[Congressional Record Volume 157, Number 59 (Wednesday, May 4, 2011)]
[Senate]
[Pages S2664-S2665]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                              The Economy

  Mr. BINGAMAN. Mr. President, the country faces two large economic 
challenges. The first is growing our economy, creating jobs, getting 
the economy back on track. The second major challenge is cutting the 
deficit. I wish to briefly talk about both of those.
  I have four charts--one that relates to jobs and growing the economy 
and three that deal more specifically with the deficit.
  Unfortunately, in Washington, the debate has shifted almost entirely 
to a discussion of the deficit. Too many people in Washington are 
pretending our efforts to generate growth in the economy have been 
accomplished, that it is a done deal, that we have recovered from the 
recession, and we can now focus full time on how to cut the deficit.
  The fact is, this is simply not true. Professor Alan Blinder, an 
economist at Princeton and former Deputy Chair of the Federal Reserve, 
testified before the Senate Finance Committee a couple weeks ago. He 
made the following statement:

       The economic recovery is mediocre at best and unemployment 
     remains high. To me, those conditions describe a bad time to 
     put the economy on a diet of either spending cuts or tax 
     increases.

  Let me point to the first chart to underscore the point professor 
Blinder made. The recession we have just gone through created a very 
deep hole. If you look at the number of private sector jobs that were 
lost between November of 2007 and the end of March of 2010, you can 
see--it is February of 2010--8.8 million jobs were lost as a result of 
the recession. While things are getting better, it is clear they have 
not gotten better enough. We have now created 1.8 million new jobs 
since we began adding private sector jobs. So we still have a shortfall 
of about 7 million jobs that need to be created in order to get back to 
where we were in November of 2007. Of course, there have been a lot of 
new people who came into the job market since then, so we need to 
create more jobs than that.
  We are encountering some strong headwinds in our effort to dig out of 
the recession. The strongest headwind is the high price of oil and gas, 
which is a tax on consumers, a tax on our businesses, and it comes at a 
very bad time. We are all looking for ways to try to deal with that. 
Frankly, it is difficult to legislate a solution.
  Another headwind is one of our own creation; that is, the constant 
drumbeat we hear to cut spending at all levels of government--cut it in 
Washington, cut it at the State level, cut it at the local level. My 
own strong view is we should heed Professor Blinder's advice. We need 
to continue to work to keep investing in those things that will help us 
create good-paying jobs. Timing is important. We clearly need to reduce 
the deficit, but we should adopt policies this year that will put us on 
a long-term path to reduce the deficit. I hope these policies will 
delay major cuts in spending and major increases in taxes, until we can 
come out of this recession some additional distance.
  Let me talk about the deficits, the second challenge I talked about 
before. We have a chart called ``Federal Revenues and Outlays as a 
Percentage of Gross Domestic Product.'' This is for a 40-year period, 
from 1970 to 2010. It is a chart the Congressional Budget Office 
prepared and presented to us.
  Clearly, there are some important points you can take away from this 
chart. No. 1, on average, over the last 40 years, the Federal 
Government has accounted for 20.7 percent of gross domestic product--
spending by the Federal Government--on average. Over that same period, 
on average, we have raised 18.1 percent of GDP in the form of revenues. 
So, on average, we have been running a deficit of about 3 percent of 
GDP each year during this 40-year period. Today, that 3 percent of GDP 
is about $450 billion.
  The one time during this 40 years when we achieved a balanced 
budget--and even ran a surplus for a 4-year period--was at the end of 
the 1990s and in the year 2000. How did we manage to do that? Well, 
beginning in 1990, the Congress passed, and President George H.W. Bush 
signed, a bill that both restrained spending and raised taxes. Again, 
in 1993 and again in 1997, Congress passed and, in that case, President 
Clinton signed, budget plans that

[[Page S2665]]

did even more to do what had been done in 1990; that is, both of those 
plans restrained spending and raised revenues.
  We enjoyed a strong economy during those years in question and that, 
of course, helped to bring more revenue into the government and get us 
to a balanced budget and a surplus.
  What went wrong that caused us to, once again, fall into deficit? I 
will cite three factors:
  First, the tax cuts Congress enacted in the last decade. Beginning in 
2001 and then again in 2003, Congress passed what have come to be known 
as the Bush tax cuts. These fairly drastically reduced the revenue 
coming to the Federal Government. At the same time we were cutting 
taxes, we ramped up Federal spending, primarily for defense, and that 
is a result of the Afghanistan war and the Iraq war. The estimate there 
is that something like $1.3 trillion has gone into those efforts. In 
addition to defense, we ramped up spending on health care primarily by 
including a prescription drug benefit in Medicare. All of that 
increased spending occurred without any increase in revenues to pay for 
it. I repeat that none of this spending was offset with increased 
revenues.
  The third factor, of course, that has brought us into the very 
serious deficit we now face is the slowdown of economic activity. This 
contributed substantially to increased expenses for the government and 
some of the entitlement programs--Medicaid, food stamps, and a variety 
of them--but also the decreased revenues. When people are earning less 
money, they pay less in taxes and less revenue comes to the government 
to pay for those services that the government is providing.
  The deficit, of course, has worsened substantially in the last 2 
years because of, first, reduced Federal taxes being collected, largely 
a result of the recession; second, increased Federal spending--both 
because there is more demand for government services as a result of the 
recession and also because we passed the Recovery Act to stimulate the 
economy. I think most economists would conclude it has helped stimulate 
the economy.
  The Pew fiscal analysis initiative analyzed the policies and 
legislation that have caused the surpluses of the late 1990s to become 
the deficits we see today. They produced a list showing their 
conclusions. That list is on this chart. We can see these are in the 
order of importance, the order in which they contributed to the current 
deficit situation.
  The top two drivers on this list are the 2001 and 2003 tax cuts--they 
account for about 13 percent of what we face today in deficits--and the 
Iraq and Afghanistan wars, which account for about 10 percent of what 
we face.
  All told, tax cuts caused 21 percent of deficits since 2001; 
increased defense spending caused 15 percent of deficits. Two-thirds of 
that was due to Iraq and Afghanistan. Increased nondefense spending 
caused 10 percent of the deficits we currently face; the Recovery Act 
caused 6 percent; Medicare prescription drug caused 2 percent.
  The final chart I have shows how these policies have affected the 
deficit over time. This is a chart which is labeled ``Why CBO's debt 
projections changed between 2001 and 2011,'' the specific policies and 
drivers. I know this is very difficult for anyone to see on a 
television. Let me make the main points.
  The main points are that the changes caused by the legislation make 
up the large segments at the top of the chart, including interest 
charges. They caused 65 percent of the deficits when we look at these 
policy changes. The remaining 35 percent of deficits are due mainly to 
the economic and technical adjustments to CBO's projections primarily 
to reflect the lower revenue we have enjoyed because of the recessions.
  How do we dig out of the hole we are in? I say simple obvious things. 
No. 1, we need to keep the focus on growing the economy. As Professor 
Blinder said, do not put the economy on a diet. This is not the right 
time to do that.
  Second, we need to agree, as we did in 1990 and 1993 and 1997, to a 
balanced package of spending cuts and tax increases that will, once 
again, put us on a path to a balanced budget. We have some serious 
proposals to work from in achieving this deficit reduction plan. Of 
course, the President's deficit reduction commission, the Simpson-
Bowles commission, and Senator Domenici and Alice Rivlin, the former 
head of the Congressional Budget Office, put out a bipartisan 
commission report which is very constructive. The President himself has 
given the framework for a plan. There is a bipartisan group of 
Senators, the Gang of 6, who are working to come up with a proposal. 
And, of course, Senator Conrad, who chairs the Budget Committee, is 
putting together a proposed budget plan for that committee's 
consideration.
  All of these plans I have mentioned follow the model used in the 
1990s of combining both spending cuts and revenue increases. The only 
proposal that does not follow this model of a balanced package of 
spending cuts and tax increases is the budget that was passed by the 
House Republicans 2 weeks ago. Rather than raising revenue while 
cutting spending, it would cut revenue while cutting spending. In my 
view, this cannot lead us to a lower deficit.
  There is a lot of political polarization in Washington. I remain 
hopeful that we can get a critical mass of right-thinking people to do 
what is responsible, to come together on a balanced package of spending 
cuts and revenue increases that we can commit to going forward. We 
should be able to agree on policies that grow the economy and shrink 
the long-term deficit.
  I pledge my best efforts to achieve these objectives. I urge my 
colleagues to work to do so as well.
  Mr. President, I yield the floor, and I suggest the absence of a 
quorum.
  The PRESIDING OFFICER (Mr. Merkley). The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. FRANKEN. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mrs. Hagan). Without objection, it is so 
ordered.
  Mr. FRANKEN. Madam President, I ask unanimous consent to speak as in 
morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.