[Congressional Record (Bound Edition), Volume 146 (2000), Part 1]
[Senate]
[Pages 610-611]
[From the U.S. Government Publishing Office, www.gpo.gov]



                       LONGEST ECONOMIC EXPANSION

  Mr. CONRAD. Mr. President, we have now reached a milestone in our 
economic history with the report the other day that our economic 
expansion is now the Nation's longest. We have now enjoyed economic 
expansion of 107 months. That is the longest economic expansion in our 
Nation's history. I thought it might be useful to reflect on some of 
the policies that have contributed to that success.
  First and foremost is the fiscal policy of the Nation. The policies 
that determine our economic success are the fiscal policy of the United 
States and the monetary policy of the United States.
  The fiscal policy of America is controlled by the President, working 
with the Congress of the United States. That is the spending policy and 
the tax policy of America.
  The monetary policy is controlled by the Federal Reserve Board. Of 
course, we had a vote this morning on the question of the continued 
leadership of Chairman Greenspan over the monetary policy of our 
country.
  With respect to the fiscal policy of the country, I thought it would 
be useful to compare and contrast the records of our last three 
Presidents.
  Under President Reagan, starting in 1981, we saw a dramatic increase 
in Federal budget deficits. In fact, they nearly tripled from $79 
billion a year, when he came into office, to over $200 billion a year. 
Then we saw some improvement in the final 2 years of his 
administration.
  Then, with President Bush, we saw a dramatic increase in our Federal 
budget deficits, going from $153 billion in his first year to $290 
billion in his final year in office. At that point, we were advised 
that we could expect red ink for as far into the future as anybody 
could project. In fact, they were expecting, at that point, this year 
we would have budget deficits of over $600 billion if there was failure 
to act.
  Thank goodness we did not fail to act because in 1993 President 
Clinton came into office, put forward an ambitious 5-year plan to 
reduce the budget deficit, and we were able to pass that plan. We were 
able to pass that plan; and for the next 5 years, under that 5-year 
plan, each and every year the budget deficit came down, and came down 
sharply, to $22 billion at the end of that 5-year plan.
  At that point, we passed, on a bipartisan basis--unlike in 1993, 
where nobody on the other side of the aisle in either Chamber supported 
the 5-year plan put forward by President Clinton--but in 1997, we 
joined hands, on a bipartisan basis, to finish the job.
  Indeed, we did finish the job, so that in 1998 and 1999 we saw 
unified budget surpluses. In fact, in 1999, we had a surplus of $124 
billion, on a unified basis--that means counting all of the accounts of 
the Federal Government. And even better news; we were able to balance 
that year without counting Social Security.
  This year, the year we are currently in, we anticipate a $176 billion 
unified budget surplus, again, without counting Social Security.
  Those are very dramatic improvements that we have had in the fiscal 
policy of the United States.
  I will go to this chart first because it shows the changes that were 
made in the two key elements in determining whether or not you have a 
budget deficit. The blue line is the outlays of the Federal Government; 
that is, the spending. The red line is the revenues. You can see, we 
had a big gap between the two for many years. That is why we had a 
budget deficit. We were spending more than we were taking in.
  In 1997, when we passed that 5-year plan to close the gap, you can 
see from the chart we reduced expenditures and we raised revenue. That 
combination has eliminated the budget deficit. That is why we are in 
surplus today.
  Let's go back to the chart that shows, on the spending side of the 
ledger, how things changed.
  We are now at the lowest level of Federal spending in 25 years as 
measured against our gross domestic product, as measured against our 
national income, which is the fairest way to measure these things so 
you see changes over time, so that you are able to put in context the 
time value of money.
  What you see is, we are now spending 18.7 percent of our national 
income on the Federal Government. That is, again, the lowest level 
since 1974, 25 years ago. If we stay on this course, you can see we 
will continue to see declines down to about 17 percent of our national 
income going to the Federal Government. That is a dramatic improvement 
over where we were back in 1992, when we were spending over 22 percent 
of our national income on the Federal Government.
  Some have said: We have the highest taxes in our history.
  Let me go back to the chart that shows revenue and spending. This, 
again, is measured against our gross domestic product, our national 
income.
  The red line is the revenue line. It is true that the revenue line 
has gone up, just as the spending line has come down. That is how we 
balance the budget. We cut spending and we raised revenue so we could 
eliminate the deficit.
  One of the key reasons we have more revenue is because the economy is 
doing well. It has been revived because we got our fiscal house in 
order in this country. Some say that translates into the highest taxes 
individuals have paid. That is not the case.
  The fact is, the tax burden is declining for a family of four. This 
is not the Senator from North Dakota's analysis. This is the respected 
accounting firm of Deloitte & Touche, that compares the tax burden for 
a family earning $35,000 a year in 1979 to 1999. This chart shows their 
overall tax burden. This includes payroll taxes, income taxes. It shows 
that their tax burden has declined. The same is true of a family income 
of $85,000 a year. Their taxes have not gone up. Their taxes have gone 
down. Their taxes have been reduced.
  Overall, revenue has increased because the economy is strengthened. 
Goodness knows, anybody who looks around at America's economy 
understands we are in the best shape we have been in in anybody's 
memory.
  How do we keep this successful economy going? I think it is useful to 
reflect on how very important the successful economic policy we have 
been pursuing has been. It has produced the lowest unemployment rate in 
41 years. This chart shows the dramatic improvement in the unemployment 
rate in this country. We have also experienced the lowest inflation 
rate in 33 years.
  You remember we used to talk about the misery index. We used to 
combine the unemployment rate and the inflation rate and look at the 
so-called misery index. The misery index would be as favorable as it 
has been in almost anybody's lifetime because we have seen unemployment 
and the inflation rate come down dramatically.

[[Page 611]]

  The fact is, this economic policy has been working--a policy of 
balancing the budget and getting our fiscal house in order.
  Now the question is, What do we do going forward? We have these 
projections that say we are going to be experiencing substantial 
surpluses in the future.
  Chairman Greenspan, who we voted for overwhelmingly on the floor of 
the Senate, has given his recommendation. As recently as January 27, he 
told Congress: ``Pay down the debt first.'' That is what he is urging. 
He is saying: Continue the policy that we have pursued to eliminate 
deficits, reduce debt because that lifts an enormous burden off of the 
American economy. We reduce the interest costs; we reduce the 
competition for funds; we reduce the Government's call on money that is 
available in this economy; and there is more money available for the 
private sector at lower interest rates. That means higher rates of 
investment. That means stronger economic growth. We ought to pay 
attention to what Chairman Greenspan is telling us: ``Pay down the debt 
first.''
  I wish to talk a little about these projections of surpluses we have 
heard about. When the Congressional Budget Office released their 
projections, they put out three different calculations of what the 
surpluses might be over the next 10 years.
  The first one was based on an assumption that we have a so-called 
capped baseline; that is, we go back to the 1997 agreement. That would 
mean very sharp cuts in spending this year over the spending we had 
last year. In fact, this baseline assumes that we would cut spending 
this year by $66 billion over last year's spending.
  Now, that is not going to happen. We have had a Republican-controlled 
Congress the last 2 years. They have not been reducing spending from 
the previous year. They have been increasing the spending, even though 
the caps existed. In fact, we shattered the caps last year. So it is an 
unrealistic expectation to suggest that all of a sudden we are going to 
start following them this year. In fact, that would require a $66 
billion cut in spending to get the projection of a non-Social Security 
surplus over the next 10 years of $1.9 trillion.
  The second estimate put out by CBO was, if we froze all domestic 
spending for the next 10 years, that would give us a non-Social 
Security surplus of $1.8 trillion. Again, how realistic is that? Are we 
really going to freeze for the next 10 years all the spending on 
education? Are we going to freeze for the next 10 years all the 
spending on defense? Are we going to freeze for the next 10 years all 
the spending on law enforcement? Are we going to freeze for the next 10 
years all the spending on parks in this country, roads, and highways? 
That is not a realistic projection. That is not an honest projection.
  The third estimate put out by the Congressional Budget Office is if 
we adjusted for inflation each of the years going forward for the next 
10 years. That resulted in a non-Social Security budget surplus of $838 
billion. In order to evaluate how reasonable that forecast is, I think 
you have to look at what has happened the last 2 years. This 
Republican-controlled Congress has been increasing spending by higher 
than the rate of inflation, which would reduce this number even 
further. That means instead of a $1.9 trillion Social Security surplus 
that has been bandied about in the press, or a $1.8 trillion surplus 
over the next 10 years that has been discussed in some circles, we are 
much more likely to face a surplus over the next 10 years in the non-
Social Security accounts of about $800 billion. That is reality, that 
is facing the most likely prospect, instead of the kind of dreamworld 
anticipations we have had in the first two scenarios.
  In the proposal of Governor Bush and the Republican side over the 
next 10 years, he is proposing a tax cut of $1.3 trillion, when we only 
likely will have a non-Social Security surplus of $800 billion. That 
means Governor Bush would have to take $500 billion out of Social 
Security to pay for his tax cut scheme, a tax cut scheme that gives 60 
percent of the benefit to the wealthiest 10 percent in this country. 
That is a dangerous plan for this Nation's economy.
  Instead of further reducing the debt with this non-Social Security 
surplus, he would devote every penny of it to a tax cut 
disproportionately going to the wealthiest 10 percent in this country. 
That is a dangerous plan.
  It is especially dangerous in light of what Chairman Greenspan has 
told us, which is that the highest priority ought to be to pay down the 
debt--not to have a massive tax cut scheme, not to have a massive new 
spending scheme, but to have our first priority being to pay down the 
debt. Goodness knows, our generation ran up this debt. We have a 
responsibility to pay it down. Not only do we have a moral obligation, 
but it is the best economic policy for this country. It will take 
pressure off interest rates. It will mean greater economic growth. It 
will mean we are preparing for the baby boom generation, which all of 
us know is coming.
  I am a baby boomer; many of us are. We know there is a huge bulge in 
the population. When these baby boomers start to retire, they are going 
to put enormous pressure on Social Security spending, on Medicare 
spending, and we ought to get ready for that day. We ought to be 
responsible. The responsible thing to do is not to engage in some big 
new spending scheme, not to engage in some massive tax cut scheme, but 
to have a balanced approach, one that puts the priority on paying down 
this debt, one that puts a priority on strengthening Social Security, 
extending the solvency of Medicare, and also addressing certain high-
priority domestic needs such as education and defense, which I think 
many of us in this Chamber believe needs to be strengthened.
  I come from agriculture country. I come from a farm State. 
Agriculture needs attention. That is a domestic priority for many of 
us.
  Finally, yes, we can have tax reduction as well, but we certainly 
shouldn't put that as the highest priority. We certainly should not 
take all of the non-Social Security surplus and devote it to that 
purpose. We absolutely must not take money out of Social Security to 
provide a tax cut. That is irresponsible. That is dangerous. That 
threatens our economic security and our economic expansion.
  Over 5 years, the Bush tax cut plan is even more dramatic in terms of 
its effect on Social Security. I talked about a non-Social Security 
surplus over 10 years of just over $800 billion. Over 5 years, it is 
about $150 billion. Yet the Bush tax cut plan over 5 years approaches 
$500 billion. Let me say that again. Over the next 5 years, the most 
realistic projection of surpluses is just under $150 billion. Yet the 
Bush tax cut plan over 5 years is over $480 billion. Where is the 
difference coming from? It can only come from one place. That is the 
Social Security surplus. That is profoundly mistaken, profoundly wrong. 
That is exactly what we should not do in terms of the fiscal policy of 
this country. The last thing we should do is put this thing back in the 
old ditch of deficits and debt.
  I end as I began. Chairman Greenspan has advised us that what we 
ought to do as the highest priority is pay down this debt--$5.6 
trillion of total debt, $3.6 trillion of publicly held debt. Let us 
keep our eye on the ball. Let us put as our highest priority the paying 
down of this national debt. Our generation ran it up. We have an 
obligation to pay it down.
  I thank the Chair and yield the floor.
  Mrs. FEINSTEIN addressed the Chair.
  The PRESIDING OFFICER (Mr. Voinovich). The Senator from California.
  Mrs. FEINSTEIN. Mr. President, I ask unanimous consent to speak for 
such time as I may require as in morning business and that, by 
unanimous consent, Senator Feingold be recognized to speak directly 
following the conclusion of my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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