[Congressional Record (Bound Edition), Volume 147 (2001), Part 11]
[House]
[Pages 16418-16424]
[From the U.S. Government Publishing Office, www.gpo.gov]



  THE STATE OF AMERICA'S BUDGET, THE FATE OF THE BUDGET SURPLUS, AND 
                            DILEMMAS TO COME

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 3, 2001, the gentleman from Maine (Mr. Allen) is recognized for 
60 minutes as the designee of the minority leader.
  Mr. ALLEN. Mr. Speaker, I rise tonight to discuss the topic that is 
foremost on the minds of many Americans, which is the state of our 
budget, the question of what happened to the surplus that existed in 
this country in the Federal budget only a few short months ago, and the 
consequences of the change and the dilemmas that we face over the next 
few years.
  What has happened recently, of course, by now is well known. Both the 
Office of Management and Budget and the Congressional Budget Office 
have come up with revised projections of the surplus for this year and 
for the next 10 years. Those surplus projections are, of course, 
dramatically different from what the President was saying and what my 
friends on the Republican side of the aisle were saying just a few 
short months ago.
  As an example of the kind of statement that the President was making 
when he was traveling across the country pitching his tax cut, I 
thought I would give this example of what he said in Portland, Maine, 
in my district on March 23 of this year.
  This was his basic argument. He said, ``Now I know these numbers 
sound like a lot, but this is reality I'm talking about. We have 
increased discretionary spending by 4 percent, we pay down $2 trillion 
worth of debt, we set aside $1 trillion in the budget over a 10-year 
period for contingencies, and guess what, there's still money left 
over, and that's the debate. The fundamental question is, what to do 
with it.''
  Today we know there is no money left over. Apart from some small 
surplus over the next 5 or 6 years in the

[[Page 16419]]

Medicare and Social Security accounts, a very small surplus, there is 
no surplus over the next 5 years. In fact, almost all of what remains 
of the surplus is in fact a Social Security surplus that is primarily 
in the second 5 years of the next decade and not in the next 5 years.
  What I want to do tonight is to begin by focusing on some of these 
statements. The first one worth calling attention to is the statement 
of the President that ``We have increased discretionary spending by 4 
percent.''
  Let us look at the reality. At the time, March 23, when he made this 
statement, the President had not submitted a budget for defense. As we 
all know now, he asked for a major increase in defense spending, over 
$30 billion.
  Let us take a look for a moment at a chart which shows or which 
compares this Administration's budget request to the last year of the 
Clinton administration's budget request. The Clinton administration 
asked for $38 billion in fiscal year 2001, the year in which we are in, 
above budget outlays in fiscal year 2000; $38 billion more last year. 
Of course, our current President has roundly criticized President 
Clinton and the previous administration for being big spenders, for 
spending out of control.
  Members will note that that budget request is about a 6.7 percent 
increase in budget authority over the previous year. That is what 
President Clinton was asking for in his last year. Who is the big 
spender here? President Bush's request is $44 billion, $6 billion more 
than President Clinton requested in his last year in office.
  This $44 billion represents the extent to which that is the increase 
in budget outlays requested by this administration for fiscal year 2002 
above the fiscal 2001 budget: a $44 billion increase. That works out to 
almost around a 7.2 percent increase in budget authority.
  When he was back in Portland in May, and in fact in speeches all 
around the country, the President said over and over again, ``We are 
only asking for a 4 percent increase in discretionary spending, only 4 
percent, and that is a reasonable. That is far less than the Clinton 
administration was asking.''
  But when the defense request rolls in and is considered, the 
President, this President, is actually asking for a bigger increase in 
spending than the previous administration did in its last year in 
office. That is part, but only part, of the problem.
  Let us go back to another part of the statement that President Bush 
made in Portland, Maine, on March 23. He said, ``We set aside $1 
trillion in the budget over a 10-year period for contingencies, and 
guess what? There is money left over.''
  I have been reading the newspapers, as any other American in the last 
month and a half, and I have not heard one word, not one word, either 
in the press or from this administration, about the $1 trillion in 
contingencies. Whatever happened to the $1 trillion contingency fund? 
Surely a slight decline in economic productivity, a decline in economic 
growth in this year, which should have been able to be handled by $1 
trillion in contingencies.

                              {time}  2030

  Well, as the ad says, not exactly. There was not exactly a $1 
trillion fund for contingencies; and in fact, it was not there at all. 
Those contingencies were, in fact, obligations, and not all of them 
that we will have to meet in this Congress and with the administration 
over the next 10 years. There was no trillion dollar fund, a true 
contingency fund. It did not exist in March, and it clearly does not 
exist today.
  Let us talk about what the situation is today. The truth is that this 
year, the fiscal year that ends on September 30, is very different from 
what it was projected earlier in this year. This year, the Government 
will tap $29 billion from Medicare surplus taxes and $9 billion from 
Social Security revenues simply to fund government operations for 
fiscal year 2002, for the coming fiscal year.
  Over the next 5 years the President's tax cut and the decline in 
economic growth together will force a $30 billion diversion from the 
Social Security Trust Fund and a $170 billion diversion from the 
Medicare Trust Fund. These are uses of Medicare revenues and of Social 
Security revenues that virtually every Member of this House pledged not 
to do. Virtually every Member of this House stood up and said we are 
going to protect Social Security revenues, excess revenues, Social 
Security surplus, and we are going to protect the Medicare surplus; but 
today, it is very different.
  These are, of course, CBO projections, the recent CBO projections; 
and, in fact, they are too conservative themselves to actually be 
realistic. Why? Because the way CBO does its projections, it assumes 
that there will be no change in existing law, and we know there will be 
changes in existing law.
  Let me give a few examples. These baseline estimates do not assume 
any of the additional spending included either in the budget that 
President Bush has presented or the congressional budget resolution for 
defense, for education, or for a prescription drug benefit under 
Medicare. Those increases are simply not included in the CBO 
projections.
  In fact, some of that funding will occur; and so the problem we have 
is one that was created by the fact that, as many of us said back in 
March and April, the President's tax cut was too big to be responsible 
budgeting. We also argued it was too weighted to the wealthiest 
Americans, which it was and which it is.
  Fundamentally, we argued at the time, we said over and over again, 
this will use up all of the available on-budget, non-Social Security, 
non-Medicare surplus; and as we said repeatedly, we have agreed not to 
use surplus funds for Medicare and Social Security.
  Today, we know that the President's tax cut has threatened that 
possibility. I am not talking about the $300 or the $600 tax rebates 
that about 60 percent of American taxpayers have received or will 
receive. That is a relatively small factor in the problem that we face.
  What I am talking about is what happens over the next few years. Over 
the next few years, compared to the last eight, during the greatest 
period of economic expansion in our Nation's history, what is happening 
over the next few years is we will divert billions and billions and 
billions of dollars to people in this country, the wealthiest 1 percent 
who earn over $300,000 every single year.
  Though we have enormous problems in this country, problems with 
finding qualified teachers to teach our young people, problems with 
ensuring that people who graduate from high school and want to go to 
college can actually get there and get the education they need to be 
productive citizens in this world, problems with those seniors in my 
district and all around the country who look at people who are employed 
who have health care, who get prescription drug coverage through their 
health care plan, they say to me, why do we not have prescription drug 
coverage through our health care plan, which is Medicare.
  Those people need some help. They deserve some help. It is outrageous 
that the wealthiest country in the world at the time, until just 
recently, of its greatest prosperity, cannot somehow find the resources 
to provide our seniors with a prescription drug benefit that is 
comparable to the benefit that those Americans who are employed, who 
are working, have for a prescription drug benefit through their own 
insurance.
  What is fair for our working people ought to be fair for our seniors. 
But back for a moment to the CBO projections.
  As I said, the CBO estimates do not assume any additional spending 
included in the Bush budget or the congressional budget resolution for 
defense, for education or for Medicare prescription drugs. The figures 
also omit the cost of extending expiring tax credits, funding 
anticipated emergencies for natural disasters, or paying for the $73.5 
billion farm reauthorization bill for which the budget resolution 
provided.
  Let us look at what this means over the next few years. The 
President's

[[Page 16420]]

budget alone plus his tax policies and spending requests invades the 
Social Security surplus for the next 6 years for a total of $128 
billion. It invades the Medicare surplus for the next 8 years for a 
total of $304 billion. This year, fiscal year 2001 ending on September 
30, the Government must tap $29 billion from Medicare and $9 billion 
from Social Security to fund routine government operations.
  Now, one of the reasons that that is true in fiscal year 2001 is this 
administration, knowing that it faced a shortfall in next year, fiscal 
year 2002, they delayed the date on which certain corporate income 
taxes would have to be paid from September 30 to October 15. That is a 
gimmick. We can only do this once. The effect of that was to move $33 
billion in current revenues to the next fiscal year in revenues. When 
we move that $33 billion, we are very close to creating the deficit 
that we have created in the current fiscal year. That kind of gimmick 
which now it appears this administration has adopted in a number of 
areas is irresponsible budgeting.
  Let us go for a moment to a different chart. Let us go to a chart 
which talks about the impact of the surplus over the next several 
years. As this chart shows, the Bush budget wipes out the surplus. 
There is going to be a lot of debate in these Chambers about what 
happened to the surplus, not just what happened to that supposed $1 
trillion contingency fund, but what happened to the surplus.
  It was not so long ago that people were saying we can see surpluses 
as far as the eye can see. Now they are gone. They are all gone. Here 
is basically what happened: the CBO in May 2001 baseline showed a 
surplus of $2.745 trillion. Now, what has happened to that? Well, $1.66 
trillion of that is the total cost of the Bush tax cut. Then we have 
had an economic slowdown. That is also a factor. The economic slowdown 
and certain technical factors have caused us to lose another $639 
billion or .639 trillion dollars.
  Now you have additional funding requests from the President of .767 
trillion or $767 billion, and it is the combination of these three 
factors that drive us into deficit over a 10-year period. Let me say a 
little bit about that surplus. This deficit and the surpluses are not 
distributed evenly over the next 10 years. In fact, if you look at a 
chart that shows year by year what happens to the surplus, in fact, 
there is either a deficit or a minuscule surplus for the next 5 years, 
and then you have a projected surplus over the second 5 years of the 
decade with the largest surplus of all, over $200 billion in the final 
year.
  Well, why is the largest piece of surplus the tenth year out? Well, 
another gimmick because basically what happened when the tax cut was 
passed, the House passed a $1.6 trillion tax cut. The other body passed 
a $1.35 trillion tax cut, both of them calculated over 10 years. But 
when the conferees got together, they liked tax cuts so much, not just 
the $300 and $600 rebate this year, but tax cuts for the wealthy 
extending out over the 10-year period that really drained enormous 
amounts of revenue from the Federal budget, making it extraordinarily 
difficult to meet the educational, the health care, the environmental, 
and the job-training needs of our population.
  When you look at that last year, you will find that the tax cut 
sunsets on December 31, 2010. So that the last year of this coming 
decade is one where the estate tax is back just as it is today, where 
the tax rates are back just as they are today. All of the tax code 
changes that are passed in the President's tax cut bill are eliminated 
and the tax code reverts to what it is today.
  Why was that done? Well, it was done to keep all the tax breaks and 
yet to stay within a $1.35 trillion number. That gimmick makes all of 
these budget numbers look actually better than they are in the real 
world.
  In the real world this country faces some enormous challenges. This 
is going to be a difficult fall. I think Members on both sides of the 
aisle agree because we have gone from surpluses from the non-Social 
Security, non-Medicare accounts to deficits; and we have done it within 
just a few months of this administration's election to office. We have 
done it primarily, not exclusively, but primarily because the size of 
the Bush tax cut was so large as to be completely irresponsible.
  That is why back in March, back in April, back in May so many of us 
on the Democratic side of the aisle were saying we ought to have a tax 
cut, we ought to have a large tax cut. It ought to be about $800 
billion. If we had set aside a tax cut, if we had done a tax cut of 
$800 billion, we would not be running into deficit projections now. We, 
in fact, would have those funds to make sure that Social Security and 
Medicare would be shored up over the next few years and not at the risk 
of being weakened simply because of our irresponsible budgeting. We 
would be looking at fully funding special education.
  I do not know anyone, Republican or Democrat, who is not hearing from 
people in his district about the need to live up to our commitment to 
fully fund special education at the 40 percent that, frankly, was the 
goal when the special education IDEA Act was enacted in 1974. But if 
the money is not there, if the surplus is gone, it will not happen. 
That is what we were saying.
  We were saying that you cannot project over 10 years with any degree 
of confidence. Boy, were we right about that one. We did not have to 
wait 2 years or 4 years or 5 years or 8 years to test the accuracy of 
these projections. In just 3 months, in just 3 months the numbers 
change dramatically. As you can see right here, minus $639 billion 
dollars over 10 years, a change in the projection in just 3 months. But 
it is that kind of change that many of us were saying, you cannot 
predict the future with any degree of confidence; and, therefore, what 
we need to do is to be cautious, not have a tax cut so large that it 
eats up all of the budget surplus and causes us to dipping into 
revenues from Social Security and Medicare. We argued then it was 
irresponsible, and it is more clear than ever today that that course of 
action was, in fact, irresponsible.
  I see that I am joined by a couple of my colleagues here tonight, and 
I want to recognize them in a few moments. I think I would like to 
close these brief remarks by saying this.

                              {time}  2045

  When Members look at what is happening with the tax cut, so large 
that it is jeopardizing our fiscal health, so large that it is making 
Alan Greenspan's actions at the Fed not as effective as they might be 
because people understand if we are moving straight to deficit as 
projections of surplus, long-term interest rates are going to stay up; 
and for businesses, for homeowners, for all of those people who borrow 
over some extended period of time, if long-term interest rates are 
going to stay up, we are not going to do as well. The Federal 
Government is going to be paying higher interest. The businesses will 
be paying higher long-term interest rates. Homeowners will be paying 
higher long-term interest rates.
  Remember, this economy took off in 1993. This Congress and the 
administration said, we are going to cut spending and make sure that 
the very wealthiest Americans pay their fair share of taxes. What 
happened? Interest rates went down and the deficits turned into 
surpluses, and the economy took off. It is the reversal of those 
fundamental policies which is jeopardizing the economic health of this 
country which is so serious.
  We are going to be debating in the--next last few weeks and perhaps 
months about the budget. It is really fundamentally a debate about the 
future. Fundamentally it is a debate about whether we are going to 
reduce the amount that we spend together on those things that we can 
only do together.
  What am I talking about is, Abraham Lincoln said in 1854, the role of 
governments is to do those things that a community of individuals 
cannot do or cannot do so well alone. We cannot create a public 
education system one by one, and yet every business in this country 
depends on having a well-educated, well-trained work force.

[[Page 16421]]

  We cannot take care of our seniors one by one, individually. That is 
why Medicare and Social Security were created.
  We cannot do an interstate highway system, we cannot provide for the 
common defense, we cannot lift up this country so that individuals in 
this country can reach their full potentials unless we use our 
government, as well as other voluntary associations, to do things 
together that we cannot do as individuals.
  The fundamental theory underlying the President's tax cut was that we 
take every dollar out of Washington, and that is good. Even if that 
dollar would educate a kid who cannot get Head Start now because there 
is not enough money to serve every kid who qualifies for Head Start, 
even if that dollar would help seniors pay for prescription drugs when 
they are not taking their medicine now because they have to buy food 
instead, even if that dollar represents a loan to someone who could 
then go on and get the college education that they feel they need. That 
is what this country ultimately is all about. We are here somehow to 
help each other lift each other up, to hang together on things that are 
of fundamental public importance.
  But this tax cut was about me and not about we. The health of this 
country depends on getting back and moving from me to we, from doing 
well, investing in ourselves, investing in this country, making sure 
that the people of this country have a fighting chance to get ahead. 
They cannot do that. They will not do that. They have no chance to do 
that. If the Federal Government slides back into deficits, if we cannot 
fund education, if we cannot fund health care and shore up the 
infrastructure of this country and provide opportunity for all of the 
people who live here and to our children.
  The last thing we wanted to do was to shift expenses, shift costs 
from this generation to our children, but the President's tax cut was 
so large that is exactly what it is doing. Unless we make changes and 
unless we figure out how to get out of this problem, we are right back 
in deficits and we are jeopardizing the future of this country.
  Mr. Speaker, I yield to the gentlewoman from Ohio (Mrs. Jones).
  Mrs. JONES of Ohio. Mr. Speaker, first of all, I congratulate my 
colleague for bringing to the Nation this Special Order with regard to 
the budget and the dilemma that we find ourselves in this evening.
  The gentleman from Maine (Mr. Allen) has been in the forefront of 
working on these issues and making the public aware, and I am happy to 
join him.
  Mr. Speaker, our Nation is facing a serious shortfall in the budget. 
This is because the Congress and the President have chosen short-term 
reward over the long-term benefit of paying down the debt and 
protecting Social Security and Medicare. There are colleagues of mine 
in the Congress who have not joined in this and have fought against the 
tax cut and against the proposed budget. But the majority of Congress 
unfortunately went along with the President on that tax cut, and we are 
all paying for that today.
  Since February 7, 2001, I have been on record stressing the 
importance of protecting retirement security and enacting a 
prescription drug benefit. I want all Americans to see every penny they 
earn working for them.
  Social Security is our system to protect retirement benefits for 
older people. Medicare provides seniors with health benefits. What 
could be a better use of our surplus than long-term security? If 
Americans could be guaranteed to pay $300 or even $600 and not have to 
worry about their retirement savings or health benefits from now to 
one's last years, Americans would do it. Many poorer Americans are told 
they need that $300 check, but that money is nothing if Members think 
about the benefits that could be accrued if we collectively joined our 
money into a pool that would, in fact, fund a prescription drug benefit 
for seniors.
  Thanks to the administration, we are all getting our refund checks 
now, and maybe some of us are able to put more money to our credit card 
debt, buy a little something for our homes or a luxury like a new pair 
of shoes. Then what? Can Americans take a prescription out of a bag of 
shoes? Can Americans take a prescription out of a luxury car? I think 
not.
  Thanks to the President's refund and the state of our economy, the 
government is facing financial shortfalls. Instead of operating in a 
surplus and each party claiming credit, we are blaming one another for 
a deficit. The other party's leaders choose to ignore the advice of 
economists forecasting a shrinking surplus, and all indications are 
that the economy has begun to slow.
  The surplus was once expected to be about $125 billion. The 
Congressional Budget Office is estimating the present surplus is nearly 
zero. Things have changed over the last 3 months. The White House is 
spinning blame to the Congress, but it is unwilling to accept the fact 
that the President's tax cut has eaten up the surplus. Just like an 
800-pound gorilla would go at a banana, it is all gone.
  I join the gentleman from Missouri (Mr. Gephardt) and Senate 
Democrats in urging the President to resubmit a budget. America needs a 
budget reflecting the current downturn in the economy and the lack of a 
surplus.
  Yesterday I held a prescription drug forum in my district with my 
colleague, the gentleman from Ohio (Mr. Brown) who serves on the 
Committee on Energy and Commerce. Together we discussed the issues of 
prescription drugs from their availability to the over-prescribing by 
many physicians and ways to make them more affordable, as well as 
potential legislation to correct the problem of exorbitantly high drug 
prices.
  The event was highly informative, and I encourage my colleagues 
throughout the country to hold a similar event. I had more than 250 
seniors gathered at the Jewish Community Center to talk about the issue 
of prescription drugs. I will continue to hold events to allow seniors 
in my district to air their grievances and help formulate answers on 
this issue.
  The money that the President's tax cut will take out of the budget 
surplus affects these seniors. They are seeking a prescription drug 
benefit, seeking help to make ends meet and still be able to afford 
their medication. The Bush budget not only does not allot money for 
Social Security, but takes their Social Security and Medicare money 
away. They do not need $300 to spend. This will not buy more than one 
prescription in many instances, because drugs for senior citizens are 
very expensive, and they are not able to afford them once they are 
placed on that prescription.
  The tax cut is like a classic Trojan horse. The President is trying 
to convince us that he has delivered a lovely gift to the American 
people. But once inside the gate, this gift will prove to merely 
camouflage far more sinister designs: windfalls for the wealthy and a 
return to the bad days of deficits and inadequate funding.
  How many employers of a business would award job bonuses to employees 
for the next 10 years in a row in advance, based on projected business 
income? We all know that is not good business sense. We tried this 
before, this whole thing about trickle-down economics. Remember the 
promise: If we give money back, the money will trickle-down to the most 
in need. Remember what happened: We found out that the poor got poorer 
and the rich got richer.
  I just say to the American public that are listening this evening, we 
are pushing this President to reconsider the budget which has been 
submitted. The people who are most in need of help from a governmental 
budget are our seniors who have paid their taxes, who have worked very 
long and are being forced to spend their personal dollars down to 
nothing in order to get a governmental benefit.
  I call upon my colleagues and the rest of this Congress and the 
Senate to do what is best and what is important, and I call upon this 
President who kept talking about throughout his campaign that he was 
going to help those most in need, to do what is right, resubmit this 
budget, put in a prescription drug benefit and make our seniors know 
that

[[Page 16422]]

we love them, want to support them and encourage them.
  Mr. Speaker, I thank my colleague, the gentleman from Maine (Mr. 
Allen) for the opportunity to be heard.
  Mr. ALLEN. Mr. Speaker, I appreciate the gentlewoman's comments. They 
help shed light on what the gentlewoman's constituents and many others 
are facing.
  Mr. Speaker, the President's tax cut is the primary reason for the 
elimination of the surplus within just a few months of his 
administration. Now that we are in this predicament, it is up to him to 
come forward and say, how do we deal with this.
  During the campaign, the President said I will not touch $1 of the 
Social Security revenue. A few weeks ago, on August 24, 2001, he 
conceded that he might have to invade the Social Security surplus in 
time of war or recession. We are certainly not in a recession now.
  Yesterday he said that he would not do anything that would invade the 
Social Security surpluses, but the Congressional Budget Office numbers 
say we are and we are doing it now. We are doing it this year, and 
there needs to be some leadership from the White House to explain how 
we possibly get out of this predicament.
  The gentleman from Wisconsin (Mr. Kind) is here today, and I yield to 
the gentleman.
  Mr. KIND. Mr. Speaker, I thank the gentleman from Maine (Mr. Allen) 
for organizing this Special Order and commend the gentlewoman from Ohio 
(Mrs. Jones) for the leadership that she has shown on important issues 
affecting Americans across the country, the Social Security and 
Medicare programs which are vitally important, the passion that she has 
for instituting a real prescription drug plan, which was on everyone's 
agenda in last year's campaign.
  Vice President Gore, virtually every Member of Congress, when we were 
running for Congress last year, were talking about the need to deal 
with the rising cost of prescription drugs, but no one has highlighted 
this issue more than the gentleman from Maine (Mr. Allen), who 
organized this Special Order.
  He saw this problem quite awhile ago, and saw the impact that this 
was having on seniors on fixed incomes. He has been providing 
leadership in this Congress in trying to institute a bipartisan 
prescription drug plan, as well as talking about the importance of 
maintaining the solvency of Social Security and Medicare. That is 
really what this discussion is about tonight. That is why I commend the 
gentleman from Maine for talking about it.
  Mr. Speaker, it is all about how do we, given the current situation, 
the economic slowdown and the budget numbers that we are facing, 
maintain fiscal discipline in this Congress so we can maintain the 
solvency and protect the sanctity of the Social Security and Medicare 
programs.

                              {time}  2100

  The way I see it, the greatest fiscal challenge our country is facing 
today is the fact that we have an aging population, a population that 
is getting older, and a baby boom generation who will all start to 
retire at basically the same time, 2015, 2020, thereabouts, and they 
will all be bigger, these programs, Social Security and Medicare, at 
about the same time. So what can we do today in order to deal with that 
advent we know is going to come and is going to hit our country but 
especially affect our children and our grandchildren that is going to 
make sense?
  One of the areas is maintaining fiscal discipline. That is why it 
took so long in order to turn the corner and be able to start walling 
off both the Social Security and Medicare trust funds. It is a pledge 
that virtually every Member on this floor has made over the last few 
years. It is a pledge that the current administration and the President 
in the White House now made in last year's campaign, and it is a pledge 
that is in serious jeopardy today in light of the new Congressional 
Budget Office numbers. These numbers are important, because the issue 
is one that is very simple, and that is being able to protect these 
trust funds and keep its dedicated purpose for reducing the publicly 
held national debt.
  Why is this so important? The question before us is will it be easier 
for us to deal with the advent of the baby boom generation going into 
retirement if we also have to deal simultaneously with paying off all 
the Federal IOUs that are in our Federal debt today? I submit that that 
is an impossible proposition to meet, dealing with the aging 
population, with the huge inflow of the population in Social Security 
and Medicare, paying off those IOUs that are currently in the trust 
fund while at the same time we are being asked to pay off the Federal 
debt and the publicly held Federal debt.
  That is why it makes such good sense, fiscal sense, to take this 
opportunity now of preserving this trust fund money, reducing the 
national debt, so we are on much sounder fiscal footing to deal with 
the aging population. That is really what this debate is about.
  Yes, the President is correct in saying that dipping into the trust 
fund today is not going to affect the current payments going out to 
current recipients. That is true. Because IOUs are still going to be 
added to those trust fund accounts. But if the money behind the IOUs is 
meaningless and spent for other purposes, then why do we not just 
reduce FICA taxes today, still continue to throw the paper IOUs in 
these trust funds and deal with it when they come due which is what I 
am hearing the current administration basically proposing.
  Mitch Daniels, the Director of the Office of Management and Budget in 
the administration, is basically saying that there is nothing 
inherently wrong with using the trust fund for a plus-up in defense 
spending, for instance, because the country is still going to meet 
those IOUs that are added to the trust fund.
  But if we are not taking this opportunity to reduce the national debt 
today, it is going to make it very difficult to meet those obligations 
in the future. I think that is such a fundamental point in this entire 
debate. The difference in these numbers must be important whether we 
are looking at Congressional Budget Office numbers or Office of 
Management and Budget, the administration's budget numbers, because, 
correct me if I am wrong and maybe the gentleman from Maine has a 
better memory than this, but back in 1995 when the Republican 
leadership in Congress decided to take on the Clinton budget numbers, 
it was over the stated purpose that the Clinton administration was 
relying on their own OMB numbers to justify their budget calculations 
rather than relying on the Congressional Budget Office numbers.
  Now we have the same situation today, where many of us are crying 
foul because of the bookkeeping and the gimmicks that are being played 
with OMB numbers, I mean some bookkeeping changes that have not been 
made in the last 35 years in order to pretend as if we are not dipping 
into these trust funds. I think there is some political rhetoric being 
used here in what numbers we are using, but the fundamental point is 
that I am hoping that this Congress and the administration working with 
us will be able to find a bipartisan solution to continue using the 
trust fund money to reduce our national debt so we are going to be in 
the fiscal position to deal with the aging population and the baby 
boomers when it comes time for them to retire and start entering these 
very important programs.
  Mr. ALLEN. I had a couple of thoughts that were triggered by the 
gentleman's comments. First of all, the gentleman from Wisconsin is 
correct. It was the Republicans insisting on using CBO numbers and not 
OMB numbers because they said then the CBO numbers were more accurate 
than the OMB numbers. The same holds true today.
  Mr. KIND. As the gentleman recalls, the ultimate outcome of that 
insistence back in 1995 led to the shutdown of the Federal Government. 
Because the leadership in Congress was insistent that the 
administration use CBO numbers rather than OMB numbers and it led to 
the shutdown of the government which as we later found out was

[[Page 16423]]

not exactly popular with the vast majority of Americans throughout the 
country.
  Mr. ALLEN. And not something we want to go through again. But there 
is a further point in that connection. I had another chart but I do not 
have it here today which shows that during the first Bush 
administration, the economic projections from OMB as to the health of 
the economy were always significantly above, about .8, .7 percent above 
the consensus private forecasts. That is about what the first year of 
this administration's projections of economic growth are above the 
private forecasts. So now under both the first Bush administration and 
now the second Bush administration, we see that OMB is more optimistic 
about the economy than the private forecasts.
  You have to say to yourself, what is going on here? They are trying 
to make the numbers look good so the budgets look good so they can get 
through an immediate funding crisis. If you look at the Clinton 
administration, in the 8 years of the Clinton administration, only in 2 
years were the OMB projections above the consensus private forecasts. 
In 2 of those years, they were exactly the same. In the other 4 years, 
they were actually lower. They were more conservative than the 
consensus private forecasts. One of the disturbing aspects of this 
administration in its first few months is that it looks and feels as if 
the Office of Management and Budget has become an arm of the spin 
machine, that numbers are being manipulated, not just numbers related 
to projections of future economic growth but numbers that make the 
accounting change in Social Security that the gentleman was referring 
to, the gimmick I mentioned earlier about moving $33 billion in 
corporate tax revenues from 2001 to 2002, all of these gimmicks, all of 
this manipulation is really a way to kind of make the numbers come out 
right.
  But that is not the way we ought to be doing our budgeting. It is not 
conservative. It is not fiscally responsible. We ought to be getting 
the best numbers we can and then be arguing policy. But we should not 
have to be doing what we have wound up doing the first few months of 
this administration which is arguing about the accuracy of the numbers. 
That did not happen to anything like this extent before. It really is 
important that OMB get back on track with CBO and stop manipulating 
numbers because we have got a real problem.
  Mr. KIND. These are not insignificant differences, a percentage point 
here, a percentage point there on projected economic growth. When you 
project it out over 4, 5, 10 years, these numbers explode on you. And 
so it is important that we deal with an accurate projection and 
description of what the economy is doing and forecasting. When you see 
the OMB starting to manipulate these numbers, have these gimmicks 
within the bookkeeping system that have never been tried before in the 
last 40 years, it undermines the confidence that many of us have in the 
numbers that the administration is using in order to justify their 
budget requests. And it makes it a much more difficult proposition then 
to work in a bipartisan fashion to reach agreement on these important 
issues. That is why many of us earlier in the year when we were 
discussing the merits of a tax cut of this size were using more 
conservative numbers. Many of us supported an alternative tax proposal, 
one that was based on more conservative economic figures because we 
felt it was prudent and made fiscal sense to hedge our bets a little 
bit because as quickly as the surplus can appear, many of us knew it 
could disappear.
  Given the incredible size of our Nation's economy, a slight change in 
growth one way or the other was going to have a huge impact on 
budgetary decisions before this Congress. So many of us supported an 
alternative tax relief plan that would provide meaningful tax relief to 
working families, dealt with the marriage penalty, dealt with estate 
tax relief or family-owned businesses and family farms but within a 
more fiscally responsible framework, not of the magnitude of the tax 
cut that was ultimately passed and which is now having the most 
important impact on dipping into the Social Security trust fund again.
  The reason why many of us felt it was important to be somewhat 
conservative was because of the obligations our Nation faced, of Social 
Security, Medicare, trying to come up with a bipartisan prescription 
drug plan that was going to provide meaningful relief to our seniors 
who are suffering under this burden of escalating drug prices that they 
need to have, our obligations to a strong national defense, just 
quality of life with our military personnel.
  This was not going to come cheap. In fact, the President is still 
calling for a 9 percent increase in defense spending, roughly $20 
billion that does not exist right now. It puts a lot of us in a tough 
position that supported many of these policy proposals but because of 
the slowdown because of the magnitude of the tax cut, it is going to 
make it very difficult for us to meet these obligations for our Nation.
  Mr. ALLEN. Again, I think what we are trying to say is that if any of 
us have a child 5 or 10 years away from going to college and we know we 
are going to be paying for that out of our own pockets, the prudent 
thing to do is start setting aside some money to pay for the college 
expenses. If we are the owners of a business and we can see that we 
have reached the capacity of growth within our existing buildings and 
we are either going to grow and do a major expansion or we are going to 
be at a competitive disadvantage and we have to do that in 3 or 4 or 5 
years, we would start to figure out how to set aside funds to be able 
to do that when the time comes.
  We are, as a country, in the same spot with respect to Social 
Security and Medicare. We know that the leading edge of the baby boom 
generation within 9 or 10 years is going to start to qualify for those 
two programs. So as many of us have argued over and over and over 
again, even though we have lost the point on the debate in the tax cut, 
we have said what is prudent to do is to use the Social Security and 
Medicare surpluses to pay down the national debt, to reduce the amount 
we pay in interest costs on the national debt, to be ready to wade in 
and support those two programs when the baby boom generation starts to 
move into them. That would be prudent fiscal planning. It is not 
prudent to go out and take a big vacation right now and spend all of 
the surplus over the next 5 or 6 years based on projections that we 
knew even a few months ago were inherently unreliable.
  I want to come back to the way I began, the statement that the 
President made in Portland, Maine on March 23. He said, ``We've 
increased discretionary spending by 4 percent.'' Not exactly. Right 
now, now that the defense budget is in, that 4 percent number is 7.2. 
It should read, ``We've increased discretionary spending by 7.2 
percent,'' 7.2 percent more than the Clinton administration did in the 
last year of that administration.
  He also said, ``We set aside $1 trillion in the budget over a 10-year 
period for contingencies.'' Well, not exactly. It was not true then. It 
is not true now. If it were true then, if there were truly a 
contingency fund, we would not be in the dilemma that we are in today 
because we have not had a loss of $1 trillion just from economic or 
technical factors, although it is $639 billion. This tax cut was rushed 
through. It was too big to be responsible, it was too weighted to the 
wealthiest Americans, and it was rushed through without considering 
either how the economic numbers, how the projections would work out 
over time and without even the President's own request for defense 
which has turned out to be by far the biggest increase, not education 
as he was saying in March, the biggest increase in his proposal.
  If we are going to get back on track, we have to be honest about the 
numbers and honest about the claims and look at this problem we have 
with our budget, look at exactly what caused it, largely the tax cut, 
also the economic slowdown, also some additional requests for spending 
by the administration and also some other numbers that we have to deal 
with. But let us look at

[[Page 16424]]

the numbers honestly and let us try to figure out how to work our way 
through this to get the best result for the American people.
  Mr. KIND. I do not want to speak on behalf of my friend from Maine, 
but for me really the crux of the issue is what decisions can we make 
in this body that will set up our younger generation, the next 
generation, for success later on in life, so that they can meet the 
obligations that they are going to face when the reins of leadership 
turn over to them. I fear that if we make it impossible by not reducing 
national debt, by not shoring up the Social Security and Medicare trust 
funds, it is going to be impossible for that next generation to meet 
those obligations and we will see a fiscal crisis never before 
witnessed in this Nation.
  It is almost deja vu all over again as far as economic policy. We 
have seen this. It is really the repeat of Reaganomics back in the 
early 1980s where they ushered through this huge tax cut but also 
simultaneously tried paying for a huge increase in defense spending 
which led to year after year, a whole decade's worth of deficit 
financing which left us in a position of dealing with a $5.7 trillion 
national debt.

                              {time}  2115

  The difference between that then and what we are facing today is back 
then the country could afford to make that mistake, because we had time 
to recover.
  We do not have that luxury anymore. We have this aging population 
staring us in the face. They are going to start retiring in the next 
decade. We do not have the luxury of being able to deal with a fiscal 
mistake that was made and trying to dig ourselves out of that hole in 
time to prepare for this aging population.
  That is really the big difference between the economic policies of 
the early eighties and the same type of economic policy being pursued 
today. We do not have that margin of error in order to correct the 
mistakes, to dig ourselves out of debt, as we were starting to succeed 
in doing throughout the decades of the 1990s. Instead, we apparently 
have now reversed track and have jeopardized the good work being done 
just a few short years ago.
  Mr. ALLEN. What is so startling is all this has happened in just a 
few months, so those of us who were saying this is a reckless approach, 
this an irresponsible approach back in March and April, now find 
ourselves saying, you know, we told you this was a possible outcome. We 
told you that the policy was irresponsible. Now, Mr. President, how do 
we dig ourselves out of that?
  I think that the point the gentleman was making about Social Security 
and Medicare, it is very true. But it is also true when I travel around 
my State of Maine and talk to business owners, for example, they say to 
me, apart from health care, which seems to be their number one problem, 
the high cost of health care, they talk about the qualifications of the 
workforce. They realize that they are only going to succeed if they 
have well-trained, well-educated, well-qualified workers for the jobs 
which they need.
  It gets harder and harder. If too many kids do not get Head Start, if 
you do not have enough spending on title I funds for kids from 
disadvantaged areas, if you are not fully funding special education in 
accordance with the promises made by this Congress in the past, if 
young people in this country do not have the funds to go on and get the 
college or technical college education they need, we are not going to 
be as strong a country, as competitive; and our businesses will not do 
as well. Those are simple facts.
  Yet the examples I have given are examples of public investments. 
They cannot be made by our businesses. They cannot be made by 
individual families, many of whom are struggling and do not have the 
funds for private school or private college. They are only the kinds of 
investments that we can make together. We cannot make those investments 
together if all the money has gone in a tax cut that is too large to be 
responsible, where most of the money, or at least half of the money, is 
going to people in this country who make over $300,000 a year.
  We have to look again at this tax cut. We have to figure out how we 
can make sure that our overall budgeting over the next few years is 
reasonable, responsible, disciplined and conservative, not 
irresponsible and reckless, I guess I would say.
  Mr. KIND. If the gentleman will yield further, with the drastic 
change in the budget numbers, and there is no sign of immediate 
economic recovery on the horizon, I think the responsible thing to do, 
one that really requires real leadership right now and a gut check, is 
for the administration to submit a new budget proposal, in light of the 
fact that their own numbers, a 7 percent increase in discretionary 
spending, is just not affordable right now within the context of the 
overall budget, unless, again, they are willing to dip into the Social 
Security and Medicare Trust Funds, which I do not think there is a lot 
of bipartisan support to do.
  I think just about everyone in this Chamber now is on record 
supporting the lockbox proposal, walling off those trust funds, the 
surpluses being run in those programs for debt reduction; and that is 
why we are hoping that the administration, the President, will take a 
look at this and realize that things have changed.
  That is okay. Mistakes are made from time to time. But we are still 
in a position of being able to recover. We are not down this road that 
far yet. These numbers have just come out. We have not passed the next 
fiscal year's budget, so there is still time to recover.
  It is going to require, I think, a whole lot of cooperation across 
the aisle and shared responsibility across the aisle to make this add 
up, to maintain some fiscal discipline, but also meet our obligations 
that exist.
  We have an Elementary and Secondary Education Act we are trying to 
reauthorize that is going to require resources, bipartisan thinking, in 
order to solve that dilemma. We have the next farm bill reauthorization 
to come to the floor here shortly. Lord knows our family farmers are 
struggling to survive. You talk about a national security issue, food 
security ranks right up there at the top as well. We have that 
obligation to meet.
  We also need to be thinking long term and maintaining the solvency 
again of these important programs, like Social Security, Medicare, so 
we are not just punting on this issue, which would be the easiest thing 
for us to do today. I think that is one of the reasons why the 
President appointed his Social Security commission, because he realizes 
we need to take a hard honest look at this and start finding some 
bipartisan solutions to the challenges we face.
  We still have time to recover. I guess that is one hopeful note in 
tonight's discussion. Hopefully, we are going to get enough consensus 
and enough bipartisan work here in the coming weeks before the ultimate 
budget is passed to recover from the new economic realities and do the 
right thing for our kids.
  I have got two little boys myself. I am a little concerned about the 
fiscal obligations they are going to be facing. The numbers are not 
working in their favor right now. With the generational trends with the 
aging population, more and more will be asked of the next generation to 
deal with these challenges. We can help by starting today in dealing 
with accurate economic numbers and making some probably pretty 
difficult choices in the weeks ahead.
  I thank the gentleman again for organizing this Special Order and 
highlighting in such a coherent fashion the dilemma we are in and the 
challenges we face.
  Mr. ALLEN. Mr. Speaker, I thank the gentleman for being part of this 
debate. I know we can do better, and we will do our best to do better.

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