt. I would 
also like to suggest that those who continue to evoke the spending 
policies of the last administration become more focused on the future. 
That is what Americans want us to do. It makes little sense to complain 
about high spending from a previous era and then make the situation 
worse, creating a deficit that is four times as much as the biggest 
deficit in the previous administration and creating a debt burden that 
is equal to all of the Presidents from George Washington through George 
Bush.
  Americans want this administration to confront the massive spending 
and massive debt it is accumulating in a meaningful way. The budget the 
President sent to Capitol Hill this morning does not do the job.
  I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. HARKIN. 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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