[Congressional Record (Bound Edition), Volume 147 (2001), Part 10]
[Senate]
[Pages 14033-14036]
[From the U.S. Government Publishing Office, www.gpo.gov]



                     RESPONDING TO LAWRENCE LINDSEY

  Mr. CONRAD. Mr. President, I thank the Presiding Officer. Yesterday, 
Mr. Lawrence Lindsey, the President's chief economic adviser, attacked 
me in a speech before the Federal Reserve Bank in Philadelphia. In that 
speech, he repeatedly misrepresented my views, my clear positions, and 
my record.
  Mr. Lindsey, the President's chief economic adviser, for some reason 
feels compelled to take my positions and twist them into something that 
is unrecognizable. These are not my positions, not my statements. This 
is not my voting record. I call on Mr. Lindsey to recant these false 
statements. This does not improve the level of debate about serious 
issues and what is to be done about our economy and the management of 
the fiscal affairs of our country.
  Yesterday, Mr. Lindsey, in this speech in Philadelphia before the 
Federal Reserve, said at one point early in the speech, for example:

       The new chairman of the Senate Budget Committee has alleged 
     the recent tax cuts are driving the country right into the 
     fiscal ditch.

  He got that part of it right. I applaud him for that. He then went on 
to say:

       These views reflect one side of the political debate--one 
     that ultimately favors allocating more of our Nation's 
     resources to government.

  Mr. Lindsey, you know better. That was not the proposal of this 
Senator. The proposal of this Senator in the budget debate this year 
was to continue to reduce the role of the Federal Government. That was 
my clear position. That is the clear record, and no attempt by him to 
distort it can change the facts.
  Here are the facts. The spending proposal I put before my colleagues 
would have continued to reduce the share of our national income going 
to the Federal Government from 18 percent of gross domestic product to 
16.4 percent of gross domestic product, which is the lowest level since 
1951. Mr. Lindsey, facts are stubborn things. Mr. Lindsey then went on 
to say:

       The criticisms of the tax cut and comments on the budget 
     made by Senator Conrad hearken back to views widely held in 
     the 1920s and 1930s.

  He went on to describe those views supposedly widely held. He 
concluded that their solution was to raise taxes. The top income-tax 
rate was raised from 24 percent to 63 percent. The result, of course, 
was economic disaster. Mr. Lindsey ascribes those views to me.
  Mr. Lindsey, that is false. You know it is false, and that it is a 
total misrepresentation of the record of this Senator.
  Let's turn to what I proposed to our colleagues. These are the charts 
that were used on the floor of the Senate during the budget debate 
highlighting the Democratic alternative.
  No. 1, we protected the Social Security and Medicare trust funds in 
every year. Does Mr. Lindsey disagree with that? Let's hear an honest 
debate about that issue.
  No. 2, we paid down the maximum amount of publicly held debt.
  Next, we provided for an immediate fiscal stimulus of $60 billion. 
That was a tax cut, not a tax increase, Mr. Lindsey. That was a tax 
cut. I was one of the first to propose a significant tax cut--in fact, 
a tax cut to help stimulate the economy that was far bigger than what 
the administration proposed.
  Let's look at what the administration proposed in terms of a fiscal 
stimulus for the current year, at a time when we are suffering an 
economic slowdown. All one has to do is turn to the proposal. This is 
from the President. Their proposal: No tax cut in 2001. None. Zero. 
That was their proposal. They had no fiscal stimulus. They had no tax 
cut at a time of economic slowdown. It was largely Democrats who 
insisted on providing a bigger tax cut this year to provide a fiscal 
stimulus to help this struggling economy.

[[Page 14034]]

  And now, for Mr. Lindsey to twist that around and suggest that I was 
for a tax increase at a time of economic slowdown, Mr. Lindsey, shame 
on you. That is false. That is misrepresenting my clear record and my 
views. Shame on you. You should not engage in debate in that way. You 
should not take my clear positions, my clear record, and stand them on 
their head. I am not going to allow it to happen.
  Mr. President, I don't know what could be more clear. We provided not 
only a substantial tax cut this year, but the budget plan I put before 
my colleagues also provided significant tax relief for all Americans, 
including rate reduction, marriage penalty relief, and estate tax 
reform. That is my record--not proposing tax increases at a time of 
economic slowdown.
  That is not my record, that is not my position, and that is not my 
votes.
  We also reserved resources for high-priority domestic needs, 
including improving education, a prescription drug benefit, 
strengthening national defense, and funding agriculture, and we 
provided $750 billion to strengthen Social Security and address our 
long-term debt. That is my record. Those were my proposals. Those were 
my positions. And for Mr. Lindsey to go to the Federal Reserve Bank of 
Philadelphia yesterday and suggest otherwise is flat dishonest.
  What has them all fussed up down at the White House? Why do they 
engage in these ad hominem attacks on the chairman of the Budget 
Committee and others of us who believe that this administration has put 
us right into the fiscal ditch?
  I think what triggered all of this was a press conference I had after 
Mr. Lindsey himself said that the revenue they were forecasting this 
year is going to come in below what they had projected.
  What we find, if we follow through this, what some in the media have 
called this amazing shrinking surplus, is that we started out with a 
forecast of $275 billion of surplus for this year, but after you take 
out the trust funds of Social Security and Medicare, the cost of the 
tax bill, and other related budget items, you get down to only $6 
billion available this year, and that is before Mr. Lindsey said the 
revenue is not coming in as forecast.
  That puts us in a negative position. That puts us in a non-trust-fund 
deficit. That is, when you take out the trust funds of Social Security 
and Medicare, you see red ink for this year, and I pointed out it is 
not just this year, this time of economic slowdown, but looking ahead 
to next year when the administration forecasts strong economic growth 
that we find the situation is becoming even more serious. This is after 
the administration promised us a budget plan that could do everything. 
They said they had a budget plan that would allow for a massive tax 
cut. They said they could also accommodate a major defense buildup, 
they could protect Social Security, and they could have maximum paydown 
of the national debt. They said it all added up. It does not all add 
up. That is what is becoming more and more clear.
  If we look at 2002, the next fiscal year, with a projected surplus of 
$304 billion, if we take out Medicare and Social Security, we get down 
to $95 billion. Then take out their tax cut and the budget resolution 
that passed Congress, and we get down to $25 billion available. But 
that is before we see a further reduction in the economic forecast 
because of the economic slowdown.
  The economic slowdown this year will mean we have less revenue next 
year. We had three economists testify before the Budget Committee that 
we could see a reduction of anywhere from $50 billion to $75 billion 
next year from what was forecasted in revenue for the Federal 
Government. That wipes out the available surplus and puts us into a 
raid on the Medicare trust fund next year, and it even suggests that 
this administration may be using some of the Social Security trust 
fund.
  That is not at a time of economic slowdown; that is a time in which 
they are projecting strong economic growth, and yet we see their 
proposal will be using Medicare and Social Security trust funds to 
finance other programs of Government at a time they are forecasting--
this is the administration's projection--strong economic growth. Yet 
their proposal will mean we are using Social Security and Medicare 
trust fund money to finance the other programs of the Federal 
Government.
  This is what I have raised questions about. Does it make sense for 
this country to use Medicare and Social Security trust fund money to 
finance the other programs of the Federal Government at a time that the 
administration is forecasting strong economic growth? I do not think 
so. I do not think we should finance the other programs of Government, 
however meritorious, by using the trust funds of Social Security and 
Medicare at a time of strong economic growth.
  Why? Because we all know that in the next decade the baby boom 
generation starts to retire and these surpluses in the trust funds turn 
to big deficits.
  I should point out that we see trouble next year in terms of the 
trust funds of Social Security and Medicare being used to finance other 
programs of Government before the big increase in defense the President 
has requested.
  If we look at what that will do, and we look at 2002, we see we are 
already in trouble before the President has requested a substantial 
increase for defense. That just makes the raid on the trust funds 
deeper and broader.
  When we look ahead and put in the Bush defense request, when we put 
in new money for education, which just passed nearly unanimously in the 
Senate but is not in the budget, when we put in money for natural 
disasters, which is not in the budget--but we just had a natural 
disaster in Ohio the night before last, we just had a natural disaster 
in West Virginia, we just had natural disasters in Texas--when we put 
in money for natural disasters, when we address the tax extenders, the 
popular expiring provisions of the Tax Code we all know are going to be 
extended that are not in the budget, when we look at fixing the 
alternative minimum tax fiasco created by this tax bill, which is going 
to take us from fewer than 2 million people being caught up in the 
alternative minimum tax to 35 million people being caught up in the 
alternative minimum tax, and if we just look at the cost of fixing that 
problem caused by this tax bill, it costs $200 billion to fix, and if 
we look at additional economic revisions because of the economic 
slowdown we are experiencing and the associated interest costs, what we 
see is that every year for the next 9 years this administration's 
economic plan will be using Medicare trust funds and Social Security 
trust funds to pay for the other programs of the Federal Government 
unless some change is made.
  One can look at these and say: Gee, I don't think we are going to add 
any new money for education. Or one can say: I don't think we are going 
to pay for natural disasters. Or: I don't think we are going to pay to 
fix the alternative minimum tax that is going to affect 35 million 
American taxpayers by the end of this period, nearly 1 in 4 taxpayers 
in this country. Or one can say: We don't think the Bush defense 
request will be granted.
  Fine. One can use one's own assumptions. I just say to my colleagues, 
this reveals just as clearly as can be that their economic plan, their 
budget plan, does not add up, did not add up, and puts us right back 
into the deficit ditch. That is what I have said and that is what I 
meant, and I believe the record is clear.
  Mr. President, I think they realize they are in trouble, so their 
response has been: Oh, there really isn't a Medicare trust fund 
surplus. That has been one of their responses. We have heard it in this 
Chamber, and we have heard it from people in the administration. That 
is an interesting idea, but if one looks at the report of the 
Congressional Budget Office on page 19 of the budget outlook, under 
``Trust Fund Surpluses''--this is a report of the Congressional Budget 
Office--it shows that Social Security has big surpluses every year. 
Medicare, hospital insurance, Part A: big surpluses every year.
  Part B, the administration claims, has a deficit. That is not what 
the

[[Page 14035]]

records show. The records show that it is in rough balance and actually 
has a slight surplus over the period of the 10 years in this budget. It 
is not just the Congressional Budget Office documents that show there 
is a Medicare trust fund surplus; it is the administration's own 
documents issued by the Office of Management and Budget that show 
Medicare, Federal hospital insurance, HI trust fund surpluses each and 
every year.
  It is not just Medicare Part A; it is Medicare Part B the 
administration is now claiming is in deficit. But look at their own 
reports. Here is Part B, the Federal supplementary medical insurance 
trust fund; look at the reports they have issued. They show that over 
the 10-year period of time they are in rough balance in Part B. What 
they have tried to do is say, because Medicare Part B is financed 25 
percent from premiums and 75 percent from the general fund, the general 
fund contribution represents a deficit. It does not. If we were to 
apply that standard, every other Federal Government program would be in 
deficit because they are funded, by and large, by 100-percent 
contributions from the general fund.
  Is this administration claiming the defense budget is in deficit 
because it is financed 100 percent from the general fund? I have never 
heard that from them. I never heard from them that education is in 
deficit because it is funded 100 percent by the general fund. That is 
precisely how you fund most Government programs.
  Medicare Part B physician services actually has an additional funding 
mechanism. Some of it comes from the general fund, but part of it--25 
percent, roughly--comes from the premiums paid by Medicare-eligible 
people.
  Now, is this administration saying that in a deficit they are 
proposing a big increase in the premiums that senior citizens pay? I 
would like to hear the answer to that. Is that what they are 
suggesting? They have a problem because I believe it is wrong to use 
Medicare and Social Security trust fund money to pay for the other 
programs of Government. Their own congressional leadership doesn't 
agree with them.
  If they are saying that my views are the views of the 1930s, are they 
making that same accusation with respect to the Speaker of the House of 
Representatives--the Republican Speaker of the House of 
Representatives? This is what he said on that question on March 2 of 
this year:

       We are going to wall off Social Security trust funds and 
     Medicare trust funds. And consequently, we pay down the 
     public debt when we do that. So we are going to continue to 
     do that. That's in the parameters of our budget and we are 
     not going to dip into that at all.

  That is the Republican Speaker of the House of Representatives. Is 
the White House saying he has 1930s economic views?
  It doesn't stop there. This is a quote from the House majority 
leader, Dick Armey, a Republican. He said, this month:

       Let me just be very clear on this. The House of 
     Representatives is not going to go back to raiding Social 
     Security and Medicare trust funds.

  Does Mr. Lindsey think Dick Armey, the Republican majority leader in 
the House of Representatives, has 1930s economic views?
  It doesn't stop there. Here is a quote from July 11 from the House 
Budget chairman in the House of Representatives, Mr. Jim Nussle:

       This Congress will protect 100 percent of the Social 
     Security and HI trust funds. Period. No speculation. No 
     supposition. No projections. The Congress has voted 
     unanimously, or almost unanimously. There were a few that 
     didn't see it this way for lockboxes and all sorts of 
     different mechanisms to make sure this occurred. Both parties 
     prepared budgets that did so. We will protect 100 percent of 
     Medicare and Social Security.

  Does Mr. Lindsey say the Republican House Budget Committee chairman 
has 1930s economic views? What say you, Mr. Lindsey? It appears to me 
you are contradicting the elected leadership of your own party in the 
House of Representatives. And it is not just in the House of 
Representatives. If we come to the Senate and look at the statement 
from the former chairman of the Budget Committee, the very 
distinguished and able Senator Pete Domenici, this is his quote:

       For every dollar you divert to some other program, you are 
     hastening the day when Medicare falls into bankruptcy, and 
     you are making it more and more difficult to solve the 
     Medicare problem in a permanent manner into the next 
     millennium.

  Mr. Lindsey, does Senator Domenici, the former Republican chairman of 
the Senate Budget Committee, have 1930s economic views?
  It is not just the former chairman of the Senate Budget Committee, 
the former Republican chairman, and not just the elected leadership of 
the House of Representatives--all Republicans--who have said very 
clearly that they intend to protect both Social Security and Medicare 
trust funds. Every Republican Senator, every single one, voted 4 months 
ago, on language that said the following:

       Preserving the Social Security and Medicare hospital 
     insurance surpluses would restore confidence in the long-term 
     financial integrity of Social Security and Medicare.

  That is what they said. They said very clearly the same thing I am 
saying.
  Mr. Lindsey, does every Republican Senator have 1930s economic views? 
I don't think so.
  We ought to have a thorough and honest debate. But Mr. Lindsey, don't 
misrepresent my view and misrepresent my record. It is there for 
anybody to check. I proposed not a tax increase this year; I proposed a 
significant tax reduction, a much bigger tax reduction than this 
administration proposed for this year. I proposed a real fiscal 
stimulus at a time of economic downturn. I didn't just propose it; I 
voted for it. My record is clear.
  Interestingly enough, this administration proposed no fiscal stimulus 
for this year. I am holding up their plan. I will submit it for the 
Record because it is right here. If Mr. Lindsey thinks we have 
forgotten who proposed what, he is dead wrong. We remember very well.
  Who stood where on the question of fiscal stimulus for this year? I 
not only proposed significant tax relief for this year; I proposed 
significant tax relief going forward. It is true, not as big a tax cut 
in future years as the administration proposed, because I could see 
they were putting us in danger of raiding the Social Security and 
Medicare trust funds in the future, at times when even they say the 
economy will be growing strongly. That is their economic plan. That is 
their budget plan that has put this country in jeopardy, that has put 
us in a position of violating the trust with the American people. It is 
their budget plan, it is their tax plan, that has us on a collision 
course with going back into the deficit ditch.
  Mr. Lindsey is the chief economic adviser to the President of the 
United States and the architect of this failed plan. He will be held 
accountable by history. He said they had a plan that added up. I 
confess, I didn't know when I was on the floor day after day after day 
questioning the wisdom of their plan that it would be revealed in this 
year how flawed it really was. I did not think we would face a problem 
until perhaps 2003 or 2004. But already we are in trouble; already this 
administration is using Medicare and Social Security trust fund money--
at least Medicare trust fund money this year, clearly Medicare trust 
fund money next year and perhaps even Social Security trust fund 
money--and that is before their request for a substantial increase in 
defense expenditures.
  I am willing to engage in a tough and spirited debate on these issues 
with any representative of the administration. But I do not expect them 
to misrepresent my positions and my clear record. That is unacceptable. 
That is absolutely unacceptable.
  All of this is especially ironic, given the headlines in the 
Washington Post today: ``Social Security Future Grim, Bush Panel 
Says.'' Here is the first paragraph of that article:

       A commission assigned by President Bush to redesign Social 
     Security yesterday offered a bleak appraisal of a ``broken'' 
     system, warning that deep benefit cuts, tax increases, or 
     ``massive'' federal debt are inevitable unless Congress 
     allows the personal retirement accounts the White House 
     favors.


[[Page 14036]]


  What irony, warning that:

       . . . deep benefit cuts, tax increases, or ``massive'' 
     federal debt are inevitable unless Congress allows the 
     personal retirement accounts the White House favors.

  I have always believed it is inappropriate to say I told you so, but, 
I told you so. When we had the budget debate, the proposal I put before 
our colleagues protected the Social Security and Medicare trust funds 
in each and every year, but, more than that, set aside $750 billion out 
of the surpluses of today to prepay some of the Social Security 
liability tomorrow. This administration said no. This administration 
turned their back on an opportunity not only to protect the Social 
Security and Medicare trust funds in each and every year but, more than 
that, to set aside money to prepay part of the liability that is 
coming, which they now say threatens massive debt, tax increases, or 
deep benefit cuts.
  Where were they when just months ago we had that exact debate? They 
didn't know this? We all knew it. We all knew that is where we were 
headed. Yet Mr. Lindsey, as the chief economic adviser to the 
President, and the rest of this economic team, plunged ahead with a 
budget and tax plan that never added up, that doesn't add up, that 
risks putting us back into the budget ditch, and now are 
misrepresenting my record by trying to assert that I favor tax 
increases at a time of economic downturn when my record shows 
absolutely to the contrary, that I proposed a far bigger tax cut this 
year than did the administration.
  Finally, for them to assert that my budget plan meant more resources 
going to the Federal Government--nonsense. The budget proposal I put 
before our colleagues continued to shrink the role of the Federal 
Government, from 18 percent of gross domestic product today to 16.4 
percent of gross domestic product at the end of this budget period, the 
lowest level of GDP since 1951.
  Mr. Lindsey, that is my record. Those are my positions. No attempt by 
you to distort them or misrepresent them is acceptable.
  I thank the Chair. I yield the floor and suggest the absence of a 
quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  The PRESIDING OFFICER. In my capacity as a Senator from the State of 
Florida, I ask unanimous consent the order for the quorum call be 
rescinded.
  The Chair hears none, and it is so ordered.

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