[Congressional Record Volume 157, Number 41 (Thursday, March 17, 2011)]
[Senate]
[Pages S1805-S1806]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             BUDGET PROCESS

  Mr. TOOMEY. Mr. President, I wish to share a couple of thoughts on 
the budget process that is underway and where we are with the 
continuing resolution we voted on this afternoon.
  First, with respect to the CR, that was a tough vote for me. It was a 
tough vote because this is no way to run the government. We are here 
now dealing with business that should have been done last year. 
Unfortunately, last year the Senate didn't get its work done, didn't 
even do a budget, didn't go through the normal appropriations process. 
They started kicking the spending can down the road last year, and we 
are still in the midst of that. I am not sure how many continuing 
resolutions we have had at this point--three, four, five, six; I am 
losing track--but this last one for this next 3 weeks, frankly, is the 
last one I will vote for. This one I could support because it does 
sustain the lower level of spending as passed by the House. There are 
some tough cuts in that bill, but it is very necessary that we get 
serious about getting our spending under control. This is a small step 
in that direction.
  I really want to urge my colleagues to bring an end to these 2-week, 
3-week, short-term CRs. It is just kicking the can down the road. Let's 
resolve this. Let's get a funding measure in place that will fund the 
government for the remainder of this fiscal year and be done with it. 
We have serious work to do. We have a budget resolution we need to 
govern the spending that will occur for next year. We have process 
reform that we badly need. There is an awful lot that needs to be 
addressed, and this really just needs to get done. So I hope we will do 
that soon.
  As we discuss the level of spending we are going to have in this CR 
that will continue from when the current one ends--hopefully, there 
will be just one more that will take us through the remainder of this 
fiscal year--it is very important that we get that level of spending 
down to at least the level that was passed in the House, and I want to 
talk about why.
  I have looked at some of the individual cuts, and they are tough. 
They are going to make things difficult in many cases. But it is very 
necessary that we do this for the sake of beginning to restore some 
sense of fiscal sanity to get us on a sustainable trajectory.
  One of the arguments I have heard from some of my friends on the 
other side of the aisle who have real concerns and objections in some 
cases to adopting a spending measure that does reduce spending--I would 
argue modestly over all--is that this will cost jobs; that if the 
government doesn't spend more than what is contemplated in the House-
passed continuing resolution, we will lose jobs; that if we cut 
government spending, we will have lower employment. I am here to 
suggest that is exactly backward. That is precisely wrong. In fact, it 
is the exact opposite.
  At the point we are now, the more the government spends, the fewer 
jobs we will have. And the sooner and the more quickly we bring this 
government into some sense of fiscal stability, the more employment we 
are going to have and the more job creation we are going to have. I 
think for many people that is common sense, but it is not universally 
accepted here. I understand that. But consider this: If all we needed 
to do was have the government spend more money to create jobs, then 
recessions would always be a trivial matter because we would just crank 
up some government spending and everybody would be back to work and we 
would be fine. But we know that doesn't work. It has never worked. If 
that is what worked, frankly, the economy would be booming right now.
  We have been spending on a scale we have never even contemplated 
before. As a percentage of GDP, deficit spending, total spending, by 
any measure--the spending is at a record high, and yet unemployment is 
persistently much, much higher than we had hoped it would be, much 
higher than it typically is at this stage in what should be an economic 
recovery.
  It isn't just this experience we can look at. We can look around the 
world. Countries that have lived beyond their means and where the 
government occupies a big segment of the economy and spends a great 
deal, those are not the more successful economies. In fact, those are 
the least successful economies. They have persistently high 
unemployment, low economic growth, low job creation, and a low standard 
of living. I think this is all widely recognized but not entirely so 
here in Washington.
  Of course, it is true that the government can always create a job. 
The government can have a program that instructs someone to go out and 
hire someone, give that person a wage and, bingo, they have created a 
job. Government can always do that. Of course, the problem is that in 
the process, the government destroys jobs in the private sector. That 
is because the money that is necessary to create that government job 
has to come from somewhere, and it always comes from the private sector 
unnecessarily.
  When the money comes from out of the private sector and goes to the 
government for the government to create a job, that does several 
things. First of all, the government tends to allocate resources much 
less efficiently than free men and women do in the voluntary exchanges 
of the marketplace, so you get politically motivated allocation of 
resources rather than market-oriented allocation, and this is widely 
acknowledged to lead to lower investment returns, less efficient 
investment, and therefore less job creation.
  This isn't just theory. There is plenty of empirical data on this 
issue. I wish to observe for my colleagues and talk

[[Page S1806]]

about one particular chart that I think is a very helpful illustration 
because this kind of goes to the heart of my point. My point is that 
the job creation we desperately need right now is only going to come 
from the private sector. The sustainable jobs that lead to solid 
economic growth, permanent jobs, wealth creation, and real opportunity 
are going to come from the private sector, and that is driven by 
private investment. The more government spends, the more it crowds out 
private investment and precludes the very engine of economic growth and 
job creation we need.
  The chart behind me is a great illustration of this. It is provided 
by John Taylor, a very well regarded economist whose work is highly 
respected and widely circulated. In this chart, Mr. Taylor illustrates 
that the unemployment rate is inversely related to private investment.
  So when the private sector is making investments--and this can be 
investments in new business or in capital, but when private money is 
being put to work by business, as the percentage of the economy, the 
amount of this investment declines as a percentage of our economy, we 
see the unemployment rate go up.
  When we see private investment growing, as it did for a sustained 
period from the early 1990s until the early part of this decade, we see 
the steady upward trend, and it was driving down the unemployment rate. 
It is clear that as this line goes down--the private investment line--
the unemployment rate goes up. When it turns around and private 
investment as a percentage of our economy grows, the unemployment rate 
declines--not just for this period--and you can see the trend 
continues.
  Again, we have another period after about 2000 of declining private 
investments as a percentage of GDP and a rising unemployment rate. Now 
that we have seen in recent years a long, pretty precipitous decline in 
private investment as a percentage of our economy, we see this huge 
increase in the unemployment rate.
  These lines--at a quick glance, you can see it--are almost a mirror 
image of each other. This is a great illustration of a simple and well-
known fact: It is private investment that drives job growth.
  When the government gets too big, as ours is today, and when it 
spends too much money, as this one does, and when the deficit gets too 
big, it crowds out and precludes the private investment that drives job 
growth. That is why it is so important that we get spending under 
control. That is why it is so important that we pass a continuing 
resolution that will fund the government for the rest of the year, at 
the lowest possible level we can reach an agreement on, because lower 
spending is going to drive job growth.
  There are several other aspects to this fact that lower spending will 
lead to greater job growth. Everybody knows that higher government 
spending eventually leads to higher taxes. We are at this point now 
where we have this huge shortfall in the revenue relative to the amount 
of money that is being spent. So any potential investor wonders, how 
much are taxes going to go up? When will they go up? Are they going to 
go up on me, or on my investment, or on my labor?
  These are the uncertainties we in Washington have introduced into the 
economy. But everybody who is contemplating an investment has to 
wrestle with this question. Uncertainty is the enemy of private 
investment and job growth.
  The other possibility is that instead of a tax increase, maybe there 
will be a debt crisis. We are borrowing money on such a huge scale, it 
is not at all clear that we can continue that. I guarantee we cannot 
continue this indefinitely. I don't know how much longer it can 
continue. That is a very dangerous thing to flirt with--ever higher 
levels of debt and the expectation that lenders will lend us money when 
there are such large percentages of our economy.
  There is another variable in the mix, and that is the danger that the 
central bank, the monetary authority, will decide maybe the easiest way 
out of this mess is to print money.
  This is a road that has been gone down many times before in many 
parts of the world. It always leads to a disaster. Monetizing the debt 
is the way many governments have chosen to deal with excessive 
spending. I am very worried now about the policy of the Fed, and QE2 is 
the policy by which they are currently monetizing more than half of the 
deficit we are running this year. That is a dangerous policy. Combine 
that with the beginnings of this fiscal imbalance and imprudent policy, 
together with this very accommodative monetary policy, and this is a 
very dangerous mix.
  What we can do in the short run, and what we ought to be doing right 
now, is addressing the spending problem that is at the heart of all of 
it. It is driving this. In my view, that starts with the continuing 
resolution that will fund the government for the remainder of this 
year. We passed one that will fund the government for the next 3 weeks, 
but I wish it had been for the remainder of the year. We have no time 
to waste; we have to get this resolved and we have to move on to a 
budget that brings our spending and revenue into balance, without 
raising taxes and ruining economic growth.
  This should be the big priority for this body. I hope when we get 
back from this recess, this is what we will be working on--the spending 
measure to close out this fiscal year, a budget that will put us back 
on a sustainable path, and progrowth policies that will lead to the job 
creation we need.
  With that, I yield the floor.
  The PRESIDING OFFICER (Ms. Klobuchar). The Senator from New Mexico is 
recognized.
  Mr. BINGAMAN. Madam President, I ask unanimous consent to speak for 
15 minutes as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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