[Congressional Record (Bound Edition), Volume 145 (1999), Part 11]
[House]
[Pages 15763-15767]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              {time}  2130

                        THE DEBT AND THE DEFICIT

  The SPEAKER pro tempore (Mr. Hayes). Under the Speaker's announced 
policy of January 6, 1999, the gentleman from Washington (Mr. Smith) is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. SMITH of Washington. Mr. Speaker, I rise tonight to talk about 
fiscal responsibility, the budget deficit and hopefully paying off the 
debt.
  We have a very promising situation right now where we are finally 
headed towards balancing the budget. It was not too long ago when that 
seemed like an impossible dream. I remember in 1990 when we looked at 
budget deficits growing on a yearly basis, stacked on top of an already 
multi-trillion dollar debt, it seemed impossible to think that we would 
ever dig our way out of that hole, but thanks to a strong economy, the 
private sector kicking in and some good decisions made by both sides of 
the aisle and by President Clinton's administration, we are to the 
point where we almost have a yearly balanced budget. Now, we still have 
a $5.6 trillion debt to deal with, but we are headed in the right 
direction, for the moment.
  That is why I rise to speak this evening, because the ``for the 
moment'' part could change. As we head into the budget negotiations 
that are starting in earnest in both chambers and at the White House, 
we need to be very careful not to lose the progress that we have gained 
and not to, in essence, snatch defeat from the jaws of victory which we 
still have plenty of time to do.
  I think there are a couple of ways this might happen. The first way 
is when we start throwing numbers around of the surplus. We have heard 
the numbers in the trillions of dollars about how much money we have 
got lying around. I want to try this evening to clarify exactly what we 
are talking about, because there are a number of variables in these 
numbers that often do not come with the rosy scenarios that various 
politicians are laying out for people to hear.
  We have heard, for instance, that we have and will run up, as 
currently projected, $6 trillion in surpluses over the course of the 
next 15 years. There are a number of problems with this scenario. First 
of all, of that $6 trillion, better than half, almost, I think it is 
like $3.1 trillion, will be ran up in the Social Security trust fund. 
Any surplus that we

[[Page 15764]]

have in the Social Security trust fund is not money that we can spend 
because it is money that we borrow from that trust fund with a promise 
to pay it back plus interest so that we can meet the obligations of the 
Social Security trust fund. If we were to take that money and treat it 
as a surplus and spend it, we would in essence--not in essence, we 
would--be spending money twice. That is exactly the sort of thing that 
got us in trouble in the 1980s. If you spend money twice, you wind up 
in debt because you do not have it when you need it.
  So right away we lose half of that 15-year figure, better than half 
of that 15-year figure. You could still look at that and say, ``Gosh, 
$2.9 trillion over 15 years, that is still a lot of money.'' It is, but 
it presumes that our existing budget of all spending will be reduced by 
20 percent. Not only will it not increase but we will make cuts of 20 
percent. This was part of the 1997 balanced budget agreement that 
occurred before our economic situation got rosier and more money poured 
into the coffers. I do not want to be one to predict the future, but 
having been around this place for the last year or so and listening to 
people talk about all the various programs, from defense to education 
to you name it that people feel are underfunded, much less in need of a 
20 percent cut, I find it very hard to believe that over the course of 
that 15 years we are actually going to have that 20 percent reduction. 
So if we assume that again, we are going to get in trouble. That puts 
us in a position where you realize there is not that much money there.
  Lastly, and most importantly, these are projections, estimates. Now, 
we have to do projections and estimates. You have to sort of guess, if 
you will, at what your budgets are going to look like so you can plan 
for the future. That is acceptable, but I would not count our chickens 
before they hatch. Because that 15-year projection is based on 15 years 
of continued growth and low inflation. Now, granted the growth that is 
projected is lower than we have had in the last year or two, as we have 
had the long peacetime expansion, the longest that we have had in a 
while, but still there are times when revenues go down instead of up, 
when estimates get worse instead of better. I know this as every Member 
of this Chamber ought to know. Those times happened throughout the 
1980s and into the early 1990s. We had projected balanced budgets at, 
gosh, I do not know how many times throughout the 1980s and 1990s, but 
the numbers always came in worse than expected, many times far worse 
than expected, dramatically growing the deficit instead of reducing it.
  So if we assume that this 15-year period is going to produce 
continued growth, continued low inflation, we are asking for trouble. I 
would suggest that a more modest approach is at most let us assume that 
maybe half of that is going to happen and if the other half happens, 
fine, when it happens, then we can use it for tax cuts or needed 
spending, but let us not spend it before we get it.
  And, fourth, the final point, we should not forget the $5.6 trillion 
debt that we have hanging over us. It would be nice to use a lot of 
this money to pay down that debt, to get us back to the point where we 
can have the fiscal responsibility that we need in this country. We 
spend over $200 billion, somewhere around $220 billion a year, in 
interest on the debt. That is money that cannot go for any program, 
cannot go for any tax cut, it is merely servicing our debt. If we were 
to pay down that debt, we could reduce that amount and have even more 
money and a more fiscally responsible budget.
  Let me suggest that now is the time to do this, at a time when we 
have between 4 and 6 percent growth depending on the quarter, at the 
time when we have virtually nonexistent inflation. These are 
unprecedented times, at least unprecedented in the last 40 or 50 years 
in this country, and if we do not seize this opportunity at a time when 
unemployment is 4.2 percent, to be fiscally responsible, we will never 
do it when times turn bad. Because when times turn bad is precisely 
when you need to spend more money on things like education and 
infrastructure, when you need to give tax cuts to help people who are 
struggling due to the tough economic times. Now is the time to be 
fiscally responsible.
  I want to touch on one more point on that. We have recently heard a 
lot of talk about tax cuts. Truthfully there are not many politicians 
who do not like tax cuts. We would love to be able to give as many of 
them as possible and in as many places as possible, but only in my 
opinion if they do not jeopardize fiscal responsibility.
  The plan that has been rolled out by the majority Republican Party in 
recent days calls for $850 billion, or $875 billion, depending on whose 
figures you believe, over the next 10 years. Right away, please note 
that they estimate over the next 10 years, whereas the surplus figures 
that have been thrown around in the newspapers estimate over 15 years. 
So over 15 years, that $850 billion is even more. In fact, if you take 
that $850 billion, put it over the 10 years like it is, then take our 
projected surpluses back over 10 years, and that is the chart that I 
have with me today, you will see that we have a figure here that shows 
that the combined surpluses over those two periods are somewhere around 
$1 trillion.
  If you then also add into it the fact that if you spend the $850 
billion or if you give it to tax cuts basically, you will not be able 
to pay down the debt at all, you jack up your interest payments by 
almost $200 billion and you completely exhaust this projected surplus 
in 10 years. So we better do absolutely as well every single year and 
we better be prepared to cut the budget 20 percent or we can forget 
about fiscal responsibility. The number is simply too high. Yes, we 
ought to do tax cuts. I completely support that. I completely agree 
with that. We ought to target it to the middle class, target it to the 
people who maybe have not necessarily benefited as much from the recent 
economic boon as others. But we should not exhaust the entire projected 
surplus on these tax cuts, putting ourselves in a position where we 
cannot even begin to pay down the debt and probably will not be able to 
have a balanced budget if the numbers come in worse than they are 
currently projected. That is not fiscally responsible.
  Let me throw one other frightening statistic at you as we are looking 
at these happy numbers of the projected surpluses. We project out 15 
years, which is an interesting time frame to pick particularly when you 
factor in positive economic projections, because it is right about at 
that time period, the year 2014, when the costs of Medicare and Social 
Security are really going to accelerate. If you project it out a few 
more years, you would see how much that starts to hurt us as the baby 
boom generation starts to retire in earnest. We are going to be in big 
trouble.
  All of these factors and statistics need to be considered. The fact 
that half the money is in the Social Security trust fund, the fact that 
right at the end of our projections we get hit with a huge bill for 
Medicare and Social Security. These are things that mitigate how much 
money we have. My grave concern, and I have seen it already, and had 
people come up to me, program after program, tax cut after tax cut is 
thrown at us and everyone says, ``Well, gosh, you ought to be able to 
do it. You've got this multi-trillion dollar surplus that everybody 
keeps talking about.'' I hope in my remarks I have explained a little 
bit tonight that we do not have that multi-trillion dollar surplus in 
the bank by any stretch of the imagination.
  I really think that the single best thing this Chamber can do for the 
people of our country right now in these strong economic times is 
balance the budget and pay down the debt. Then if we hit tough economic 
times, we will have a little leeway to borrow some money, help prime 
the pump, help get the economy back going again, but not if we cannot 
do it now. If we cannot do it now in these prosperous times, we will 
never do it. And God help us if it gets to the point where actually the 
projections go down, if we experience a year of negative growth, which 
by the way does happen, if inflation ticks

[[Page 15765]]

back up closer to double digits than just one or two, then we will 
really be in a fix. Now is the time to prepare for the future.
  I would like to close by just making one other point. This is tough. 
I recognize that. I am not going to stand here and say that fiscal 
responsibility is easy. Because we have a lot of needs in this country. 
I could tick off a dozen off the top of my head, defense spending, 
education spending, veterans, health care for seniors and children, 
environmental protection programs, and that is just a few. We also 
could have a tremendous need for a lot of tax cuts that would be 
tremendously helpful to the middle class and others. I know that. Every 
day in my office a number of people come in the door and request one of 
those programs. But the obligation and the responsibility of this 
Congress is to recognize that we are not the last people in this 
country who are going to need those things and if we spend all the 
money now, if we basically have no discipline and simply want to pass 
out the goodies to make as many people happy as is humanly possible, 
then 10, 20, 30 years from now our children, our grandchildren, those 
of us who are still around, are not going to have anything for these 
same programs. In the year 2020, 2050, they are going to need education 
and transportation and health care and defense spending every little 
bit as much as we need it now but they will not have it because we in 
our fiscally irresponsible way will have spent their money.
  I grew up in the 1970s and the 1980s when prior Congresses were in 
essence spending all of my money. I did not much like it and I darn 
sure do not want to do it to future generations because I do not have 
the discipline to do what is right and what is best for this country 
and what is responsible.
  Do not let rosy scenarios and pie in the sky numbers fool you about 
where the budget is going and what is going to happen. Demand fiscal 
responsibility from this Congress, demand that the budget gets balanced 
and we pay down the debt.


                    BLUE DOG VIEW OF FEDERAL BUDGET

  The SPEAKER pro tempore (Mr. Hayes). Under the Speaker's announced 
policy of January 6, 1999, the gentleman from Texas (Mr. Stenholm) is 
recognized to control the remainder of the minority leader's time.
  Mr. STENHOLM. I thank my colleague for requesting this hour this 
evening. I very much appreciate the opportunity to participate. I will 
assure the Speaker, I do not intend to take the full remaining part of 
the time tonight. If some other colleagues do show up, I will yield to 
them under the rule.
  Let me sort of begin where the gentleman from Washington just ended 
and on the chart that he has in the well and point out, contrary to a 
lot of rhetoric in this body over the last few days, there is no budget 
surplus this year. When we look at the year 2000, the off-budget 
surplus is $5 billion projected. In the year 2001, it is $24 billion 
projected. Therefore, I would hope that this body would resist the 
temptation that is prevalent today to talk in terms of an $850 billion 
tax cut over the next 10 years when, according to all arithmetic today 
that is conservative, you will find that it will have to be done with 
borrowed money.
  Now, the people that I represent do not get excited about a tax cut 
that is paid for with borrowed money. The first thing they assume is 
that if you borrow $850 billion, the least you are going to pay for 
interest is about 5 percent, maybe 6 percent, because it is the 
government doing the borrowing, but then they understand that if that 
is done with borrowed money, there is a pretty good chance that the 
Federal Reserve is going to involve itself in our decisions.
  I ask my colleagues tonight, what did the Federal Reserve do a couple 
of weeks ago? If memory serves me correctly, they increased interest 
rates by .25 percent. Why did the Federal Reserve and the wisdom of 
Alan Greenspan increase those interest rates? Because they were afraid 
the economy was about to start overheating, inflation was going to 
begin moving up and they wanted to nip it in the bud. Now, let us move 
ourselves back to the subject of tax cutting.
  Why would we want a tax cut? Obviously because it is a politically 
popular thing to do. It makes good political rhetoric to say we are 
going to leave this money that has been accumulated by overtaxing the 
people and sending it back to you, but by the same breath, tax cuts 
stimulate the economy. Now, the problem that I have with this $850 
billion tax cut is that if on the one hand we are going to stimulate 
the economy and that stimulation of the economy is going to cause 
interest rates to go up, who is going to benefit best? I would submit 
to you tonight, the best tax cut that this Congress can give to all of 
the American people is to act fiscally responsible and to make certain 
that interest rates do not go up, in fact can come back down. That is 
something we had better think about, because we are not in control of 
the Federal Reserve and it is predictable based on what Chairman 
Greenspan has been saying what will happen if in fact the economy 
starts to overheat. But I go back to my first comment and point out 
again, there is no budget surplus.

                              {time}  2145

  Now I have a little further problem with this chart and all of these 
guesstimations because that is what they are.
  I have been around here a few years, and I remember the debate in 
this body not too many years ago in which we argued for hour after hour 
as to whether or not we could project 2 years, 3 years. Now all of a 
sudden we are accepting 15-year projections.
  Now who among us can predict tomorrow, much less 15 years from today? 
Who among us can make these kind of decisions? And that is why the Blue 
Dogs, as we are affectionately called by some, in the budget proposal 
that we made earlier this year suggested, let us stop this business; 
yes, Mr. President, you, and to the leadership of this body, let us 
stop this business of taking 15-year numbers and acting like this $700 
billion is going to occur, and let us go back to 5-year numbers. Let us 
be conservative. Let us use 5-year numbers and let us not get carried 
away either with our desire for cutting taxes or our desire on the part 
of some for spending more money.
  Now, again, let me repeat, there is no budget surplus. Most of these 
surpluses are dealing with Social Security. When you look at the off-
budget or the on-budget surplus, you do have projected over the next 5 
years 231 billion. What is it about this that should bother us when we 
take a 231 billion projected surplus over the next 5 years and suddenly 
use that as justification to have an $850 billion tax cut?
  And what ought to really bother this body is that when you look at 
that other number on this chart and you look at that 2414 number, that 
is when we have major problems dealing with Social Security. That is 
why another part of the Blue Dog budget has said: Let us devote 100 
percent of the Social Security trust funds to solving the Social 
Security problem, and let us do this by paying down the debt. Let us 
pay down the debt with all of the Social Security trust funds. And we 
go further in saying let us take half of the non-Social Security 
surplus funds and pay down the debt with them. And then let us use the 
other half of that projected surplus to deal with the concept of tax 
cuts and the concept of increased funding, particularly for defense.
  We find over the weekend the Pentagon began to raise concerns, and 
rightfully they did. Because when anyone looks at an $850 billion tax 
cut over the next 10 years and then sees how it literally explodes 
about 2014, that becomes a problem for the military, it becomes a 
problem for our veterans programs, it becomes a problem for Medicare 
and Medicaid, but it even more seriously becomes a major problem for 
Social Security in 2014 because that is the year in which the Social 
Security trust funds begin not to, or the amount of taxes we are all 
paying on Social Security, begin not to cover the expected outgo of 
2014.
  In other words, the current situation we have in which Social 
Security is bringing in more than we are paying out begins to turn the 
other way as the

[[Page 15766]]

baby boom generation begins to retire. It ought to bother us, and it 
ought to say to this body and to those as we speak who are marking up 
this tax bill in extreme haste tonight: Now is the time for us not to 
be liberal with our thinking but to be conservative with our thinking 
and to realize that these are projections, and no one responsibly 
spends projections like it is real money.
  Let me give my colleagues a few numbers in backing up. There is no 
budget surplus this year. For the first 8 months of fiscal year 1999, 
October through May, the Treasury reported a cumulative surplus of 40.7 
billion, but it is composed of an off-budget surplus of 78.8 billion 
minus an on-budget surplus of 38.1.
  There is no surplus, and yet we keep talking like there is one.
  Let me read an editorial that was printed in today's San Angelo 
Standard Times. This is the way it went:
  Washington's Budget Discussions Annoying. It is surreal to listen to 
Washington politicians arguing about how they ought to spend tax cuts 
on new programs, a projected budget surplus of $5.9 trillion over the 
next 15 years. There are two niggling problems with such talk. One is 
that it is the wrong policy; the second is that not only is the amount 
of money being discussed little better than a blind guess, there is not 
even any assurance that there will be any surplus.
  Consider that the new projections are $1 trillion higher than the one 
made just this past February. Then consider that just 10 months ago the 
projected surplus was about one-third the numbers being tossed around 
now. And finally consider that just 18 months ago we were still talking 
about deficits. Can anyone really have enough confidence in such 
inexact calculations to make any plans that rely on their accuracy? Is 
it not obvious that if economic conditions can improve so rapidly, they 
can worsen just as rapidly? In fact, would not the smart money say that 
after 98 months of economic expansion, the longest during the peacetime 
in the Nation's history, a downturn is vastly more likely than 15 more 
years of uninterrupted growth and that future plans ought to reflect 
that probability?
  The only good thing about the current budget blabbering is that the 
$5.9 trillion figure is in the ball park of the amount owed on the 
national debt. Would it not be nice if that image, paying off the debt 
and not dollar signs begging to be given, this political barter, was 
the one that filled the politicians' heads? Would it not be nice if the 
trillions of dollars that have been and will be paid in interest on the 
debt could be used in some more productive way?
  Making the current talk even more frustrating is that doing the right 
thing is not even a difficult political choice. Polls have consistently 
shown that, given the options, Americans want Congress and the 
President to get the Nation's fiscal house in order before doing 
anything else with extra money.
  Maybe the glorious projections being tossed around will turn out to 
be right or maybe the surplus will wind up being even twice as large, 
three times as large. That would be splendid. But it is foolish and 
irresponsible to base policy on dreams and wishes. Washington should 
take care of the priorities first, the money owed and the money that 
will be owed to future Social Security and Medicare recipients before 
committing any budget surplus elsewhere.
  I could not have said it better myself, and as we go into tomorrow's 
continued markup in the Committee on Ways and Means and then next week 
having an $850 billion tax cut on the floor, many of us are going to be 
reminding this body time and time again: If you really mean it when you 
say let us lock up the Social Security trust funds and not use them, if 
you really mean it when we talk about saving Social Security, Medicare 
and Medicaid, if you really mean it, that we are going to keep our 
Nation's fiscal house in order. We must not succumb to the temptation 
to spend this surplus that may or may not even be realized for any 
purpose, and that includes the cutting of taxes. Because if we make 
that mistake, let us remember what happened the last time when we were 
not able to meet the spending needs in the 1980s. We borrowed $3 
trillion, almost $4 trillion. We borrowed because we could not and 
would not make the difficult decisions right here in this body.
  Again, my plea to the leadership of this House: Let us make the tough 
decisions first, let us settle the appropriations battle, let us 
acknowledge that if in fact we do have a need to build up our Nation's 
military, and we do, that there is no way on this earth we will be able 
to meet those numbers unless we deal with them responsibly in the 
budget by making that decision first. Let us acknowledge, all of us, 
that if you are concerned about Social Security, you cannot wink at 
2014, you cannot say we are going to pass that on to the future 
congresses, we do not care about what is going to happen then, oh, we 
care, but we have got a plan, and the plan is yet to be materialized.
  Why would it not be the most responsible thing for us to have a 
Social Security bill on the floor? Why would it not be the most 
responsible to have a bill for Medicare reform on the floor and have 
honest to goodness projections?
  Why do we have our hospitals in town this week again concerned, as my 
hospitals are here, as I met with them, hospital administrators from 
about 20 in my district who are concerned about having to shut down 
because the budget decisions that were made in the 1997 balanced budget 
agreement went too far. And as I point out to them, it did not go near 
as far as some folks in this body would have liked to have seen. But 
why not have an open and honest debate about how we are going to deal 
with health care first? Why do we postpone that until after we have a 
vote on spending the entire surplus that may or may not be a real one?
  These are some of the questions that I think we are going to have to 
ask and to answer over and over and over again.
  Remember: When anyone talks about an $852 billion surplus that is not 
Social Security; remember the highway bill that this body passed last 
year overwhelmingly? Look at the money that we voted to spend there 
that busted the hound out of the caps, but nobody saying, oh, we were 
not busting them because that was just part of the highway bill.
  Look at this year, when we passed an airport bill not too many days 
ago and folks were standing up on the Committee on the Budget and 
saying we are busting the caps. No, we are not, because the total has 
not been busted yet, but that old bucket is filling up, and as it fills 
up, we are going to have some extremely interesting times, and I do not 
want, I hope, to be part of another Congress that for political reasons 
absolutely and totally disregards the future of our children and 
grandchildren. That is what we will do if we choose to have a tax cut 
for self-gratification today. We will be saying to our children and 
grandchildren we do not give a rip about you. Because the urgency is 
what the polls that we have to be looking at this year, and that is 
somebody somewhere is saying we need a tax cut.
  I agree we need a tax cut, but not with borrowed money. That is the 
significant thing that we are going to have to somehow get over, 
hopefully to a majority of this body, that it does not make economic 
sense for us to waste this opportunity of fiscal responsibility, the 
first time in many, many years that we have got 2 years in a row in 
which when you take Social Security trust funds and off-budget, on-
budget, all of this malarkey that we talk about here, that we do have a 
surplus. If we apply it to the debt and honestly use this opportunity 
to deal with the long-term problems of Social Security, we can do 
something that our grandchildren will look back on. And I happen to 
have two. I should say my wife, Cindy, and I happen to have two.
  And I have resolved, and many people asked me why I have been so 
involved as I have in the Social Security question. I am not on the 
Committee on Ways and Means. I have been working with the gentleman 
from Arizona (Mr.

[[Page 15767]]

Kolbe), my colleague. We have bipartisan support now for a proposal on 
Social Security that does what we say it will do. And people say, well, 
what do we say it will do? It goes a long way towards solving the long-
term problems of Social Security, better than any other proposal out 
there.
  And people say, ``Well, Charlie, why are you so involved in Social 
Security?''
  And I say two reasons. Their names are Chase and Cole. It is mine and 
my wife's 4-year-old and 2-year-old grandsons. I do not want them to 
look back 65 years from today and say, if only my granddad would have 
done what in his heart he knew he should have done when he was in the 
Congress, we would not be in the mess we are in today.

                              {time}  2200

  We have a wonderful opportunity, if we can find the bipartisan 
political courage to deal conservatively with this surplus, to avoid 
the temptation that some have today to spend the money, whether it be 
on tax cuts or whether it be on spending for new programs.
  Members will see me up at this mike and at other mikes and using 
every possible opportunity over the next several days to encourage a 
majority of my colleagues to take this surplus and pay down the debt. 
Listen to what the American people are telling us in district after 
district. They are saying, pay down the debt.
  Any small business man or woman knows what happens to their business 
when they get more debt than they can pay back. When the interest cost 
becomes insurmountable, an insurmountable problem to them, they 
understand. Why is it so difficult for Members of Congress to 
understand?
  That is the message the Blue Dogs will be bringing. That is the 
message I hope we will find bipartisan support for.

                          ____________________