[Congressional Record (Bound Edition), Volume 147 (2001), Part 1]
[Senate]
[Pages 65-68]
[From the U.S. Government Publishing Office, www.gpo.gov]



                          THERE IS NO SURPLUS

  Mr. HOLLINGS. Mr. President, parroting Patrick Henry: Peace, peace, 
everywhere man cried peace, but there is no peace. Surplus, surplus, 
everywhere men cry surplus, but there is no surplus. That is the point 
of my comments this afternoon. I have to embellish it or flesh it out 
so you will understand the reality, that ``it is not the economy, 
stupid,'' rather it is the real economy.
  During Christmas week, I picked up USA Today. A headline read 
``Surplus soars despite the slump.'' That is dangerous. People think we 
have a surplus and everybody is running around: Whoopee, cut all the 
revenues; wait a minute, if you don't cut it, those Democrats are going 
to spend it. Let's have tax cuts, tax cuts.
  This morning, I picked up Roll Call. It had a very interesting 
article by Stuart Rothenberg, one of the best of the best. Not quoting 
the entire article, he had a little squib about our new colleague and 
my friend, Senator Tom Carper of Delaware. I quote part of the article 
as of this morning:

       Delaware Senator Tom Carper's record in the House is not 
     easy to pigeonhole. During a six-year period, from 1983 
     through 1988, his U.S. Chamber of Commerce ratings ranged 
     from 38 to 64, his liberal Americans for Democratic Action 
     ratings ranged from 55 to 80 and his AFL-CIO ratings ranged 
     from 59 to 86.
       The Delaware Democrat tended to be more moderate on 
     economic issues, but that generally reflected his aggressive 
     efforts to cut the budget deficit. Since that's no longer a 
     problem, he will face a different set of legislative 
     priorities on the economy, possibly altering his image.

  I will repeat that: ``Since that's no longer a problem . . .'' The 
deficit has been solved, according to this morning's Roll Call. Not at 
all. We had that balanced budget agreement in 1997, so you would think 
that the budget would have been balanced in 1998. To the contrary.
  In 1998, according to the Congressional Budget Office, we had a 
deficit of $109 billion, not a surplus. In 1999, we had a deficit of 
$127 billion, not a surplus.
  For the year 2000, just 3 months ago, fiscal year ending September 
30, 2000, I quote from page 20, table 6 of the final monthly Treasury 
statement by the U.S. Department of the Treasury. It shows that the 
agency securities issued under special financing authorities at the 
beginning of fiscal year 2000 was 5 trillion 606 some-odd billion 
dollars, whereas on September 30, it was 5 trillion 629 some-odd 
billion dollars. That is a deficit, not a surplus, of $23 billion.
  If there is any doubt, the distinguished Presiding Officer and I were 
here when we worked out the last surplus under President Lyndon Baines 
Johnson. That was in 1968-1969. That was before we changed the old 
fiscal year to October 1. It used to begin July 1. In December, early 
that first week, if I remember correctly, George Mahon, who was then 
chairman of the Appropriations Committee, and all of us called over to 
Marvin Watson and said: Ask the chief if we can cut another $5 billion, 
and we did. We got permission.
  Does my colleague know what the budget was for fiscal year 1968-1969 
for Social Security, Medicare--go right on down the list--guns and 
butter, the war in Vietnam? The civil economy was $178 billion. The 
interest now is $365 billion, $1 billion a day; just the interest 
carrying charges, not for Government, just for past profligacy.
  I have a list of the Presidents from Truman through Clinton and their 
corresponding budget information; these are Congressional Budget Office 
figures. I ask unanimous consent this table be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

[[Page 66]]



                                                               HOLLINGS' BUDGET REALITIES
                                                                      [In billions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              Annual
                                                                          Borrowed trust      Unified     Actual deficit                   increases in
                   President and year                       U.S. budget        funds       deficit with    without trust   National debt   spending for
                                                                                            trust funds        funds                         interest
--------------------------------------------------------------------------------------------------------------------------------------------------------
Truman:
    1946................................................            55.2            -5.0           -15.9           -10.9           271.0  ..............
    1947................................................            34.5            -9.9             4.0           +13.9           257.1  ..............
    1948................................................            29.8             6.7            11.8            +5.1           252.0  ..............
    1949................................................            38.8             1.2             0.6            -0.6           252.6  ..............
    1950................................................            42.6             1.2            -3.1            -4.3           256.9  ..............
    1951................................................            45.5             4.5             6.1            +1.6           255.3  ..............
    1952................................................            67.7             2.3            -1.5            -3.8           259.1  ..............
    1953................................................            76.1             0.4            -6.5            -6.9           266.0  ..............
    1954................................................            70.9             3.6            -1.2            -4.8           270.8  ..............
Eisenhower:
    1955................................................            68.4             0.6            -3.0            -3.6           274.4  ..............
    1956................................................            70.6             2.2             3.9            +1.7           272.7  ..............
    1957................................................            76.7             3.0             3.4            +0.4           272.3  ..............
    1958................................................            82.4             4.6            -2.8            -7.4           279.7  ..............
    1959................................................            92.1            -5.0           -12.8            -7.8           287.5  ..............
    1960................................................            92.2             3.3             0.3            -3.0           290.5  ..............
    1961................................................            97.7            -1.2            -3.3            -2.1           292.6  ..............
    1962................................................           106.8             3.2            -7.1           -10.3           302.9             9.1
Kennedy:
    1963................................................           111.3             2.6            -4.8            -7.4           310.3             9.9
    1964................................................           118.5            -0.1            -5.9            -5.8           316.1            10.7
Johnson:
    1965................................................           118.2             4.8            -1.4            -6.2           322.3            11.3
    1966................................................           134.5             2.5            -3.7            -6.2           328.5            12.0
    1967................................................           157.5             3.3            -8.6           -11.9           340.4            13.4
    1968................................................           178.1             3.1           -25.2           -28.3           368.7            14.6
    1969................................................           183.6             0.3             3.2            +2.9           365.8            16.6
    1970................................................           195.6            12.3            -2.8           -15.1           380.9            19.3
Nixon:
    1971................................................           210.2             4.3           -23.0           -27.3           408.2            21.0
    1972................................................           230.7             4.3           -23.4           -27.7           435.9            21.8
    1973................................................           245.7            15.5           -14.9           -30.4           466.3            24.2
    1974................................................           269.4            11.5            -6.1           -17.6           483.9            29.3
    1975................................................           332.3             4.8           -53.2           -58.0           541.9            32.7
Ford:
    1976................................................           371.8            13.4           -73.7           -87.1           629.0            37.1
    1977................................................           409.2            23.7           -53.7           -77.4           706.4            41.9
Carter:
    1978................................................           458.7            11.0           -59.2           -70.2           776.6            48.7
    1979................................................           504.0            12.2           -40.7           -52.9           829.5            59.9
    1980................................................           590.9             5.8           -73.8           -79.6           909.1            74.8
    1981................................................           678.2             6.7           -79.0           -85.7           994.8            95.5
Reagan:
    1982................................................           745.8            14.5          -128.0          -142.5         1,137.3           117.2
    1983................................................           808.4            26.6          -207.8          -234.4         1,371.7           128.7
    1984................................................           851.9             7.6          -185.4          -193.0         1,564.7           153.9
    1985................................................           946.4            40.5          -212.3          -252.8         1,817.5           178.9
    1986................................................           990.5            81.9          -221.2          -303.1         2,120.6           190.3
    1987................................................         1,004.1            75.7          -149.8          -225.5         2,346.1           195.3
    1988................................................         1,064.5           100.0          -155.2          -255.2         2,601.3           214.1
    1989................................................         1,143.7           114.2          -152.5          -266.7         2,868.3           240.9
Bush:
    1990................................................         1,253.2           117.4          -221.2          -338.6         3,206.6           264.7
    1991................................................         1,324.4           122.5          -269.4          -391.9         3,598.5           285.5
    1992................................................         1,381.7           113.2          -290.4          -403.6         4,002.1           292.3
    1993................................................         1,409.5            94.2          -255.1          -349.3         4,351.4           292.5
Clinton:
    1994................................................         1,461.9            89.0          -203.3          -292.3         4,643.7           296.3
    1995................................................         1,515.8           113.3          -164.0          -277.3         4,921.0           332.4
    1996................................................         1,560.6           153.4          -107.5          -260.9         5,181.9           344.0
    1997................................................         1,601.3           165.8           -22.0          -187.8         5,369.7           355.8
    1998................................................         1,652.6           178.2            69.2          -109.0         5,478.7           363.8
    1999................................................         1,703.0           251.8           124.4          -127.4         5,606.1           353.5
    2000................................................         1,769.0           234.9           176.0           -58.9         5,665.0           362.0
    2001................................................         1,839.0           262.0           177.0           -85.0         5,750.0          371.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Historical Tables, Budget of the U.S. Government FY 1998; Beginning in 1962 CBO's 2001 Economic and Budget Outlook.

  Mr. HOLLINGS. Mr. President, this shows how when President Clinton 
came to office in January of 1993, in fiscal year 1992, the last year 
of President George Herbert Walker Bush's term, according to the 
Congressional Budget Office, there was a deficit of $403,600,000. We 
were spending $400 billion more than we were taking in that year.
  Since Clinton has taken office, we have reduced that deficit from 
$403 billion to $23 billion. We were headed in the right direction.
  I hope Mr. Rothenberg, Roll Call, USA Today, and the free press will 
finally get the truth to the American people. That is all we want. We 
have to be talking and singing from the same hymnal. Everybody is 
running around saying: Yes, I am for a tax cut, but not quite as big; I 
am for this; I am for that. We don't have any taxes to cut. To put it 
another way, the best tax cut is to reduce the deficit.
  If one reads the Internet site of the U.S. Treasury--
publicdebt.treas.gov--the public debt to the penny, as of 11 o'clock--
which is when they changed it--is 5 trillion 728 some-odd billion 
dollars. At the close of fiscal year 2000 on September 30, it was 
$5.674 trillion, and it has gone up to $5.728-some-odd trillion.
  So you can see, not only did we end fiscal year 2000 with a deficit--
not a surplus--of $23 billion--but in 3 months of this fiscal year, 
President Bush is going to be submitting his budget, talking about tax 
cuts, loss of revenues; and the deficit is already $54 billion. And 
that is without factoring in the $30 billion we appropriated before we 
went home for Christmas.
  So don't give me all of this talk about fiscal responsibility and 
everything else. The only responsible thing we had, of course, was 
President Clinton's and the Democrats' 1993 economic program that cut 
spending, that increased taxes, and cut the size of Government.
  Yes, I stand on the floor and publicly acknowledge I voted for an 
increase in taxes on Social Security. We were told by my distinguished 
colleague from Texas, Senator Gramm, that they would be hunting us down 
in the street, us Democrats, and shooting us like dogs if we increased 
the Social Security tax.
  We increased the tax on gasoline. We cut, as I say, the size of 
Government. But they want to keep talking, particularly the media. We 
politicians do a little liberality, and, well, they call

[[Page 67]]

it spin. They even have a program called ``Spin'' now on national TV. 
But we are entitled to a little spin. We run for public office, and we 
have to explain a lot of things we do--but not the media; they are 
supposed to give us the exact truth.
  There is a recent book called ``Maestro'' by Bob Woodward about Alan 
Greenspan. I refer to page 95. I am not going to read the whole thing, 
obviously, but I quote at the bottom of page 95, about our Chairman of 
the Federal Reserve Board, Mr. Alan Greenspan. I am quoting from the 
Woodward book:

       The long-term rates--the 10-year and longer rates--were an 
     unusual 3 to 4 percent higher than the short-term Fed funds 
     rate, at about 7 percent. The gap between the short-term rate 
     and the long-term rate, Greenspan lectured, was an inflation 
     premium being paid for one simple reason. The lenders of 
     long-term money expected the federal deficit to continue to 
     grow and explode. They had good reason, given the double-
     digit inflation of the late 1970s and the expanding budget 
     deficits under Reagan. They demanded the premium because of 
     the expectation of new inflation. The dollars they had 
     invested would, in the near and distant future, be worth less 
     and less.
       Perhaps no single overall economic event could do more to 
     help the economy, businesses and society as a whole than a 
     drop in the long-term interest rates, Greenspan said. The Fed 
     didn't control them. But credible action to reduce the 
     federal deficit would force long-term interest rates to drop, 
     as the markets slowly moved away from the expectation of 
     inevitable inflation. Business borrowing costs, mortgages and 
     consumer credit costs would go down. Clinton was so sincere 
     and attentive, and full of questions and ideas, that 
     Greenspan continued. Establishing credibility about deficit 
     reduction with the markets would lower rates and could 
     trigger a series of payoffs for the economy, he said.
       Greenspan outlined a blueprint for economic recovery. Lower 
     long-term rates would galvanize demand for new mortgages, 
     refinancing at more favorable rates and more consumer loans. 
     This would in turn result in increased consumer spending, 
     which would expand the economy.
       As inflation expectations and long-term rates dropped, 
     investors would get less return on bonds, driving investors 
     to the stock market. The stock market would climb, an 
     additional payoff.

  That is the end of the quote. You can read on.
  I am for a tax cut, too, but how do you get it? Not estate taxes. 
Giving millionaires' heirs millions of dollars, tax free, is not going 
to recover the economy and have a good effect.
  Interestingly, the one thing that really is being spent on Social 
Security--the payroll tax--nobody wants to cut. That is the crowd that 
is really getting ripped off. Otherwise, you do not hear anything about 
the Social Security taxes, that they were going to hunt us down in the 
street like dogs and shoot us for increasing. They do not say, cut 
Social Security taxes. But they come with things like the estate tax, 
marriage penalty, and everything else of that kind. They talk of a $1.3 
trillion tax cut that would return us back to where we were in 1993.
  Yes, the Federal Reserve, Greenspan, they reduced the Fed rate a half 
a percent yesterday. That was fine business. That is the short-term 
rates, but that does not affect the overall economy.
  The long-term, we cannot tinker with that except to set generally 
fiscally sound policy, put the Government on a pay-as-you-go basis.
  I have been up here 34 years, and we did it in 1968, 1969. We had a 
balanced budget. I got the first AAA credit rating for the State of 
South Carolina from Standard & Poor's and Moody's back in 1959, 1960--
40 years ago. But it is a tremendous frustration to this particular 
Senator to hear everyone crying surplus.
  What is the monkeyshine? The monkeyshine is, you can look right at 
the front page of the same Treasury report. And you ought to read that. 
As of the final monthly Treasury statement--highlighted--I quote: This 
issue includes the final budget results and details, a surplus of $237 
billion for fiscal year 2000.
  And then, as old John Mitchell would say, don't watch what we say, 
watch what we do. You turn to page 20, table 6, and there is no surplus 
at all. On the contrary, there is a deficit of $23 billion.
  How do they do that saving face? I will tell you how they do it. They 
do it, No. 1, by taking from the trust funds, Social Security.
  Mr. President, I ask unanimous consent to have printed in the Record 
this document entitled ``Trust Funds Looted to Balance Budget.''
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                  TRUST FUNDS LOOTED TO BALANCE BUDGET
                      [By fiscal year, in billions]
------------------------------------------------------------------------
                                                   1999    2000    2001
------------------------------------------------------------------------
Social Security.................................     855   1,009   1,175
Medicare:
  HI............................................     154     176     198
  SMI...........................................      27      34      35
Military Retirement.............................     141     149     157
Civilian Retirement.............................     492     522     553
Unemployment....................................      77      85      94
Highway.........................................      28      31      34
Airport.........................................      12      13      14
Railroad Retirement.............................      24      25      26
Other...........................................      59      62      64
                                                 -----------------------
      Total.....................................   1,869   2,106   2,350
------------------------------------------------------------------------

  Mr. HOLLINGS. Mr. President, at the end of fiscal year 2000--last 
September--we owed Social Security some $1.009 trillion. We owed 
military retirement $149 billion, and civilian retirement $522 billion. 
You can go right on down.
  Now, as projected by the Congressional Budget Office, we are going to 
borrow $244 billion more this fiscal year 2001 from these trust funds. 
When the day of reckoning comes, who is going to raise the taxes? Who 
is going to issue the bond and raise the taxes at that particular time 
to pay for the benefits?
  All we need to do to make Social Security fiscally sound is quit 
spending it. I have a lockbox, a true lockbox written by Ken Apfel of 
the Social Security Administration. I couldn't get a vote on it all 
last year or the year before. I will put it up again this year.
  If you want to have truth in budgeting, please see my staffer, Mr. 
Barry Strumpf, and join with me in a bipartisan fashion to get at least 
truth in budgeting. We are going to offer an amendment calling for a 
budget freeze because we still play this game here of surplus, surplus. 
We put in an amendment to the budget resolution year before last in 
that last session of Congress, and we got 24 votes for the Greenspan 
stay the course. Alan Greenspan, at that time, said: Stay the course 
and just take this year's budget for next year. If you did that, you 
could save some $50 billion.
  As a Governor, I had to do that. Many a mayor this year will do just 
that. He will go before his council and say: We don't want to fire the 
firemen. We don't want to fire the policemen. We are getting along 
well. Let's just take this year for next year. If we did that at the 
Federal level, we would save $50 billion.
  The other way in which they play this game of public debt and 
Government debt is not only to borrow from all these trust funds--like 
borrowing from yourself, like taking your MasterCard and paying off 
your Visa card--but they are also projecting no new spending. The CBO 
will adjust their economic assumptions to accommodate the $1.3 trillion 
tax cut. You can see what is going on.
  I don't think the economy can stand it. I think the best tax cut and 
the way to get on top of long-term interest rates is to do exactly what 
was done back in 1993.
  I will make one more reference. Two weeks ago, in an issue of 
Newsweek they had an article on page 58: ``Boy Did We Know Ye,'' 
comments by members of the Clinton administration, by Stephanopoulos, 
Leon Panetta, and several others. I will read just this one little 
paragraph by Bob Rubin.

       The moment that most sticks in my mind was the meeting we 
     had with Clinton on Jan. 7, 1993 in Little Rock.

  I read that because this is just about January 7 in the year 2001.
  Reading further:

       We met with him for six and a half hours on what the budget 
     strategy ought to be. From the beginning what we [the 
     economic team] recommended was that there ought to be a 
     dramatic change in policy, with the view that deficit 
     reduction should create lower interest rates and spur higher 
     confidence. Before the meeting, George Stephanopoulos told me 
     that was going to be hard, [that Clinton] would have to make 
     that decision over time, but after about a half hour at

[[Page 68]]

     the meeting, Clinton turned to us in the dining room of the 
     governor's mansion in Little Rock. He said, ``Look, I 
     understand what deficit reduction means [in terms of public 
     criticism for program cuts], but that's the threshold issue 
     if we're going to get the economy back on track. Let's do 
     it.''

  And we did it, and that is why we have had the good economy. We are 
about to go the other direction on this tax cut, returning to the 
increased deficits of the Reagan years. We had less than a trillion-
dollar debt when President Reagan took office in 1981. For 200 years--
including all the wars, the Revolution, Spanish American, World War I, 
II, Korea, Vietnam--we accumulated less than a trillion-dollar debt. We 
now have a debt without the cost of a war--the Saudis took care of 
Desert Storm--of 5 trillion 700-some-odd billion. We can't stand that 
any longer.
  I thank the distinguished Chair for indulging me, but the truth has 
to come out. I hope Members on both sides of the aisle will work with 
us to reduce the deficit and reduce the debt. Let us get to work on it 
and quit playing games with the American public.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Reid). The Senator from Nevada.
  Mr. REID. Before the Senator from South Carolina leaves the floor, I 
will reflect with him a minute on some of the struggles we have had the 
last several years.
  Remember, there was an effort by the Republican majority to pass a 
constitutional amendment to balance the budget. The Senator from South 
Carolina remembers that battle, where he and this Senator and a number 
of others started out as a very small group opposing it. We said, if 
you want a constitutional amendment to balance the budget, you should 
have one that excludes the surpluses of Social Security. Remember the 
battle there. We were able to stop them from getting enough votes to 
pass that.
  What would that have done to this country if that foolish 
constitutional amendment had passed?
  Mr. HOLLINGS. It would constitutionalize the profligacy and the waste 
and the reckless fiscal conduct that we engage in here, and you 
wouldn't have any control over it because everybody would say: There is 
the Constitution. And you would read the first page of the Treasury 
report, how we have a surplus of $237 billion, when the truth of the 
matter is, if you look in the report, we have a $23 billion deficit. 
When you constitutionalize, you dignify the blooming thing. That was 
the ultimate. I couldn't go along with that game.
  Mr. REID. Mr. President, I appreciate my friend's courage and 
leadership on these fiscal issues. He has the ability, because of his 
experience, to see what is going to happen in the future, to be a 
little ahead of most everyone around here on these financial issues. I 
appreciate the Senator recognizing the tough vote we took in 1993 on 
the Clinton budget deficit reduction act. Members of the House of 
Representatives lost their elections; they lost their political careers 
for having voted for that. But they should know that they did the right 
thing.
  Mr. HOLLINGS. They did the right thing. There is no question.
  Mr. REID. We have a new Member of the Senate today--she was sworn in 
yesterday--Maria Cantwell from the State of Washington. She was a 
freshman Member of the House of Representatives, and she, with courage, 
walked up and voted for that Clinton deficit reduction plan. She lost 
her election because of that. The people of the State of Washington now 
know that she did the right thing and now she is a Senator from the 
State of Washington. Again, I commend and applaud the Senator from 
South Carolina for his statement today but mostly for his leadership on 
these fiscal issues during the entire time I have been in the Senate.
  Mr. HOLLINGS. I thank the distinguished leader. The truth will out, 
is what the distinguished Senator from Nevada is saying. I am glad we 
have Senator Cantwell here. It was another Representative from 
Pennsylvania, I remember we had to finally get her vote and she lost. 
She was a distinguished Member.
  Mr. REID. Her name was Marjorie Margolies-Mezvinsky.
  Mr. HOLLINGS. That is it. She had the courage to do it. But here we 
are in January, seeing this binge that we are on and the only argument 
is how are we going to spend a so-called surplus. How many tax cuts are 
we going to get to buy the people's vote. That is the best thing, 
running on TV, saying: I voted for tax cuts, I am for tax cuts. That is 
the only thing that holds that crowd in office.
  Mr. REID. The biggest tax cut this country could get is reducing the 
$5 trillion debt we have. Will the Senator agree?
  Mr. HOLLINGS. Very much so. That is the tax cut I favor. That is the 
way to give to middle America so they get a lower mortgage rate and 
lower financing rate on the refrigerator, the stove, et cetera. That is 
what Greenspan told them, and I hope Greenspan will get back and say 
the same thing here, some 7, 8 years later, that what we really need to 
do is hold the line.
  I had the privilege of sitting there with Don Evans, the new 
Secretary of Commerce-designate, the best friend of President-elect 
Bush. One sentence I got, over all the things he said with respect to 
trade, competition, trade and technology, there is one sentence: tell 
the President rather than, by gosh, all these tax cuts, just come in 
and hold the line, stay the course as Greenspan recommended last year 
and take this year's budget for next year.
  Don't start us pell-mell down the road to loss of revenue and 
increasing the deficit, increasing the debt, when we are telling the 
people that this is going to lower the debt and lower the deficit. It 
is pure folly.
  Mr. REID. The people who met yesterday with the President-elect in 
Texas, these rich people--and I have nothing against rich people; I am 
happy he is meeting with them--I hope some of them realize the biggest 
tax cut anyone will ever get in their entire professional career is if 
we reduce the deficit.
  We talk about across-the-board tax cuts; that will give an across-
the-board tax cut because everything they do, from buying a new piece 
of land to paying their mortgages, will be cheaper.
  Mr. HOLLINGS. I looked at that list and it looks to me like a bunch 
of corporate heads who are interested in sales. They are not interested 
in the economy and the market; they are corporate heads interested in 
sales. It is like asking children if they want broccoli or spinach, or 
do you want a dessert. They are in Austin saying whoopee, give me 
dessert.
  I know the advice that crowd will give. Tell them to start talking to 
the Bob Rubins. This action yesterday by the Federal Reserve and 
Greenspan will influence the short-term but not the long-term rates.
  I thank the distinguished leader, and I thank the Presiding Officer.

                          ____________________