[Congressional Record Volume 158, Number 23 (Monday, February 13, 2012)]
[Senate]
[Pages S551-S554]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE BUDGET
Mr. JOHNSON of Wisconsin. Mr. President, I come to the floor this
afternoon before the debate on President Obama's just-submitted budget
descends into the arguments over the smaller little details that, quite
frankly, are not going to have that great of an effect on our whole
debt and deficit issue. What I would like to do is take a look and ask
the American people to take a look at the larger picture. I would like
to do it with a few charts and graphs.
The first chart I would like to put up really describes, from my
standpoint, the root cause of the problem. It really is the size, the
scope, all of the rules, all of the regulations, all of the government
intrusion into our lives and the cost of government. What this graph
depicts is that as of last year the Federal Government was 24 percent
of the size of our economy. So 24 cents of every dollar our economy
generates flows through the Federal Government. When you add on State
and local governments, which are about 16 percent, the total take of
government at all levels of the United States now--last year was 39.2
percent. Again, 39 cents of every dollar flows through some form of
government.
I do not find government particularly effective or efficient at so
many things they do. To make this relative, we are watching what is
happening to Greece right now. It is in flames because that social
experiment is collapsing. But if you compare the United States in terms
of its size of government to European-style Socialist nations, you can
see that Norway spends 47 percent of its GDP on government; Greece,
which we just mentioned, 50 percent; Italy, which hit a mini debt
crisis of its own, 52 percent; and France is 55 percent. Unfortunately,
America has arrived at the lower limit, the lower level of European-
style socialism. That is not a good metric.
The next chart I want to describe--so many people, I understand, want
a balanced approach: revenue and spending reform to address the debt
and deficit issue. Listen, I want more revenue too, but I think we need
to raise revenue the old-fashioned way--by growing our economy.
Everything we do in this country, everything we do here in Washington
needs to be targeted toward economic growth.
But I think what this chart describes is the fact that we have a
spending problem. It is not that we tax Americans too little; it is
because we spend way too much. Ten years ago our Federal Government
spent $1.9 trillion. Last year we spent $3.6 trillion. We doubled
spending in just 10 years. And, of course, the President's budget that
he just unveiled today will spend $3.8 trillion in 2013.
In the argument moving forward, nobody is talking about cutting
spending. All we are talking about is reducing the rate of growth in
spending. You can tell by the chart. According to President Obama's
budget, 10 years in the future, in the year 2022, he is proposing
spending $5.8 trillion. Last year's House budget would have spent $4.7
trillion. That is what the argument is about--spending $3.6 trillion
last year and increasing it to either $5.8 trillion or $4.7 trillion.
Another way of looking at that is taking a look at 10-year spending
numbers. In the nineties--a very successful decade--the Federal
Government spent $16 trillion over a 10-year period--$16 trillion. Over
the last 10 years, we spent $28 trillion. And, again, the debate moving
forward is President Obama, in his just-released budget, wants to spent
$47 trillion over the next 10 years. The House budget from last year
would have spent $40 trillion. By the way, when you hear about that $6
or $7 trillion of Draconian cuts, that is what we are talking about.
All we are talking about is reducing the rate of growth in spending in
the size of government.
You have seen an awful lot of charts describing the Nation's debt and
how it has exploded. I like this chart because we start it on September
30, 1987, when our entire Federal debt stood at $2.3 trillion. It took
us 200 years to incur $2.3 trillion worth of debt. Last year, in the
Budget Control Act, we gave the President the authority basically--I
didn't, I voted against it, but this body gave the President the
authority to increase the debt ceiling by $2.1 trillion. We will blow
through that debt in around 2 years. Think of that.
So you can see what is happening. In 2001, we were at $5.8 trillion.
In 2008, right before President Obama entered office, we were at $10
trillion. Currently we are at about $15.4 trillion, and in the
President's just-released budget, he is proposing adding about $10
trillion to our debt over the next 10 years, to come in at a whopping
$25.9 trillion. The question is, Will we really be able to borrow that
much or are we going to face the day of reckoning, when world investors
take a look at the United States and say: You know, I am not going to
loan you any more money. What is more likely to happen is they will
say: I will loan you some money but at dramatically higher interest
rates. That is what we need to be concerned about. That is what a debt
crisis is going to be. Take a look at Greece. Take a look at Italy.
One more chart I want to put up shows the extent of the problem of
the unfunded liabilities together with the debt. Now, this is actually
last year's chart. We have not been able to get the new one printed
yet. But last year the trustees of both Medicare and Social Security
published the unfunded liability of those two programs. When you add
those unfunded liabilities to the Federal debt and what we owe Federal
retirees, the total liability of the United States as reported last
year was $99 trillion. The new figure for this year--the accountants in
the Federal Government have rejiggered the figures, and now they are
claiming it is only $72 trillion. But whichever figure you take, if you
compare that to the private net assets of the United States--that is,
household assets, small business assets, large business assets--that
number is $79 trillion. So the Federal Government has made promises and
incurred debts that are equal to or exceed the entire net private asset
base of the United States. Now, that is the definition of a problem.
That is the definition of a huge problem that unfortunately this
President and this town are not grappling with. We are not coming to
terms with that.
Let me specifically hone in on one of those entitlement programs--
Social Security. In 2010 we went net cash negative in Social Security,
which means the amount of taxes collected were $51 billion less than
the benefits that were paid out. Last year we were $46 billion in the
red. If we take a look at this chart, what we see, without reforming
the program, without providing the reforms that would actually save
Social Security, within the next 24 years, by the year 2035, we will
incur a $6 trillion cash deficit in Social Security. Again, when you
take a look at the President's budget this year, is that even being
addressed?
The House budget addressed Medicare last year, and people like my
Congressman from Wisconsin were demonized for doing it. Here you had an
individual who had the courage to first of all acknowledge the problem
and then put forward a proposal, and he is demonized. Political
demagoguery is not going to solve our problem. A serious budget is what
we need to solve the problem.
Because we are not serious about even putting forward a budget--and
unfortunately, in this body, the majority leader is saying he will not
even bring a budget to the floor for a vote; there is no need to. We
are only going to incur $10 trillion more debt in the next
[[Page S552]]
10 years. I want the American people to think about that. I have been
involved in business for 33 years. I am an accountant. This is the
first time I have been involved with a financial entity--and let's face
it, America is the largest financial entity in the world--where I have
been working with an entity that does not have a budget. That is a
national scandal. We need to correct that.
But let me talk about some of the deficit risks, because we are not
serious, we are not even addressing, much less--we are not
acknowledging. It starts with what I started talking about earlier in
terms of not dealing with the debt and deficit issue dramatically
increases our risk of higher interest rates, higher interest expense.
The CBO reports that for every 1 percent increase in the interest
expense--let's face it--times $15 trillion, times 10 years, that would
add $1.5 trillion to our debt--$1.5 trillion. Greece--when they hit
their debt crisis, their interest rates spiked by 8 percent. If that
happened here, it would cost us $1.2 trillion. It would wipe out all
discretionary spending. That is the day of reckoning we need to avoid
by putting forward serious proposals.
Another risk we are really not talking about is what happens if we do
not grow according to the projections the President lays out in his
budget or the CBO projects? Well, again you look to the CBO. For every
1 percent we miss our growth targets by, add $3.1 trillion to our debt
and deficit over the next 10 years--$3.1 trillion.
Another risk is the true cost of the health care law. Thirty-seven
Republican Senators sent a letter to CBO Director Elmendorf pleading
with him to please reassess the very unrealistic estimates the CBO made
in terms of the number of employees who will lose their employer-
sponsored care.
Their estimate says only 1 million. But we have studies that were
conducted that say 30 to 50 percent of employers will drop coverage.
When that happens, when the employees who lose their employer-sponsored
care and get dumped into the exchanges at highly subsidized rates, the
cost of ObamaCare will not be $95 billion a year; it will more likely
be $\1/2\ trillion to $1 trillion a year. Multiply that over 10 years
and we can see the depth of risk inherent in the health care law. It
needs to be repealed.
The last point I wish to make is a key part of President Obama's
supposed deficit reduction in his budget is a tax on millionaires,
which, by the way, is defined by couples making over $250,000. That is
interesting math right there. Two points: I said earlier we should not
enact anything in Washington that would harm economic growth.
Increasing taxes will do that. That is what CBO says, and that is what
the Federal Reserve Chairman Bernanke says. It just makes common sense.
I want any American who would think that is a good idea to ask
themselves one question: How many jobs will that tax increase create?
How will that tax increase actually help us grow our economy? The
answer is, it will not.
There is an interesting study just released on Maryland's
millionaires' tax they enacted in 2007. When they passed that tax, they
estimated it would raise $330 million. The facts are in. That tax
increase only generated $120 million--only 36 percent of what they
originally estimated. President Obama is hoping to raise $1.5 trillion
with the millionaires' tax. Maybe it is only $1 trillion; I have not
seen the details. Take that number and multiply it times 36 percent,
then look at the harm it will cause economic growth and reduce it even
further. It simply will not work. It might feel good, but it will do
great harm to our economy. To sum it all up, what this country needs is
real leadership. We need the President to lead. We need a serious
budget. We need the Senate to pass a complete and serious budget for
2013.
With that, I yield the floor and suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. SESSIONS. 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.
Mr. SESSIONS. Mr. President, I wish to share some remarks about the
President's budget which he submitted today. This is it--the real
budget. The President asked that the press pay for their copies this
year. Maybe that will save a little money. It is a real document that
is submitted every year by every President according to the law.
Although the law also requires the Senate to pass a budget every
year, we have violated it for over 1,000 days. In fact, the majority
leader, Senator Reid, said it would be foolish for him to produce a
budget--foolish for our colleagues to produce a budget, and I can only
assume he thought it would not be good politics. It would not be
foolish for America to have a budget. I will make a commitment that if
I have anything to do about it and this Republican conference were to
achieve a majority in the Senate next year, we will have a budget. It
will change the debt course of America. It will be 10 years. It will be
a document that brings debt under control and, to the maximum extent
possible, will encourage economic growth.
That is a responsibility that leaders have to deal with now, I
believe. The President has produced this budget that claims to reduce
the deficit by $4 trillion--I will talk about that--but it does not
reduce the deficit $4 trillion. Basically, it doesn't reduce the
deficit at all. This is his fourth year as President. This is the last
budget of his Presidential term. He has an opportunity to lay out a
plan for the future--to suggest what taxes we ought to have, how much
spending we should have, where we can save money by reducing spending,
what we need to do in the short run, and in a 10-year term, 20-year
term, and 30-year term, all of that can and should be dealt with. The
President, like a Governor or mayor of a city that is in financial
trouble, or a State that is struggling financially--they have to deal
with their debt. They present their proposals, they fight for them
before the legislature, they make compromises, when necessary, and that
is how they do their business. But because we don't have a
constitutional amendment that requires a budget to be balanced, it
becomes easier to borrow the money, not cut spending, and continue the
deficit course we are on.
I am the ranking Republican on the Budget Committee, and for the few
hours we have had the budget, and the few hours we have had over the
weekend to see some of the tables, we have reached a number of
conclusions that are not good. I would say a couple of things. At the
Budget Committee hearing last week, Senator Conrad--who is the chair of
the committee--announced we should have a $5 trillion reduction in
spending over 10 years--not 4--and also said, he wishes to see a
balanced budget. I think Senator Conrad is right on both counts. But he
has basically been told if he even has a budget in committee this year,
it won't be brought up on the floor. So I don't know what we will do,
whether we will have a budget markup or not.
But Mr. Bernanke indicated during that same hearing that when you
reach debt levels as high as we are today--gross debt being 100 percent
of the gross domestic product--the country is at risk, particularly
when inevitable shocks in the world occur and you don't have the margin
of strength necessary to perhaps ride out those crises.
And we could go into crisis. I happened to see this morning on MSNBC
that Mr. Richard Haass, president of the Council on Foreign Relations,
said we could have a debt crisis next year. Talking about Greece, he
said we could have a Greece-like crisis next year, and he laid out the
scenario. This is the Council on Foreign Relations, one of the most
prestigious world organizations around.
Here are some indisputable facts about the budget before us. First,
there is no $4 trillion deficit reduction. There is not a $4 trillion
deficit reduction. I know that is hard to believe. We are talking about
a difference of $4 trillion. When the President submits a budget, and
we worry about all these accounts, and then we are $4 trillion off,
well, it is a hard thing to imagine. But I will explain to you why I
say that.
What we know is this: Under the President's budget and the numbers he
has provided us, based on his growth projections and other projections
that are in it, he projects when 10 years are up--in 2022--we will have
added to the total debt of America $11.2 trillion. We
[[Page S553]]
will have added that much debt. Every year, hundreds of billions of
dollars of debt, with the lowest single year being $575 billion worth
of deficits. The debt increases annually each year. So it would be
$11.2 trillion higher.
Under the Budget Control Act that passed last summer that had the
sequester in it and the reductions in spending--under that--if left
unchanged. And that is the current law. This budget deals with what to
do now--what to do on top of the current law we have. Under the Budget
Control Act, the debt would increase over 11 years by $11.5 trillion--
perhaps $270 billion less debt accruing under the President's budget
than current law. Well, that is not much.
The budget deficit this year is $1,300 billion. We are talking about
$11.5 trillion--that is $11,500 billion. So we are going to reduce that
$11,500 billion by $270 billion or so and claim somehow we have changed
the debt course of America? It is not true.
The American people are tired of this. It is this kind of talk, this
kind of misrepresentation and gimmickry that has gotten us to the point
where the Nation is on a fiscally unsustainable path, as every expert
has told us. Indeed, we are borrowing 40 cents of every dollar that is
spent this year. So we take in $2.5 trillion and we spend $3.8
trillion. That is not an acceptable path, and we have been told that.
We have seen these gimmicks before. I have a bill called the Honest
Budget Act that tightens up on a lot of the more common, smaller
gimmicks that need to be eliminated. My bill is called the Honest
Budget Act. But let me say we have never seen gimmicks this large. They
are so large it is hard to believe anyone would attempt to use them,
but so large people don't think it is possible the administration would
not be completely truthful in asserting them.
For example, the budget the President submitted for this year claims
credit for cuts that occurred last year as part of the budget control
process--the $2.1 trillion in Budget Control Act cuts. He claims he is
cutting the budget counting those numbers. Those are not the numbers we
are operating under today. Those have already been done. That is one of
the biggest spins I think we have ever seen in terms of making numbers
look better than they are.
But there is more. Amazingly, this budget eliminates--erases--the
$1.2 trillion in Budget Control Act sequestered spending reductions. We
can argue whether they are done in the right way and whether some,
particularly Defense, are taking too big a cut under that sequester,
but we should not give up on the sequester. We should not acknowledge
the sequester is not viable. And to say the $1.2 trillion we agreed to
cut less than a year ago is no longer operable and we are going to
spend that money and not cut any more is a stunning reversal. It is the
kind of thing that validates the charges we hear from the American
people: Oh, yes, you promised to cut money in the future--you have a
10-year plan to cut spending--but we know what you politicians are
going to do 5 years, 3 years, 6 years down the road, when those
spending cuts come up. You are going to say, oh, we can't do that. We
have constituents who are complaining. We can't cut this or that. And
we will put the money back in and the savings will never occur because
they are false promises for the future.
People have complained about that, and correctly so. That was part of
the tea party movement--a growing disrespect for the integrity of
Congress when it makes projections for the future.
But look at this: In August, we agreed to $2.1 trillion in total cuts
including $1.2 trillion in the sequester. Less than a year later, the
President says, oh, that is too much, we can't do that. We are going to
spend $47 trillion in the next 10 years, but we can't cut 1.2, when we
are facing the biggest debt crisis the Nation has ever faced? What kind
of world are we living in? No wonder we are going broke. And people are
out to hide what we are doing. I don't think it is right.
The President says, yes, I am not cutting that $1 trillion, I am
going to spend the $1.2 trillion. I am going to spend that, but don't
worry, I am raising taxes to pay for it. But his budget prognosticators
and commentators and his promoters, in their statements about this
budget, claim it reduces the deficit--this tax increase does--by $1.2
trillion. Well, if you increase spending 1.2 and raise taxes an equal
amount, you haven't saved any money; you just are not increasing the
debt any more than you would have. So we have eliminated the cuts,
making spending go up, and then we raise taxes. That is a wash. That is
not another $1.2 in savings. That is how they get the $4 trillion. That
is a sad state of affairs, to claim credit for that in a way that is
not fair.
Then we have the problem with the war cost. I was disappointed at the
State of the Union when the President said we are going to spend half
of the war savings on highways. Well, I am for highways. I would like
to spend more on highways. I am unhappy we have diverted money to
general stimulus spending instead of being spent on highways, as was
promised. However, the President said we are going to spend half of the
savings from the war on highways. But there are no war savings.
Congress has treated this war throughout as an emergency. The attack on
9/11 we treated as an emergency. The money was borrowed. Every dollar
spent on the war has been borrowed. There is no source of money being
paid out to the war so that when the war costs drop you can grab that
money and spend it. There is no money there. When the war cost drops,
the American people have a right to expect we will borrow less money or
that we don't have to borrow as much.
But they are claiming the natural reduction of war spending creates a
surplus of money that can be spent. How illogical is that? There is no
money in the war budget account. It is all borrowed. There was never
any money to be saved in the war account, only less money to be
borrowed as the war came down.
Whoever thought the war would continue at $100-plus billion per year?
We always expected those costs to come down. It has been a long,
difficult process, and I am glad to see we can bring troops home.
Hopefully, we are doing it in a way that is not risking the efforts
thousands of Americans have given to our country to put us in a
position to withdraw successfully. I hope we are not going so fast we
will jeopardize that.
Well, what about taxes? The President has been arguing for some time
that, well, we can't cut the deficit without tax increases. I know we
have to cut spending, but we can't cut the deficit without tax
increases. We have to have more tax increases.
First he said he wanted a tax on the rich that would bring in $800
billion. Now, this budget calls for additional taxes of $1,900
billion--$1.9 trillion--in new taxes all across, in a lot of different
areas. But at any rate, this is what we are talking about.
In his statement released with his budget, he said there was 2.5 in
spending reductions for every $1 of tax increases. We have been talking
about, well, what should be the ratio? Some people say: Look, I know
you shouldn't have 1-to-1 taxes increased for every spending reduction,
but we have to get the deficit down. We have to reduce the deficit. And
you Republicans who don't like taxes, we will talk about 4 to 1, $4 in
spending cuts for $1 in tax increases. The President said in the spring
last year 3 to 1, and that was a figure that was being bandied about.
But what does this budget do? Is it 2.5 to 1? Is it 3 to 1? No. Their
statement that it is 2.5 to 1 is utterly untrue.
I remember people telling us if we raise taxes, they would not reduce
the deficit. They will spend it. We have heard that over and over
again, and that maxim is certainly proved by this budget. The taxes
that are in this budget are used to pay for more spending. There are no
spending cuts in the budget. The budget calls for $1.5 trillion in
increased spending, and the taxes are on top of that. So the taxes are
not going to be used to reduce the deficit, just like people have
suspected all along that is not an accurate statement. But, indeed,
taxes are used to create more spending to create even bigger
government.
What about the debt size in its entirety? What are the numbers there?
Let's look at this chart. The red is the increase in deficits over the
next 10 years as occasioned by the Budget Control Act that is the
current law that
[[Page S554]]
was passed last August-September, and the President's budget is the
dotted line.
So if we look at what is occurring over the 10-year period, we are
starting at $15 trillion in debt today. Where does it end up? It ends
up at $26 trillion in debt under the Budget Control Act that saved $2
trillion, supposedly. I guess that would have reduced the total debt
from $13.5 trillion to $11.5 trillion. We have made some progress. We
all knew that wasn't nearly enough, but it was at least a step. Our
Democratic colleagues didn't want to cut any more money, so that was
the number reached last year and we agreed we needed to come back and
do some more work.
The President's budget, which claims to reduce the growth in our debt
by $4 trillion, actually only reduces the growth in debt less than $300
billion, from 11.5 to 11.2. That is not enough. We have had expert
after expert tell us we need $4 trillion to $5 trillion to $6 trillion.
Many believe we ought to put this country on a path to a balanced
budget and stay there, as I do. We can do that. So the numbers I would
say, $273 billion, only alters this red line by the slightest amount,
not nearly enough to make a difference in the financial markets, not
nearly enough to create confidence in the business community the United
States has a plan for its future that will work.
Furthermore, the President's plan does not provide any noticeable
effective effort to do something about Medicare, Social Security,
Medicaid--these programs that are moving every year gradually and
inexorably out of control, into default, and will endanger those
programs for future generations. I think that is a serious criticism we
should make.
Finally, I would note the interest on the debt. What do we pay on the
interest of the debt? This year this Nation, in 2012, will pay $225
billion in interest on the debt. That is almost half the entire defense
budget. But under the plan submitted by the President--and these
numbers I am quoting from are in the President's own budget, and I am
simply restating the numbers his Office of Management and Budget have
determined. Interest in 2022, 10 years from now, will be $850 billion,
from $225 billion to $850 billion. The increase in interest alone
exceeds the defense budget; $850 billion exceeds any item, including
Social Security and Medicare, in our budget today and certainly exceeds
the defense budget.
It would be the fastest growing item in the entire budget because
when we run up debt and we go from $15 trillion gross debt to $26
trillion gross debt--and we have extraordinarily low interest rates
today. They will not hold. Some think they are going up more than the
President estimates in his account. But when we add the interest
changes and the large amount of additional debt added, it goes from 225
to 850, crowding out spending for a host of programs that we are going
to have to deal with. Where are we going to find this 500 billion? By
the way, this is 1 year's interest payment, not 10 years. In 1 year we
will be paying $850 billion.
So we take that $500 billion a year and run it on for 10 years and we
are talking about $5.7 trillion in interest to be paid over 10 years.
What about the next 10 years when it is running $1 trillion a year in
interest as we age and our entitlement programs continue to go into
default?
Mr. John Hinderaker, an analyst and blogger, has suggested that this
whole debt we are seeing today and this claim of $4 trillion in savings
is why we should never have had the secret negotiations all year. The
President has asserted all year that he had a plan to save $4 trillion.
I guess this is it. What does it do? Nothing. Does it change the debt
course? No. It leads us on a course that is unacceptable. It does not
deal with the surging entitlements that indeed count for over half of
the spending already in the United States of America. Entitlements like
Medicare, Medicaid, Social Security are already nearly 60 percent of
the Federal Government's spending. How can we control spending if we
don't even talk about those programs? And they are growing faster. The
only thing growing faster is the interest on the debt. So we have a
deep and serious challenge to bring those programs under control.
I would just close by saying that our debt course has not been
altered. Our debt course is unsustainable. We now are moving to $26
trillion in debt. I remember last year when the Chairman of the Fed,
Mr. Bernanke, testified before the committee and said something to this
effect: You see those projections of your spending and debt trajectory?
And in the outyears, you have these projections and what it is going to
be like. Basically, he said: You are not going to get there because you
are going to have a debt crisis before that happens, before those years
pass.
Mr. Erskine Bowles, the man chosen by President Obama to head the
deficit commission, with Alan Simpson, they signed a written statement
to the Budget Committee last year, and they said: The course we are on
will lead America to the most predictable financial crisis in our
history.
So we can clearly see the path we are on. It is a path to financial
crisis. We have to realize we cannot continue to put this off, and I
find it deeply disappointing that the President of the United States,
in his fourth year in office, lays out a plan that does nothing to
improve the financial status of our country, does nothing to talk and
deal seriously with our entitlement programs.
Indeed, what he has indicated is that anybody else in Congress,
whether it is Congressman Ryan in the House Budget Committee or Members
of this Senate who have the temerity to make any suggestions about
containing and saving Social Security and Medicare, will be attacked by
him.
So not only is he not proposing a plan that would help the situation,
he is lying in wait to politically go after anybody who seriously
proposes changes that can put America on a sound debt course. I don't
think that is acceptable. I am deeply disappointed in the budget. I
wish it would have been so much better because I truly believe he could
have had support from Congress to do some things of a historic nature.
They were discussed in some of these secret committee meetings but
never came to fruition.
Mr. President, I thank the Chair. I yield the floor and I suggest the
absence of a quorum.
The PRESIDING OFFICER (Mr. Blumenthal). The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. LEAHY. Mr. President, I ask unanimous consent the order for the
quorum call be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
____________________