[Congressional Record Volume 156, Number 34 (Wednesday, March 10, 2010)]
[Senate]
[Pages S1360-S1362]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BENNETT:
  S. 3096. A bill to prevent an economic disaster by providing budget 
reform; to the Committee on the Budget.
  Mr. BENNETT. Mr. President, as I move around the State of Utah to 
talk to my constituents, I find, with all of the other specifics they 
are concerned about, the one thing just about everybody is concerned 
about is our long-term fiscal situation. They are worried about debt. 
They are worried about the deficit in this year that is adding to the 
debt. They say to me: What can we do about it? They listen to the 
pundits who talk on the air about this particular project or that 
particular project that sounds outrageous. Many times the projects are, 
in fact, legitimate, but they make good copy.
  I say, if you add up all of these projects together--the good ones 
and the bad ones--and eliminated them all, you would reduce the Federal 
deficit by less than 1 percent. Let's talk about where the money lies. 
Let's talk about where the challenge is. So I present to my 
constituents a series of charts that I will present here that outline 
where the challenge is.
  One of the things that becomes clear, as we go into this debate, is 
it is not just our financial situation that is in trouble. The 
pressures created by our debt are crossing over into the area of 
national security. We cannot maintain our military or our diplomatic 
initiatives with the kinds of pressures continually increasing.
  So a little bit of history, which I share with my constituents and 
that I share here as the background for the bill I am introducing 
today.
  This is a very simple pie chart that shows the components of Federal 
spending back in 1966. I ask my constituents: Why do I pick 1966 as the 
year to start? Some of them know the answer; some of them do not. But 
in 1966, mandatory spending constituted 26 percent of the budget, and 
interest on the national debt another 7 percent. You have to pay the 
interest on the bonds, so that is mandatory spending as well. So the 
government is committed for a third of the budget before the Congress 
ever gets around to appropriating any money.
  In 1966, the biggest portion of mandatory spending was Social 
Security. The combination of Social Security and other mandatory 
programs, and the interest cost, was one-third of the budget. The other 
two-thirds was available to the Congress. Of that spending, defense 
spending was 44 percent of the total. Defense spending, obviously, 
dominated nondefense discretionary spending.
  Where are we today? What has happened in the years since 1966 and 
today? Here are the components of Federal spending in fiscal 2008. I 
picked that year, before the tsunami hit us--the financial tsunami that 
caused the meltdown and all of the problems--as

[[Page S1361]]

perhaps a demonstration of what is happening structurally within the 
budget, not affected by any particular emergency.
  Mandatory spending has now grown to 54 percent. Interest costs are 
from 7 to 8 percent. So the two of them constitute roughly two-thirds 
of the budget. From 1966 to 2008, mandatory spending now is twice as 
big in its proportion of the budget than it used to be. Defense 
spending has shrunk to a half of what it was back in the 1960s, and 
nondefense discretionary spending is about the same.
  All right. Now back to the question: Why did I pick 1966 as the year 
to start with? Because that is the year the Federal Government got into 
the medical business and enacted Medicare. Since then, we have added 
Medicaid. So today, when you talk about mandatory spending, Social 
Security is no longer the dominant factor. It is a combination of 
Social Security, Medicare, and Medicaid.
  I will leave aside the issue of the value of those programs. I am 
just talking about the money we are spending here. Today, as we argue 
over congressional spending, we only have a third of the budget to talk 
about, and half of that, roughly, is defense spending.
  Let's go to fiscal year 2009. Mandatory spending has grown to 59 
percent. The interest cost is 5 percent. Defense will have shrunk, 
nondefense will have shrunk. The reason the interest costs are 
shrinking is because we are borrowing money at a lower rate by virtue 
of the things that have happened with the financial tsunami.
  But now let's go out 10 years to 2020 and see where we will be. In 10 
years, mandatory spending will have grown to 58 percent. The interest 
costs will have grown to 13 percent, and defense and nondefense 
together will constitute only 30 percent. If defense is shrunk to 15 
percent of the budget, it begins to bite very seriously into America's 
role in national security around the world.
  One author I have looked at who has talked about America's role in 
the world in a very thoughtful way looks ahead to this, and he says the 
greatest threat to America's position in the world is not China, it is 
not India, it is not North Korea. It is Medicare. The greatest threat 
to America's ability to sustain itself and its national security is 
coming from the growth of mandatory spending.
  If we spend all of our time arguing over those tiny things that make 
good copy in newspapers and on television and do not address this 
inexorable growth, we will discover that the Congress has become 
irrelevant. Three-fourths of the budget of Congress will already be 
spent before the Congress even meets, and only one-fourth will be left 
for us to talk about, and that one-fourth will have to include our 
spending for national security, and you will see how everything else 
will get squeezed out.
  I had that hit me directly as we had the debate last year on the 
budget resolution for fiscal year 2010. Standing at this very place, I 
looked down at the bill that was presented and sitting here on a 
podium, and it projected Federal revenues for fiscal year 2010 at $2.2 
trillion--down because of the challenges we had with the economic 
meltdown. Then on the next page it said: mandatory spending, $2.2 
trillion. That meant everything we do in government in fiscal year 
2010, other than mandatory spending--the Defense Department, the war in 
Afghanistan, the FAA which controls the airplanes, the national parks, 
our embassies overseas, the FBI, all of our law enforcement, the border 
security--everything, every single dime we spend in government, other 
than mandatory spending, in fiscal year 2010 had to be borrowed. We did 
not have a single dime of tax revenue available to pay for anything in 
government because it was all taken up in mandatory spending.
  All right. What does this do to us long term as a nation?
  People keep talking about the national debt and how it is growing and 
growing and growing. Actually, the national debt has not been growing 
and growing and growing over the years. Here is a chart that shows the 
national debt measured in the way it should be measured, as a 
percentage of the gross domestic product, the size of the national debt 
with respect to the size of the economy.
  To illustrate why this is the way to do it--I have often used this 
example on the Senate floor--I ran a company before I came here. When I 
became the CEO of that company it was very small. It had a debt of 
$75,000. When I stepped down to retire prior to running for the Senate, 
the debt was $7.5 million. One might say: Well, Bob Bennett, you are 
not a very good manager if you ran the debt up from $75,000 to $7.5 
million. Then you look at the debt the way you should look at it.
  At the time I became the CEO of that company, they were doing under 
$300,000 a year in total revenue. They had no margin at all. Every dime 
they took in, in revenue, was eaten up with costs, and they could not 
make the payments on the $75,000 debt. The $75,000 debt threatened the 
survival of the company. When we had a $7.5 million debt, the company 
was doing over $80 million in business, and we had a 15-percent margin 
on sales. We were earning more per year than the whole debt we had, and 
the only reason we didn't pay it off is because we had some prepayment 
penalties built into the mortgages we had established. So I wasn't such 
a bad steward after all, if you make the measure totally on the basis 
of the size of the debt. I was a good steward if you make it on the 
measure of the debt in relationship to the size of the enterprise.
  That is what this chart shows: the national debt as a percentage of 
the size of the enterprise, to use business terms; in this case, the 
size of the economy.
  We see that just after the Second World War our national debt was 
well over 100 percent of GDP, and in the two decades after the Second 
World War, we come from 1945 to 1965, the debt had shrunk from over 100 
percent of GDP to close to 30 percent of GDP. Even though it was going 
up in nominal dollars, it was coming down as a percentage because the 
economy was growing so rapidly. Then, once again, we add to our 
entitlement spending, we add Medicare, and we see this is the trough. 
It begins to grow and it begins to grow.
  When we get to the end of the Cold War, it turns down again because 
of two things: No. 1, our defense spending goes down and the economy 
booms. We get tremendous growth as a result of the end of the Cold War. 
It was at 46.9 percent when Medicare and Medicaid got started, and not 
much different in 1989 by the end of the Cold War, 53.1 percent. This 
shows the historic level it has been.
  OK. Now, this is the history, and the blue line shows the projections 
that the Obama administration has given us as to what will happen under 
their spending plan. One thing we know about projections is that they 
are always wrong. We don't know whether they are wrong on the high side 
or the low side, but we know they are always wrong. What usually 
happens is that the projections are always optimistic and circumstances 
come in with a result that is less than we had hoped for.
  So if we take this as an optimistic projection, we are saying when we 
get to 2020, which is only a decade away--only 10 years away--the 
national debt will be back up very close to what it was at the end of 
the Second World War. That is unacceptable. Everyone in this Chamber 
knows that entitlement spending is the driving force behind all of 
this. Everyone in this Chamber knows shaving back a little on this 
program or cutting out a particular grant on another program will have 
no real impact on this if we don't have the courage to deal with 
entitlement spending.
  So today I am introducing a bill to deal with entitlement spending. I 
have no illusions that it is going to pass in this Congress, but I wish 
to lay it down so we at least have a marker from which to begin. I have 
already done that with Social Security.
  Several years ago, when I was chairman of the Joint Economic 
Committee, I held a series of hearings on Social Security and 
discovered that we can indeed solve the Social Security problem. We can 
move numbers around a little and say to everyone who is currently 
drawing Social Security: You will continue to draw Social Security 
throughout your lifetime, adjusted for inflation. Nothing will happen 
to it. Furthermore, your children can draw the same level of Social 
Security benefits that you draw adjusted for inflation through their 
lifetimes without any

[[Page S1362]]

danger to it, and their children can draw Social Security throughout 
their lifetimes at exactly the same level adjusted for inflation, 
without a tax increase.
  How is that possible? The way it is possible is to say we are only 
going to allow Social Security benefits to grow as rapidly as inflation 
grows. We already have built into the program that we are going to pay 
Social Security plus inflation, plus a nice little kicker along the 
way. That nice little kicker along the way over 10 years, and then 20 
years, then 30 years pretty soon gets us into the kind of trouble I 
have described. If we say, no, we will allow it to grow with respect to 
inflation, but we will not allow it to grow any more rapidly than that, 
then the kind of thing that happened here can happen again. As the 
economy grows more rapidly than the inflation rate, we will see the 
national debt begin to come down, we will see the pressure on national 
security begin to ease, and we will see the great concern that 
Americans have about the financial situation begin to be addressed in 
the way it was addressed in the years after the Second World War.
  I am not saying we abolish entitlement programs. There are some of my 
constituents who say that is the thing to do: just abolish Medicare; 
abolish Social Security. I say, yes, we want to abolish these things 
but keep the taxes because that is what we would have to do if we are 
going to get the financial circumstance we like. No, over time, we can 
do this without abolishing these programs, but we have to see to it 
they do not grow.
  So here is what my bill will do. It will control the growth of 
entitlement spending by reinstating spending limits and saying 
entitlement programs cannot grow at a rate faster than the inflation 
rate. That will mean to the future Congresses, if they adopt this bill: 
OK, we can still spend for Medicare, we can still spend for Medicaid, 
we can still do Social Security, but we can't add things to it in such 
a way that will cause it to grow more rapidly than inflation, No. 1. 
No. 2, do the same thing with all nondefense discretionary spending. We 
will allow it to grow each year in accordance with the inflation rate, 
but we will not allow increases in nondefense discretionary spending 
more rapidly than the inflation rate. Then, No. 3, enforce the spending 
caps with automatic spending reductions and budget points of order, the 
details of the kind of thing we get into around here all the time.
  The bill is very simple, very straightforward, but it gives the kind 
of direction that many of the solutions that have been proposed around 
here don't do. Many of the solutions we have around here sound great, 
and they are very complicated--this point of order lies here, and that 
situation there--but, overall, we are turning our backs on two-thirds 
of the Federal spending. We say we would not address them because these 
programs are popular, and we don't want to offend the voters by saying 
something has to be done with the most popular programs in America.
  I find the voters are saying we have to deal with this. We have to 
have the courage to deal with it, which means we have to have the 
courage to deal with entitlement spending and not just focus on 
nondefense discretionary spending.
  The final thing my bill will do is to prohibit the creation of any 
new mandatory spending programs, which is, again, part of the problem 
we have had.
  I close by repeating a question I ask my constituents as I am making 
this presentation to them. I say: How many of you know who Willie 
Sutton was? Most of my audience is young enough not to know the answer 
to that question, but there are a few who say Willie Sutton was a bank 
robber, and that is true. He wasn't a very good bank robber because he 
kept getting caught. Each time he would serve his sentence and then he 
would go out after he had been released from prison and he would rob 
another bank.
  Finally, somebody said to him--and this is why we remember Willie 
Sutton, not for being a bad bank robber but for the comment he made. 
Somebody said: Willie, why do you keep robbing banks?
  He said: Because that is where the money is.
  We look at the national debt, we look at the problems we face, and we 
ask the question: Where is the money? We have to rein in the 
entitlement spending because that is where the money is. It is two-
thirds of the budget now, three-fourths of the budget within 10 years. 
If we continue to ignore the growth of entitlement spending and focus 
entirely on the rest of it, that makes good press but not good policy. 
We will find our financial situation is up here, our national debt will 
be as high as it was with the percentage of GDP as it was after the 
Second World War, and our national security will be threatened to the 
point that our entire posture around the world will be changed, simply 
because we would not be able to afford it.
  It is for that reason that I send to the desk an act that may be 
cited as the Economic Disaster Prevention Act of 2010 that deals with 
spending limits on entitlement programs as well as spending limits on 
discretionary spending, and the prohibition of any new mandatory 
spending programs.
                                 ______