[Congressional Record (Bound Edition), Volume 147 (2001), Part 1]
[Senate]
[Pages 1482-1488]
[From the U.S. Government Publishing Office, www.gpo.gov]



                          PROJECTED SURPLUSES

  Mr. BYRD. Mr. President, I have listened to my distinguished friend 
from New Mexico with great interest. May I compliment him on the broad 
range of testimony that his Budget Committee has been acquiring through 
expert witnesses. I am a new member of the committee. I am very 
impressed with the well-organized, well-focused hearings that are being 
conducted in that committee.
  Mr. President, our Nation is facing a fork in the road. The 
Congressional Budget Office is projecting a 10-year surplus of $2.7 
trillion, excluding the Social Security and Medicare surpluses. These 
surpluses provide us with the opportunity to invest in our future and 
to deal with the long-term threats to the budget, such as the 
retirement of the baby boom generation.
  The administration is proposing large and ballooning tax cuts which, 
if enacted, would have a significant impact on the Federal budget for 
decades to come. It falls to the Congress to decide how much to 
allocate to tax cuts, how much to spending increases, and how much to 
reserve for debt reduction.
  Before we make these decisions, we must first decide whether we have 
sufficient confidence in the surplus estimates to use them to make 
long-term budget decisions. In his recent testimony before the Senate 
Budget Committee, Federal Reserve Board Chairman Alan Greenspan--and 
his name has been referred to already by my dear colleague, Mr. 
Domenici--expressed his hope that we use caution. He said:

       In recognition of the uncertainties in the economic and 
     budget outlook, it is important that any long-term tax plan 
     or spending initiative, for that matter, be phased in. 
     Conceivably, (the long-term tax plan) could include 
     provisions that, in some way, would limit surplus-reducing 
     actions if specified targets for the budget surplus and 
     federal debt were not satisfied.

  Now, while we all rely on the professional estimates provided by the 
Congressional Budget Office, we must recognize that long-term budget 
projections often have proved to be wrong. In its own report, entitled 
``The Budget and Economic Outlook: Fiscal Years 2002-2011,'' released 
last week, CBO characterizes its estimates as uncertain. On page 95 of 
that report, CBO States that the estimated surplus could be off in one 
direction or the other, on average, by about $52 billion in fiscal year 
2001, by $120 billion in fiscal year 2002, and by $412 billion in 
fiscal year 2006. CBO confirmed in testimony before the Senate Budget 
Committee last week that this uncertainty would grow even larger for 
fiscal year 2007 through fiscal year 2011.
  Further evidence of the volatility of these estimates can be found on 
page XV of the summary of the CBO report. In summary table 2, entitled 
``Changes in CBO's Projections of the Surplus Since July 2000,'' CBO 
changes its 10-year revenue estimate by $919 billion. In just 6 months, 
therefore, from July of 2000 to January of 2001, CBO changed its 
revenue estimate, I repeat, by $919 billion and its 10-year estimate of 
the surplus by over $1 trillion for economic and technical reasons 
alone.
  In its report, CBO concludes that there is ``some significant 
probability'' that the surpluses will be quite different from the CBO 
baseline projections.
  Let me now use this chart, entitled ``Uncertainty in CBO's 
Projections of the Surplus Under Current Policies, in Trillions of 
Dollars.'' In fact, CBO indicates that, ``there is some probability, 
albeit small, that the budget might fall into deficit in the year 2006, 
even without policy changes.'' So on page xviii of

[[Page 1483]]

the report, CBO indicates that the probability that actual surpluses 
will fall--we can see that in the darkest area on the chart--is only 10 
percent.
  The probability that the surplus will fall in the shaded area is 90 
percent. Imagine that after some 15 years of crawling and scratching to 
get out of the deficit hole, the ``d'' word just might reappear in our 
national vocabulary in a scant 5 years even if we stay the course. The 
``d'' word of course, is ``deficit.''
  Yet we are now being asked by President Bush and the Republican 
leadership to use these extremely tenuous 10-year budget estimates as 
the baseline for considering a tax cut that could cost $2 trillion or 
more over the next 10 years. We have been down this road before, and 
sadly I went along for the ride. In 1981, as my good friend, the senior 
Senator from Maryland, Mr. Sarbanes, well knows, President Reagan 
proposed a large tax cut over 5 years. There are not many in this town 
who remember that his 5-year budget plan projected a surplus for fiscal 
year 1984 of $1 billion; for fiscal year 1985, a surplus of $6 billion; 
and for fiscal year 1986, a surplus of $28 billion.
  Congress passed the tax cut bill that reduced revenues by over $1 
trillion from fiscal year 1982 to fiscal year 1987. Did the Reagan 
administration's projected surpluses come to pass? No. In fact, 
precisely the opposite occurred. The fiscal year 1984 deficit was not a 
surplus of $1 billion as projected. The fiscal year 1984 deficit was 
$185 billion--using the ``d'' word, ``deficit.'' The fiscal year 1985 
deficit was $212 billion. The fiscal year 1986 deficit was $221 
billion.
  Mr. SARBANES. Mr. President, will the Senator yield?
  Mr. BYRD. Yes. I yield.
  Mr. SARBANES. These figures are the actual deficit figures the 
Senator is talking about.
  Mr. BYRD. Yes, indeed.
  Mr. SARBANES. They should be contrasted with the projections which 
were made only a few years before--projections which projected 
surpluses. Am I correct?
  Mr. BYRD. Precisely.
  Mr. SARBANES. I think this is an extraordinarily important point. We 
have these projections now. We are talking about having a surplus of 
trillions over 10 years, and yet two-thirds of the surplus being 
projected now is in the last 5 years of the 10-year period.
  Mr. BYRD. Yes.
  Mr. SARBANES. Everyone has underscored that you can't really base a 
policy on these projections, they are so uncertain. As the Senator 
pointed out earlier in his statement, in just 6 months the 
Congressional Budget Office changed its projections to raise the 
surplus estimate by about $1 trillion between last summer and last 
month.
  Mr. BYRD. Yes. That is remarkable.
  Mr. SARBANES. I want to bring one other fact to your attention, and 
then I will certainly yield back to the Senator.
  Just to show you how fragile these budget surplus estimates are, in 
1995 CBO estimated that in the year 2000 we would have a deficit of 
$342 billion. Five years out they were making that projection. Instead, 
we had a surplus of $236 billion, because we restrained ourselves on 
spending. We recouped taxes in order to balance the budget. That is a 
swing of $578 billion from the projections to the actuality. That was 
only projecting 5 years. Now we are talking about projections that go 
for 10 years.
  I think the Senator is absolutely right to underscore the fragile 
nature, which would be the best way to put it, of budget projections. 
These projections have almost an evaporating dimension to them. I think 
we have to be extremely careful, cautious, and prudent in planning our 
policy if we are using these kinds of projections.
  Of course, the Senator just underscored it, by outlining the 
projections that were made in the Reagan years to support the tax cut 
and how far from the mark they were, only a few years later--not quite 
immediately, but only a few years later.
  Mr. BYRD. Yes.
  Mr. SARBANES. I thank the Senator for yielding.
  Mr. BYRD. I thank the distinguished Senator. He served with me as we 
sought to have the President postpone the third year of that 3-year tax 
cut until such time as we could see what the impact of the 2 previous 
years' tax cuts was going to be on the budget and on the economy.
  I remember going down to the White House. I was the minority leader 
at that time. As I say, there in the Oval Office I said to the 
President: Mr. President, you are proposing a tax cut over 3 years--I 
believe it was 3 years-- 5 percent, then 10 percent, and then 10 
percent? It may not be the exact sequence, but those are the correct 
numbers. Why not wait until we see what the results are and the impact 
is for the first 2 years? Why go ahead now and add a third year of tax 
cuts? Why do it now? Why not wait?
  President Reagan responded. After he responded, I said: Mr. 
President, that doesn't answer my question. So he turned to Mr. Regan, 
who was the Secretary of the Treasury, and asked Mr. Regan to explain 
to me why we had to have 3 consecutive years all at once. Mr. Regan 
sought to explain it. When he finished, I said: Well, Mr. Regan, you 
still haven't answered my question.
  President Reagan then turned to Mr. Meese and asked Mr. Meese to 
explain it. This was all down in the Oval Office. Mr. Meese explained 
it somewhat like this: Senator, in order to give to the business people 
of this country certainty that there will be 3 years of tax cuts and in 
these amounts, in order that they might plan ahead with certainty, we 
need to package the three tax cuts in one bill.
  That was a reasonable explanation. I didn't buy it. But there were 
some people who might buy it. And there was something to it.
  I came back to the Hill, and on the Senate floor I, with Mr. Sarbanes 
and others on this side--we were in the minority then as we are now--
offered an amendment to postpone that third year until after the first 
2 years of tax cuts had been implemented. We lost, of course. As we 
see, the projections did not pan out.
  Lord Byron said, ``History, with all thy volumes vast, hath but one 
page.'' Well, the one page of history that we see today tells us very 
clearly that we cannot depend upon these projections.
  I know of no one who can better testify to this fact than the 
distinguished Senator from Maryland, Mr. Sarbanes. He has served on the 
Joint Economic Committee for several years.
  Regarding the administration's 3-year across-the-board tax cut, we 
tried. We lost. In order to help give President Reagan's economic 
program a chance, I voted for the final bill because my people in West 
Virginia who send me here said: Give him a chance. Give this new 
President a chance.
  ``Give him a chance.'' So I did, I gave him a chance. I voted for the 
Reagan tax cut. It was a mistake on my part.
  On October 1, 1981, I went out on the floor as minority leader to 
take a look forward to the new fiscal year. On that day I said: ``Today 
is the beginning of the new fiscal year. Yesterday, there was a kind of 
New Year's Eve celebration. The trouble with New Year's Eve 
celebrations, we all have to wake up the next day and face reality.''
  I quoted Arthur Schlesinger who wrote: ``This supply side fantasy is 
voodoo economics. The witch doctors have had their day. Reality is 
awaiting.''
  On that October day, I noted: ``. . . The administration's brave 
words and rosy predictions began to wilt.''
  The reality was that deficits as far as the human eye could see were 
out there. Deficits peaked in fiscal year 1992 at $290 billion. Not 
until fiscal year 1998, 17 years after the 1981 Reagan tax cuts, were 
we able to achieve a budget surplus. Having passed the Reagan tax cuts 
in 1981, which in large part created these unprecedented triple-digit, 
billion-dollar deficits, the Congress had no choice but to pass, and 
Presidents Reagan, Bush, and Clinton signed, numerous bills to correct 
our mistake and increase taxes in hopes of stemming the unprecedented 
tide of red ink.
  The Budget anachronisms of those tax increase measures are painful to 
recall: TEFRA, DeFRA, OBRA of 1987, OBRA of 1990, OBRA of 1993, and so 
on.

[[Page 1484]]

  Despite all of these efforts to stem the red ink during the 12 years 
of Presidents Reagan and Bush, the national debt rose from $932 
billion, the day Mr. Reagan took office on January 20, 1981, to $2.683 
trillion the day Mr. Reagan left office; to $4.097 trillion the day 
President Bush left office on January 20, 1993. These protracted 
deficits also resulted in higher interest rates for you and for you and 
for you, the American taxpayer, to pay. This forced the average 
American to pay more for his mortgage, more for his car, more for his 
child's education because of our rush to enact a huge tax cut. Because 
of our rush to enact a huge tax cut, the benefits of which went mainly 
to the wealthiest taxpayer, many, many middle-class American taxpayers 
were left with shrinking paychecks and shriveled dreams.
  As a result of the tough votes we took on the deficit reduction bills 
of 1990, Senator Sarbanes, and 1993, do you remember 1990, when we went 
over to Andrews Air Force Base? And do you remember 1993 when we passed 
the bill for which no Republican in the House or in the Senate voted? 
We are now reducing the debt held by the public, but gross debt 
continues to grow to this day.
  Our current gross debt is $5.6 trillion. Here is the chart: $5.646 
trillion. The chart will show that, if these $5 trillion were stacked 
in $1 bills, the national debt would reach into the stratosphere 382 
miles.
  May I ask Senator Sarbanes if he remembers when Mr. Reagan first came 
into office, Mr. Reagan made a presentation to the American public on 
television, and in that presentation Mr. Reagan talked about the debt 
he had inherited. It was $932 billion at that time. Mr. Reagan very 
graphically presented it by saying: If this $932 billion were in $1 
bills, that stack of $1 bills representing the national debt of $932 
billion which I inherited would reach into the stratosphere 63 miles.
  When Mr. Reagan left office, that same stack of $1 bills would have 
reached into the stratosphere 182 miles, three times what it was when 
Mr. Reagan took office.
  Our current gross debt worldwide is $929 for every man, woman, and 
child. Get that: Our current gross debt comes to $929 for every man, 
woman, and child around the globe! That is not pocket change. It 
represents $20,062 per man, woman, and child in the United States.
  Some may argue that increased Federal spending is responsible for the 
deficit. That is not so, not totally so. Looking at the chart entitled 
``Total Federal Spending Lowest Level Since 1966,'' I have heard my 
ranking member on the Budget Committee, Mr. Conrad, refer to this chart 
and to this total of Federal spending. He has said it is the lowest 
level since 1966.
  Federal spending this year is only 1.2 percent of GDP, the lowest 
since 1966, and almost 5 percentage points less than in 1982 during the 
Reagan administration, and 4 percentage points less than in 1992 during 
the Bush Administration.
  Once again, we face the fork in the road. We have faced it before. We 
took the wrong path. We voted for that tax cut. But this time, we have 
a signpost. It is easy to vote for a tax cut. I love to cast easy 
votes. The easiest vote I have ever cast in my 55 years in politics has 
been a vote to cut taxes. Oh how easy. It doesn't take much courage to 
do that.
  Mr. SARBANES. Will the Senator yield?
  Mr. BYRD. I yield.
  Mr. SARBANES. I want to underscore what the Senator is saying. Some 
make the argument that somehow it takes great political courage to 
advocate a sweeping tax cut. I have never encountered that in the 
course of my public career; a tax cut is always welcome. If it is 
possible, if the fiscal circumstances are such, I think we should 
consider doing tax cuts. But the real problem is always how to act in a 
responsible manner and how to think about the future and not rush. The 
paper this morning has an article entitled ``Congressional Republicans 
Seek Bush's Big Tax Cut and Think Bigger.''
  Another headline says, ``Business Vows to Seek Its Share of Tax 
Relief.''
  Once you take the lid off the punch bowl, everyone wants to come to 
the punch bowl and gorge themselves. The real challenge, the difficult 
political challenge, is not to do the tax cut. The difficult political 
challenge is to restrain yourself so whatever you do is done in a 
responsible manner, in a manner that takes into account the future of 
the country--by ``the future'' I don't just mean next year, but the 
next generation and the generation after that--and in a manner that 
will build the strength of the Nation over time. That is the difficult 
challenge. I agree completely with the Senator in his observation.
  Mr. BYRD. I thank my friend.
  Does the Senator from Maryland have grandchildren?
  Mr. SARBANES. I do, indeed.
  Mr. BYRD. Does he have great grandchildren?
  Mr. SARBANES. Not yet.
  Mr. BYRD. One day we will leave this Chamber for the last time. And, 
if I am able to do so, I will look in a mirror. I will say to myself: 
How did you serve? Did you think mostly of yourself? Did you think in 
terms of only your generation? Did you think in terms of your 
children's future? Did you think about your great grandchildren? What 
about that little great granddaughter? She is going to be in school one 
day.
  When I look into that mirror, what will I say as to my stewardship 
during these years when I have served the people in the Congress? If I 
haven't served well, I shall have cheated that great granddaughter. I 
shall have cheated my daughters and my grandchildren.
  I would say as I look in that mirror:

     When you get all you want in your struggle for pelf,
     And the world makes you King for a day,
     Then go to the mirror and look at yourself,
     And see what that guy has to say.
     For it isn't your Father, or Mother, or Wife,
     Who judgment upon you must pass.
     The fellow whose verdict counts most in your life
     Is the man staring back from the glass.
     He's the fellow to please, never mind all the rest,
     For he's with you clear down to the end,
     And you've passed your most dangerous, most difficult test
     If the man in the glass is your friend.
     You may be like Jack Horner and ``chisel'' a plum,
     And think you're a wonderful guy,
     But the man in the glass will just say you're a bum
     If you can't look him straight in the eye.
     You may fool the whole world down the pathway of years,
     And get pats on the back as you pass,
     But your final reward will be heartaches and tears,
     If you've cheated the man in the glass.

  If I have cheated the people who sent me here, if I have cheated my 
grandchildren, my children, your children, then I shall have cheated 
myself most of all.
  Senator Sarbanes and Senator Conrad, we will have to look in that 
glass one day. And right here coming up, this year is one of the tests 
as to how we are going to react to the challenge before us.
  Mr. CONRAD. Will the Senator yield for a question?
  Mr. BYRD. Yes.
  Mr. CONRAD. The Senator attended the Budget Committee yesterday in 
which we heard from the Comptroller General of the United States, the 
head of the General Accounting Office. He warned us of precisely what 
you are talking about. He warned us that this near-term outlook has 
improved, but the long-term outlook has gotten worse. Does the Senator 
remember that testimony?
  Mr. BYRD. Yes. I do. I do. And I was very much impressed by that. We 
were talking about 10 years. What was the testimony, just beyond the 10 
years?
  Mr. CONRAD. The Comptroller General of the United States alerted us 
that just beyond the 10 years lie massive deficits. We are talking 
about short-term surpluses, but there are massive deficits to come and 
we ought to take this window of opportunity to strengthen ourselves for 
the future.
  We had four demographers today before the Senate Budget Committee 
with this same message, telling us that if we would set aside some of 
these acorns, instead of using them all, consuming them all in a tax 
cut or spending--but, instead use some of it to pay

[[Page 1485]]

down this long-term debt and address this long-term demographic time 
bomb, the retirement of the baby boom generation--that we will have a 
much stronger economy in the future.
  It is really a message that Senator Sarbanes has delivered so 
powerfully in the past to the members of the committee. If we are 
really thinking ahead, we will realize we ought to take some of these 
funds and invest them for the future to reduce our long-term 
indebtedness, to expand the pool of savings, to expand the pool of 
investment, to take pressure off of interest rates, and to have a much 
bigger economy when the baby boomers start to retire.
  That is really the lesson that Senator Sarbanes has provided to us 
day after day in the committee as well.
  Mr. BYRD. Yes. Yes. I thank the distinguished ranking member of the 
Budget committee, on which Senator Sarbanes and I serve.
  Mr. President, once again we face the fork in the road. We have faced 
it before and we took the wrong path--but this time we have a signpost. 
The lesson of recent history is very clear, and we have only to review 
it to see which way to go.
  The choices are these: Do we rely on uncertain, 10-year budget 
forecasts to pass a colossal tax cut, or do we exercise a little 
caution in case the forecasts prove to be only a mirage, as they have 
so often proved to be before? If we pass such a tax cut and the 
surpluses do not materialize, what needs of our citizens may have to be 
left behind?
  Let's take Social Security. Currently, 44.8 million older Americans 
receive Social Security. That is projected to grow to 82.7 million in 
the year 2030 when the baby boom generation has retired. The ratio of 
workers to beneficiaries was 42 to 1 in 1945, at the end of World War 
II. Today, that ratio is 3.4 to 1, and it is projected to fall to 2.1 
to 1 in the year 2040. The Social Security trust fund is projected to 
be exhausted in the year 2037. If we go along with the Bush 
administration's tax cut, what about our pledge to protect Social 
Security?
  Let's take Medicare--33.4 million Americans rely on Medicare for 
their health care costs. This is projected to grow to 77 million in 
2030. The Medicare--hospital insurance--trust fund is projected to have 
benefits exceed receipts in 2015 and to run out of money in 2023. If we 
go along with the Bush administration's tax cuts, shall we just pretend 
that the Medicare problem will solve itself?
  How about prescription drugs? Since Medicare was created in 1965, the 
practice of medicine has changed dramatically. Prescription drugs allow 
patients to avoid more expensive and invasive procedures, such as 
surgery. Since 1990, national spending on prescription drugs has 
tripled. The current Medicare program does not provide a prescription 
drug benefit. How can we pay for a prescription drug benefit if we have 
emptied the kitty with tax cuts?
  Just go up to your local drugstore. Get yourself a comfortable place 
somewhere over in the corner if you can, and watch that line as it 
progresses along that counter. Listen to some of the people who come 
there. They get their drugs, and they pay $100, $150. I sometimes 
wonder, how can they do it? Drugs are so terribly expensive, and they 
are becoming more expensive. And yet these people rake and scrape and 
save to try to have a little money with which to buy drugs. We have 
heard many stories about how some of them have to make a choice between 
food on the table or drugs to keep down pain, and the problem is 
getting worse. We are at a crossroads. What are we going to do about 
it?
  Discretionary spending--let's talk about it for a moment. I am an 
appropriator. The population of this Nation grew by 33 million, or 13.2 
percent, from 1990 to 2000, and according to the U.S. Census is 
expected to grow by another 8.9 percent by 2010. Congress should make 
sure that we allow for the future growth of our population.
  There are those who argue that discretionary spending is too high. 
Let me refer to this chart entitled ``Total Discretionary Outlays, 
Fiscal Years 1962 to 2000.'' The distinguished ranking member of our 
Budget Committee has referred to this subject matter as we have 
discussed the budget surplus from day to day.
  In fiscal year 2000, discretionary spending as a share of our economy 
was just 6.3 percent. There it is. This share of spending has been 
shrinking for decades and is less than half of the share in 1962. When 
I came to this Senate, I say to Senator Conrad--I came to this Senate 
43 years ago--the line on the graph would have been up between 12.7 and 
14 percent. That was for discretionary spending. I was on the 
Appropriations Committee. I went on it the first month I came here.
  What is it today? At that time, the estimates--the latest estimates 
that were available were 1962. I came here in 1959. But in that year, 
68 percent of all Federal spending was discretionary. On the pie chart, 
one can see how much of that chart was for discretionary spending: $72 
billion; 68 percent was for discretionary spending. That was the amount 
of money that went through the hands of the Appropriations Committee.
  Today, only 34 percent of the Federal budget is discretionary. 
Entitlement spending has grown. We heard a witness before the Budget 
Committee just the other day talk about entitlement spending. Let's 
look at this chart entitled ``Entitlement Spending as a Share of the 
Economy.'' We see that entitlement spending has grown from 5.7 percent 
of GDP, gross domestic product--the source is CBO--in 1966 to 10.5 
percent today. So America continues to have real needs that are not 
being met in the areas of infrastructure, education, health care, 
national security, and the list goes on and on.
  For example, the number of vehicle miles traveled on our Nation's 
highways has grown--from 1983 to 1999--from 1.65 trillion miles per 
year to over 2.69 trillion miles per year. Of the road miles in rural 
America, 56.5 percent are in fair to poor condition, according to the 
Federal Highway Administration; 56.9 percent are in fair to poor 
condition. One does not have to go very far to see that. Just travel 
along the streets in this Capital city and see the potholes, and what 
is happening to traffic congestion. I came to this city 49 years ago.
  Conditions are even worse in urban America, where 64.6 percent of the 
road miles are considered to be in some state of disrepair.
  The situation is no better when we turn our attention to the Nation's 
highway bridges. According to the most recent data from the Federal 
Highway Administration, 28.8 percent of our Nation's bridges are either 
functionally obsolete--they can no longer handle the kind of traffic 
for which they were built--or they are structurally deficient.
  We all should remember the Silver Bridge disaster that took place a 
few days before Christmas at Point Pleasant, WV, a few years ago. That 
bridge collapsed, sending many people to their watery graves, on the 
Ohio River. Do we just cross our fingers and hope that these bridges do 
not collapse?
  The EPA has estimated $200 billion in unmet needs for sewer, 
wastewater, and safe drinking water systems construction and 
maintenance, just to maintain the current systems and to allow for 
necessary expansion. Clean and safe drinking water should be a basic 
right of every man, woman, and child in America. We simply must address 
these needs, and it will take dollars--billions of dollars--to do it.
  According to the Department of Housing and Urban Development, there 
are 5.4 million families, representing 12.3 million individuals, who 
are in need of affordable housing. Do we sacrifice these needs on the 
altar of tax-cut fever?
  We are all familiar with the myriad problems confronting our military 
forces today: Recruitment and retention problems, crushing deployment 
burdens, aging ships and tanks and aircraft, a scarcity of spare parts, 
a scarcity of ammunition--just read it in today's Washington Post, a 
scarcity of ammunition--substandard housing, outdated facilities. All 
of these factors affect readiness.
  Beyond the current budget, we are bracing for the likelihood of 
requests

[[Page 1486]]

of major leaps in defense spending, perhaps as much as $50 billion a 
year just over the horizon.
  When we allocate the surplus, it would be totally irresponsible--
totally irresponsible--to fail to provide enough discretionary 
resources to allow us to invest in our future. Ask the mayors of the 
big cities throughout this country. Ask the mayors of the little 
cities, the towns throughout this country.
  Debt reduction--let's talk about it for a moment. Our debt held by 
the public peaked in fiscal year 1997 at $3.8 trillion. In recent 
years, we have paid about $200 billion per year in interest --
interest--on that debt. As we approach the retirement of the baby boom 
generation, we could do no greater favor for my granddaughter, for my 
great granddaughter, for your children, for all of our people, no 
greater favor than to eliminate that debt and to eliminate those 
interest payments.
  I know we have received testimony in the committee that we can only 
eliminate it to a certain point as of a year that is not too far away. 
By the end of fiscal year 2001, we expect to have reduced the publicly 
held debt to $600 billion from the level in fiscal year 1997.
  We should make sure that we can stay on that course. If we enact 
large tax cuts that siphon away--that suck away, that draw away--the 
on-budget surpluses, we could return to the days when we had to use the 
Social Security surplus to help finance Federal operations rather than 
using it for reducing debt.
  In July of 1999, when the Republican leaders were pushing large tax 
cuts, I suggested that Congress take five steps:
  One, watch our investments carefully and manage them prudently. 
Manage the economy and watch out for inflation.
  Two, pay our debt. Pay down the national debt.
  Three, cover the necessities. Do not shortchange our Nation's core 
programs, such as education, health care, and the like.
  Four, put aside what we need to put aside for a rainy day. Reserve 
the Social Security and Medicare surpluses exclusively for future costs 
of those programs.
  Five, take prosperity in measured doses. Ease up on taxes without 
pulling the rug out from under projected surpluses.
  Mr. President, our present conundrum regarding budget surpluses 
reminds me of that old Aesop's fable about the ant and the grasshopper. 
It seems, as Aesop told it, that a commonwealth of ants, busily 
employed in preserving their corn, was approached by a grasshopper 
which had chanced to outlive the summer. The grasshopper was ready to 
starve from the cold and hunger and begged the ants for a grain of the 
corn, much like the 10 virgins in the Scripture; 5 who were wise and 
who had oil in their lamps, and 5 who were foolish who had no oil in 
their lamps.
  In this case, one of the ant colony asked the grasshopper why he had 
not anticipated the winter and put aside food, as the ants had so 
wisely done. The grasshopper answered that he had so enjoyed the 
abundance of summer that he had never once thought of the possibility 
of winter.
  So we are going to have a big tax cut. Ah, we will enjoy that. How 
enjoyable. How sweet. How sweet it would be.
  If that be the case, the ant replied, then all I can say is, those 
who spend all day reveling in summer may have to starve in the winter. 
The moral is, of course, do not fail to provide for the future.
  So a prudent course would demand, Mr. President, that we anticipate a 
cold and chilly downturn in our economic fortunes and forecasts and put 
back something for the winter. After all, it is only a very few years 
after the 10-year budget window that even these rosy estimates return 
to deficits as we cope with the retirement of the baby boom generation.
  Given the pressing needs of our Nation in the coming decades and the 
uncertainty of the budget projections, I believe it is critical we 
establish a mechanism that would put a cautionary curve on tax cuts and 
new spending. In response to my question at a recent Senate Budget 
Committee hearing, Mr. Barry Anderson of the Congressional Budget 
Office responded that it would be prudent to establish such a 
mechanism.
  So I intend to work diligently with my colleagues on the committee to 
craft some way to put a cautionary brake on these huge, foolhardy tax 
cuts that are being proposed, until we can be more sure that the 
surpluses will materialize. In my heart of hearts, I would prefer that 
any tax cuts this year be limited to no more than half a trillion 
dollars. That is my own viewpoint: $500 billion.
  Americans believe in prudence. They would not blow the mortgage money 
at the race track. Neither should we. Massive tax cuts of the size that 
is being proposed, based merely on projections, merely on pieces of 
paper--here they are. These are the projections. These are the 
projected surpluses. There they are on paper. Can you spend it? What is 
it worth? It is money not even in our pockets yet. It borders on 
reckless disregard for the needs of our people and the promises we have 
made to them to proceed in this manner and spend it based on 10-year 
forecasts.
  Even worse, we risk a return to serious budget deficits. As Mr. 
Conrad has said so many times, let's not get back into the ditch which 
our children would have to address. So, as we approach this fork in the 
road, we owe it to our children and to our children's children to make 
the right choice. We should invest in our future. We should set aside 
funds for problems that we know are lurking just over the horizon. Let 
us not make a risky U-turn and return to the rocky road of deficits as 
far as the eye can see.
  Mr. President, we will hear this refrain, that: ``It's the people's 
money. Let's give it back. It's their money. It's their money.'' And it 
is. But it is also their debt. It is also their deficits. It is also 
their highway safety. It is also their water and sewage treatment 
needs. It is also their children's education. It is theirs. It is also 
their safety in the skies. It is all theirs. And we are the stewards. 
How do we best serve them?
  Mr. SARBANES. Will the Senator yield?
  Mr. BYRD. I will yield to Senator Sarbanes.
  Mr. SARBANES. As always, I think the very able Senator from West 
Virginia has given us an extremely important message. Moderation in all 
things is essentially what the Senator is talking about. He is saying: 
Be cautious. Be prudent. These steps that the Senator set out, if one 
goes over them carefully, are a balanced package which he is 
recommending. He says: Watch the investments. Manage the economy. Pay 
down the debt. Cover the necessities. Do those programs that are 
essential to our future strength: Education, health care. Put aside 
what we need for a rainy day, preserve Social Security and Medicare. 
And then ease up on the taxes.
  The Senator is not saying: Don't do a tax cut, in light of these 
surpluses or projected surpluses. But let's be careful about it. And do 
not pull the rug out from under the projections in the future.
  Now that is a package that makes sense. That is what all the 
commentators are telling us. The Baltimore Sun just today had an 
editorial. I ask unanimous consent it be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                 [From the Baltimore Sun, Feb. 7, 2001]

             Calming Down Frenzy for a Big Federal Tax Cut

       President Bush is a glib salesman for his massive tax-cut 
     program. But a closer look at the numbers should prompt 
     Congress to be careful.
       For a conservative Republican, the president is using very 
     rosy revenue forecasts. The numbers he's using understate the 
     cost of ongoing programs. He's ignoring the extra cash needed 
     for his other proposals and congressional initiatives, such 
     as a prescription-drug plan. he hasn't factored in spending 
     to fix the Social Security and Medicare programs.
       Mr. Bush is promising more in tax cuts than this country 
     can probably afford. He calls it a $1.6 trillion plan, but 
     other analysts say the true cost is closer to $2.5 trillion. 
     And that amount may not be affordable, even if large 
     surpluses pour in for a decade.

[[Page 1487]]

       Congressional leaders would be wise to listen to David M. 
     Walker, who heads the General Accounting Office on Capitol 
     Hill. He said this week that ``no one should design tax or 
     spending policy pegged to the precise numbers in any 10-year 
     forecast.''
       Yet this is what President Bush is doing. It's a mistake 
     Congress shouldn't duplicate.
       Will there be a tax cut this year? Yes, indeed. The 
     momentum is there. But the size of the president's proposal 
     is unrealistic. And, sadly, some Republicans are talking 
     about adding even more to it in this form of capital gains 
     tax cuts and business tax reductions.
       If there is to be a tax cut, Congress should see that it is 
     more tilted toward those at the lower and middle ranges of 
     the income scale than the president's proposal. Prudence is 
     essential in handling future surpluses that might never 
     occur. And there must be enough left on the table to deal 
     with other pressing needs, such as modernizing the military 
     and making repairs to old-age programs.
       Mr. Bush has raised expectations, but Congress still must 
     carefully examine every aspect of this major proposal. We all 
     want smaller tax bills, but only if they are reasonable and 
     responsible.

  Mr. SARBANES. ``Calming down frenzy for a big federal tax cut. 
Congress should take a close look at Bush's forecast figures and a 
decidedly cautious approach.''
  They quote the Comptroller General from his testimony before our 
committee where he said that: ``No one should design tax or spending 
policy pegged to the precise numbers in any 10-year forecast''--exactly 
the point that the able Senator made at the outset of his statement.
  And they conclude: ``Mr. Bush has raised expectations, but Congress 
still must carefully examine every aspect of this major proposal. We 
all want smaller tax bills, but only if they are reasonable and 
responsible.'' Reasonable and responsible--and, as the Senator has 
pointed out, in the context of dealing with these basic needs: 
Education, infrastructure, defense.
  This administration has already sent the signal that they are going 
to want a major step up in defense and of course, reserving a 
significant amount of the surplus to pay down the debt. When are we 
going to pay off the debt, if we don't do it when we are running large 
surpluses and are at a 4.2 percent unemployment rate? We have a strong 
economy now. We don't want to risk the chance of knocking it off the 
track.
  The Washington Post had an editorial entitled ``Fiscal Souffle.'' 
They conclude it by saying:

       A rush to commit too much of the projected surplus could 
     take the country back to borrow and spend, just as the last 
     big tax cut did 20 years ago.

  Mr. BYRD. Right.
  Mr. SARBANES. I ask unanimous consent that that editorial be printed 
in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                [From the Washington Post, Feb. 1, 2001]

                             Fiscal Souffle

       The Congressional Budget Office has raised by another $1 
     trillion its estimate of the likely budget surplus over the 
     next 10 years, and Republicans, led by President Bush, say 
     the new figures prove there's plenty of room to enact the 
     president' tax cut and still fulfill the government's other 
     obligations. Democrats, including notably the conservative 
     Blue Dogs in the House, say that's not so, that the true 
     surplus is unlikely to be that large and that Congress, while 
     it can safely grant a tax cut, should exercise caution in 
     doing so.
       The people flashing the caution signs are right. CBO itself 
     warns that ``considerable uncertainty surrounds'' the 
     projections, and that once the baby boomers retire, the 
     outlook shifts from sunny to bleak. About 70 percent of the 
     10-year surplus is projected to occur in the last five years 
     of the period, for which the estimates are least dependable; 
     only 30 percent is projected to occur in the nearer term. The 
     supposed $3 trillion, 10-year surplus consists in part of 
     Medicare funds that both parties in Congress have said should 
     not be counted because Medicare is headed for a deficit. The 
     surplus makes no allowance for the funds that, even with 
     benefit cuts, will be required to avert that deficit, nor the 
     Social Security deficit that likewise lies ahead, nor the 
     increase in defense spending that both parties say is 
     necessary.
       Make these and similar, smaller allowances, all of them 
     realistic, and the amount available for tax cuts quickly 
     falls. A realistic estimate, assuming everything goes right, 
     is probably well under $2 trillion, and in the past, members 
     of both parties have said they want to use some of that for 
     debt reduction. The true 10-year cost of the Bush tax cut, 
     meanwhile, is well in excess of the $1.3 trillion estimate 
     used in the campaign. In part that's because important 
     provisions would not take effect until toward the end of the 
     10-year estimating period. The 10-year cost of the Bush 
     proposals fully fledged would be more than $2 trillion.
       ``It doesn't leave room for much of anything else,'' Rep. 
     John Spratt, the ranking Democrat on the House Budget 
     Committee, said the other day. And it may grow; such 
     Republicans as House Majority Leader Dick Armey have begun to 
     say that the Bush proposal may be too small. The Blue Dogs 
     issued a statement yesterday warning that ``budget 
     projections can deteriorate just as rapidly as they have 
     improved in the last few years,'' and that a ``rush to 
     commit'' too much of the projected surplus could take the 
     country back to borrow-and-spend, just as the last big tax 
     cut did 20 years ago. That risk is real.

  Mr. SARBANES. I thank the Senator. He has set out for us what, 
really, is a historic decision we will be confronting. We must 
recognize it as such.
  Mr. BYRD. Yes.
  Mr. SARBANES. It will affect generations to come. We must make a wise 
and prudent decision. I thank the Senator from West Virginia for his 
extraordinary leadership in this effort.
  Mr. BYRD. I thank the distinguished Senator from Maryland.
  Mr. CONRAD. Will the Senator yield for a question?
  Mr. BYRD. Yes.
  Mr. CONRAD. The Senator may recall when we had the Congressional 
Budget Office personnel before us, they were the ones who made this 
forecast of the surplus, and yet they themselves warned us of the 
uncertainty of their projections.
  Mr. BYRD. They did.
  Mr. CONRAD. The Senator may recall that Mr. Anderson put up a chart 
and the chart showed that in the fifth year of this 10-year forecast, 
based on the previous variances in their projections, we could have a 
budget that was anywhere from a $50 billion deficit to more than a $1 
trillion surplus.
  Mr. BYRD. Yes; here is the chart.
  Mr. CONRAD. I see the Senator has that chart that shows in the year 
2006, which is 5 years into this 10-year forecast, we could have 
anywhere from a $50 billion deficit to over a $1 trillion surplus. That 
is the uncertainty of their forecast, according to them.
  Mr. BYRD. Yes, that is just 5 years out.
  Mr. CONRAD. That is just 5 years out in a 10-year forecast. They are 
warning, I take it--I would be interested in the Senator's reaction----
  Mr. BYRD. That is my reaction.
  Mr. CONRAD. That we should not bet the farm on a specific number with 
a 10-year forecast because of the failure of previous forecasts to be 
accurate over such an extended period.
  Mr. BYRD. Exactly.
  Mr. CONRAD. Isn't that the upshot of their testimony?
  Mr. BYRD. That is the point we should take home with us.
  Mr. SARBANES. In addition to the Post editorial from which I quoted, 
I have a column that appeared in the Post written by Newsweek's Wall 
Street Editor entitled ``Iffy Long-Term Numbers Are Poor Excuse for 
Huge Tax Cuts and Wild Spending.'' The discipline has to be on both 
sides, on the tax cut and on the spending side.
  No one is saying we should not do some tax cuts. Obviously, we need 
to make some investments on the expenditure side if we are going to 
meet the needs of our country. But they have to be responsible, they 
have to be reasonable. And, as this says, iffy long-term numbers are a 
poor excuse for huge tax cuts and wild spending. We need to keep that 
admonition in mind as we proceed to engage in this debate.
  I ask unanimous consent that this editorial be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                [From the Washington Post, Feb. 6, 2001]

   Iffy Long-Term Numbers Are Poor Excuse for Huge Tax Cuts and Wild 
                                Spending

                            (By Allan Sloan)

       There are weeks when you have to wonder whether the 
     American economic attention span is longer than a sand 
     flea's. Consider last week's two big economic stories: The 
     Congressional Budget Office increased the projected 10-year 
     budget surplus by $1 trillion, and the Federal Reserve Board 
     cut

[[Page 1488]]

     short-term interest rates another half-percentage point to 
     try to keep the economy from tanking.
       To me, the real story isn't either of these events; it's 
     their connection. The Fed is cutting rates like a doctor 
     trying to revive a cardiac patient because as recently as 
     last fall, Fed Chairman Alan Greenspan didn't forsee what 
     today's economy would be like. Meanwhile, although it's now 
     clear that even the smart, savvy, data-inhaling Greenspan 
     couldn't see four months ahead, people are treating the 10-
     year numbers from the Congressional Budget Office as holy 
     writ.
       Hello? If Greenspan missed a four-month forecast, how can 
     you treat 10-year numbers as anything other than educated 
     guesswork? Especially when the CBO has for years devoted a 
     chapter in its reports to ``The Uncertainly of Budget 
     Projections''?
       Both the Fed's rate cuts and the CBO's projection are being 
     cited to justify a huge tax cut. Basing economic policy on 
     long-term projections is nuts, and I'd be saying the same 
     thing about Al Gore's campaign spending proposals if he had 
     become president. I sure wouldn't base my personal financial 
     decisions on ultra-iffy long-term numbers. I hope you 
     wouldn't run your life or business that way.
       A stroll through the numbers would be helpful here, as 
     would a little history. Remember that through the mid-1990s, 
     experts were forecasting huge federal deficits as far as the 
     eye could see. Now they are projecting huge surpluses. When 
     you're dealing with a $10 trillion economy and looking 10 
     years out, relatively small changes make a huge difference--
     if they come to pass.
       The fact that the projected 10-year surplus grew to $5.6 
     trillion from $4.6 trillion a mere six months ago is an 
     obvious sign that these aren't the most reliable numbers in 
     the world.
       Here's the math: The surplus grew about $1 trillion because 
     the CBO increased the projected average 10-year national 
     growth rate to about 3 percent (adjusted for inflation) from 
     the previous 2.8 percent or so. Another $600 billion comes 
     from dropping fiscal 2001 (the current year) from the 10-year 
     numbers and adding fiscal 2011. The 2011 number, being the 
     furthest out, is the shakiest one in the projection.
       Those two changes add up to $1.6 trillion of higher 
     surpluses. But the total increased by only $1 trillion. 
     That's because last year's late-session congressional 
     spending spree knocked $600 billion off the 10-year number. 
     So, even though these numbers are huge, you see how 
     vulnerable they are to moving dramatically as taxes, spending 
     and economic projections change.
       Now, let's subtract the $2.5 trillion Social Security 
     surplus, which is supposedly going to be ``saved,'' and you 
     have $3.1 trillion to play with. (I treat the Social Security 
     number as reliable because it's based on demographics rather 
     than on economic guesstimates.) Subtract another $500 billion 
     for the Medicare surplus, because we're supposedly saving 
     that money, too. That leaves $2.6 trillion--provided the 
     projections are accurate, which they won't be.
       The CBO hasn't put a cost on President Bush's proposed tax 
     cut package. The package supposedly costs $1.6 trillion, but 
     I'll bet that's way understated, which is typical of such 
     things. And it doesn't include the impact of the feeding 
     frenzy that will undoubtedly result with a big tax cut on the 
     table. Remember what happened when the Reagan tax cuts were 
     enacted in the early 1980s? In addition, Bush's campaign 
     proposals are ``back-loaded''--they cost far more in the 
     later years than in the earlier years.
       The reason we used to have projected budget deficits as far 
     as the eye could see and now have seemingly endless surpluses 
     lies in the nature of projections--even those as 
     sophisticated and intellectually honest as the CBO's. The CBO 
     takes what's going on now, projects it forward and adjusts 
     for things such as higher or lower interest rates or debt 
     levels, or for programs such as Social Security. It assumes 
     that discretionary spending rises at a fixed rate, which 
     never happens, and that no major new changes in taxes will be 
     enacted. If things are going well in budgetland, as they are 
     now, projections will get better the further out you go. If 
     things are going badly, the projections will get worse.
       Now we come to Social Security, which contributes hugely to 
     today's happy surplus situation but is projected to start 
     causing trouble, big time, around 2015. That's not all that 
     long after 2011, when the CBO's 10-year projection ends. In 
     2015, Social Security is predicted to start taking in less 
     cash than it pays out, so it will have to start cashing in 
     the Treasury securities in its trust fund. In remarkably 
     short order, Social Security will start running 12-figure 
     cash deficits unless something is done.
       Until last year, the Social Security problem was projected 
     to start in 2013, but it's been put off because the economy 
     has been doing better than expected. That, combined with now-
     slipping fiscal discipline, is why the federal budget numbers 
     turned around a few years ago. But if we go on a big tax-cut-
     and-spend spree, which seems increasingly likely, and the 
     economy performs worse than now projected, we'll be back in 
     the fiscal soup quicker than you can say ``fiscal 
     responsibility.''
       For now, I'm going to pass on what many people have taken 
     as Greenspan's support for tax cuts. Even if you believe him 
     to be semi-divine, you can parse his public utterances as 
     being cautious about tax cuts. (There is occasionally an 
     advantage to having been an English major in college.)
       Finally, despite 10 years of projected huge surpluses, the 
     CBO predicts that the total national debt ($6.7 trillion) 
     would be higher on Sept. 30, 2011, than it is now ($5.6 
     trillion.) That's because, even though publicly held debt 
     shrinks to $800 billion from $3.4 trillion, the debt held in 
     government accounts, primarily Social Security, rises to $5.9 
     trillion from today's $2.2 trillion.
       So if we go on a tax-cutting and spending spree, don't be 
     surprised to find us back in the soup a few years down the 
     road. Don't say that you had no way to know. The Fed and the 
     CBO were telling you the risks last week. You just weren't 
     listening.

  Mr. BYRD. I thank the distinguished Senator from Maryland, a very, 
very fine Senator, knowledgeable. He has had many years of experience. 
I thank him for his contribution today and for the articles which he 
has brought to our attention and which will be included in the 
Congressional Record as he has requested. I value my association with 
the Senator, and I thank him very much.
  I yield the floor.

                          ____________________