[Congressional Record (Bound Edition), Volume 147 (2001), Part 9]
[Senate]
[Pages 12658-12661]
[From the U.S. Government Publishing Office, www.gpo.gov]



            USE OF MEDICARE AND SOCIAL SECURITY TRUST FUNDS

  Mr. CONRAD. Mr. President, I enjoyed reading the Washington Post this 
morning and listening to the weekend talk shows. I noticed I was the 
subject of a number of the articles and a number of the shows. I must 
say, I didn't recognize the policy that was being ascribed to me. 
Somehow, people have taken what I have proposed and twisted it and 
distorted it in a way that is almost unrecognizable. I think after 
examination it is clear why they have done that, but we will get into 
that in a moment.
  The first article I would refer to is Robert Novak's piece in this 
morning's Washington Post that was headlined, ``Kent Conrad's Show 
Trial.''
  Mr. Novak asserted that a hearing that I will be chairing later this 
week to talk about the fiscal condition of the country and where we are 
headed is some kind of a show trial. I want to assure Mr. Novak and 
anyone else who is listening, I have no interest in show trials. I do 
have a very serious interest in where we find ourselves after the 
fiscal policy that the President proposed has been adopted in the 
Congress because I think it has created serious problems.
  Mr. Daniels, the head of the Office of Management and Budget, was on 
one of the talk shows this weekend and said I was engaged in what he 
referred to as ``medieval economics.'' I kind of like better the way 
Mr. Novak referred to me. He accused me of ``antique fiscal 
conservatism.'' ``Antique fiscal conservatism,'' that is the 
characterization he applied to the policies I proposed. Mr. Daniels 
called it ``medieval economics.''
  What is it that I have talked about that has aroused such ire? All I 
have said is I don't think we ought to be using the trust funds of 
Medicare and Social Security for other purposes.
  That is what I have said. I think that is the right policy. I don't 
think we should be using the trust funds of Social Security and 
Medicare for other purposes. After I made that statement, and after I 
noted that the latest numbers that come from this administration 
suggest that in fact we will be doing precisely that this year and next 
year, Mr. Daniels responded by suggesting that means Senator Conrad 
favors a tax increase at a time of an economic slowdown.
  That is not my proposal. That is not what I suggested. In fact, my 
record is precisely the opposite of that. They know that. They know 
that as the ranking Democrat on the Budget Committee this year, I 
didn't propose a tax increase in the midst of an economic slowdown. It 
is precisely the opposite of that. I proposed a $60 billion tax 
reduction as part of the Democratic alternative to the budget the 
President proposed. In fact, I supported much more tax relief as fiscal 
stimulus in this year than the President had in his plan.
  So, please, let's not be mischaracterizing my position and suggesting 
I was for a tax increase at a time of economic slowdown. That is not 
the truth. That isn't my record. My record is absolutely clear. Through 
all of the records of the Budget Committee and the debate on the floor, 
both during the budget resolution and the tax bill, my record is as 
clear as it can be. I favored fiscal stimulus this year, more fiscal 
stimulus than the President proposed--not a tax increase, a tax cut.
  We are going to have a debate, and the debate is required because we 
have a serious problem developing. Let's have it in honest terms. Let's 
not mischaracterize people's positions. Mr. Daniels, don't 
mischaracterize my position. You know full well I have not called for a 
tax increase in times of an economic slowdown. You know full well that 
my record was calling for a tax cut--in fact, more of a tax cut in this 
year of economic slowdown than the President was calling for.
  It is true that over the 10 years of the budget resolution I called 
for a substantially smaller tax cut than the President proposed because 
I was concerned about exactly what happened. Let's turn to that because 
this is what set off this discussion.
  As we look at the year we are now in, fiscal year 2001, if we start 
with the total surplus of $275 billion and take out the Social Security 
trust fund surplus of $156 billion and the Medicare trust fund of $28 
billion, that leaves us with $92 billion. The cost of the President's 
tax cut which actually passed the Congress wasn't what he proposed. It 
was substantially different than he proposed because it was more front-
end loaded, $74 billion this year. And $33 billion of that is a 
transfer out of this year into next year--a 2-week delay in corporate 
tax receipts in order to make 2002 look better, because they knew they 
were going to have a problem of raiding the Medicare trust fund in 
2002.
  What did they do? They delayed certain corporate receipts by 2 
weeks--$33 billion worth--and put them over into 2002. That added to 
the cost of the tax bill.
  There is only $40 billion of real stimulus in this tax bill that is 
going to go out into the hands of the American people during this year. 
But the cost is $74 billion because of this cynical device they use to 
delay corporate tax receipts to make 2002 look better.
  As we go down and look at the cost of other budget resolution 
policies for this year--largely the bill that is on the floor right 
now, the supplemental appropriations bill for certain emergencies--and 
we look at possible economic revisions that their own administration 
has suggested will come--that is, we are not going to receive the 
amount of revenue anticipated--we then see that we are into the 
Medicare trust fund by $17 billion this year. That is what it shows for 
this year.
  We had distinguished economists testify before the Budget Committee. 
Based on what they said, next year we are going to not only be using 
the entire Medicare trust fund surplus but we are actually going to be 
using some of the Social Security trust fund as well, $24 billion next 
year; that is, if we take into account a series of other policy choices 
that are going to have to be made.

[[Page 12659]]

  That is the question I am raising. Mr. Daniels wants to change that 
into a discussion of having a tax increase this year. I don't know 
anyone who is advocating a tax increase this year. I am certainly not. 
I advocated a tax reduction. But we don't have a forecast of economic 
slowdown for the next 10 years. That is not the forecast of the 
administration. They are forecasting strong economic growth. That is 
their forecast. Yet with a forecast of strong economic growth starting 
next year, we see that we are into the Medicare trust fund and the 
Social Security trust fund next year. We have problems with the two 
funds in 2003 and 2004, and that is before a single appropriations bill 
has passed.
  This is not a question of the Congress spending more money and 
putting us back into the deficit ditch. That is not this situation. We 
are in trouble just based on the budget resolution that was passed--the 
Republican budget resolution, I might add.
  Their tax cut--the tax cut supported by this President, and the 
reduction in revenue that they themselves are predicting--we have 
trouble going into the Medicare and Social Security trust funds just on 
the basis of those factors: The budget resolution that they endorsed, 
the tax cut that they proposed and the President signed, and the 
economic slowdown that they are predicting.
  We are into the trust funds already. That is before the President's 
request for additional funding for defense. He has already asked for 
$18 billion for next year. That has a 10-year effect of over $200 
billion.
  The question I am raising is, Where should that money come from? We 
are already into the trust fund before the President's defense request. 
Should that come out of the trust funds of Medicare and Social 
Security? Should we raise taxes to fund it? Should we cut other 
spending to fund it? Where should the money come from? Or, does the 
administration believe we should just go further into the Social 
Security and Medicare trust funds? I hope that is not what they believe 
because I think that would be a mistake.
  Again, this is all within the context of their forecast of a stronger 
economy, of a growing economy. Is that circumstance the right policy to 
fund the President's additional spending requests for defense and the 
right policy to take it out of the Medicare trust fund or the Social 
Security trust fund? I don't think so. I think that is a serious 
mistake. As I say, we are already in trouble. We are already into the 
trust funds before the President's defense request, before any new 
spending for education.
  Remember that the Senate just passed, almost unanimously, a bill that 
authorized more than $300 billion of new spending for education. It is 
not in the budget resolution. We can see that if we fund just a part of 
that--if we only fund $150 billion of it--that makes the situation with 
the trust funds more serious.
  This is before any funding for natural disasters. There is no funding 
for natural disasters in the budget. Yet we know we spend $5 billion to 
$6 billion a year on natural disasters. Should that funding come out of 
the Medicare and Social Security trust funds? That is exactly where we 
are headed.
  The question is, Is that the right policy? That is before the tax 
extenders are dealt with. Those are popular measures such as the 
research and development tax credit and the wind and solar energy 
credits. Some of them run out this year. We are going to extend them. 
Yet that is not in the budget.
  Is it the right policy to take the funds necessary to extend those 
tax credits out of the Medicare and Social Security trust funds? 
Because that is what we are poised to do.
  The alternative minimum tax--that now affects some 2 million 
taxpayers, but under the tax bill that has passed it is going to affect 
35 million taxpayers--just to fix the part of the alternative minimum 
tax that is caused by the tax bill we just passed would cost over $200 
billion to fix. That is not in the budget. Should that money come out 
of the Medicare and Social Security trust funds? Because that is what 
we are poised to do.
  I have said I do not think that is a good policy. I do not think we 
should pay for a defense buildup out of the trust funds of Social 
Security and Medicare. I do not think we should pay for additional 
education funding out of the trust funds. I do not think we should pay 
for natural disasters or tax extenders or the alternative minimum tax 
fix out of the Medicare and Social Security trust funds. Because we 
need to run surpluses there to prepare for the retirement of the baby 
boom generation. That is the money that is being used to pay down the 
publicly held debt.
  I think, as I have said, at a time of strong economic growth--which 
is what is in the forecast--as a policy we should not be using the 
Medicare and Social Security trust funds to fund other parts of 
governmental responsibility. I think that is a profoundly wrong policy. 
Any private-sector organization in America that tried to use the 
retirement funds of their employees to fund the operations of the 
organization would be headed for a Federal institution, but it would 
not be the Congress of the United States; they would be headed for a 
Federal prison because that is fraud, to take money that is intended 
for one purpose and to use it for another.
  We have stopped that practice. In the last year we stopped raiding 
the trust funds to use those moneys for other purposes. We have stopped 
it. We have used that money to pay down debt. That is the right policy.
  I hope very much we do not go back to the bad old days of raiding 
every trust fund in sight in order to make the bottom line look as if 
it balances. I suggest to my colleagues, using the Medicare trust fund 
or the Social Security trust fund for the other costs of Government is 
not a responsible way to operate. That is the point I have made.
  I do not advocate a tax increase at a time of economic slowdown. I 
want to repeat, my proposal that I gave my colleagues was for a 
substantial tax cut this year, fiscal stimulus, $60 billion of fiscal 
stimulus that I supported in this year. But we are not talking about an 
economic slowdown being projected by this administration for the next 
10 years. They are projecting a strong return to economic growth.
  I just saw the Secretary of the Treasury, the top spokesman on 
economic policy for this administration, at a meeting overseas saying 
they anticipate a return to strong economic growth next year. That is 
their projection. That is their forecast.
  What I am saying is, if we are in a period of strong economic growth, 
it is not right to raid the trust funds of Medicare and Social Security 
for other purposes. It is just wrong. It should not be done. But that 
is exactly where we are headed. The record is just as clear as it can 
be. We are going to be into the Medicare trust fund and even the Social 
Security trust fund next year just with the budget resolution that has 
passed, just with the tax cut that has passed, and just with the 
slowdown in the economy that we already see. That is where we are. That 
is before any additional money for defense. That is before any 
additional funding for education. That is before any money for natural 
disasters or tax extenders or to fix the AMT problem. And that is 
before additional economic revisions we anticipate receiving in August 
from the Congressional Budget Office.
  When we factor in those matters, what we see is a sea of red ink, 
what we see is a very heavy invasion of both the Medicare trust fund 
and the Social Security trust fund. That is where we are headed.
  The question I am posing to my colleagues, and to this 
administration, is, Does that make any sense as a policy? I do not 
think so. I do not think this is where we want to go, especially given 
the fact that we know in 11 years the baby boomers start to retire and 
then our fiscal circumstance changes dramatically.
  We have to get ready for that eventuality. The first thing to get 
ready is not to raid the Medicare trust fund and the Social Security 
trust fund at a time of surpluses. That is just wrong. They can call me 
an antique fiscal conservative. They can call me somebody

[[Page 12660]]

who is advocating medieval economics. I do not think so. I do not think 
this is antique fiscal conservatism. I think this is good old-
fashioned, Midwestern common sense. You do not take the retirement 
funds of your citizens to fund the operation of Government. You do not 
take the health care funds of your people for other operations of 
Government. There is not a private-sector company in America that could 
do that.
  I think this is very clear, the circumstance we face. We are already 
in trouble just with the budget resolution that has passed, just with 
the tax cut that has passed, and just with the economic slowdown that 
is being forecasted in the next 2 years. The trouble only gets more 
severe, only gets deeper, when you factor in the President's request 
for a big increase in defense. I think it is fair to ask the President, 
and this administration, how do you intend to pay for it? Do you intend 
to use the money from the trust funds to pay for this big buildup in 
defense? Do you intend to use the Medicare and Social Security trust 
funds to pay for natural disasters? Do you intend to use the Medicare 
and Social Security trust funds to pay for the tax extenders? I think 
people deserve to know what their recommendation is.
  Mr. President, I will conclude as I began by saying I am not for a 
tax increase at a time of economic slowdown. That does not make good 
economic sense. The administration is not forecasting an economic 
slowdown next year or for the years to follow. They are forecasting 
strong economic growth. Yet the policies they have laid out and the 
plan they have put in place lead to huge, dramatic raids on both the 
Medicare and the Social Security trust funds each and every year for 
the next 9 years. I believe that is a mistake. I do not support that 
policy.
  I support, certainly, fiscal stimulus at a time of economic downturn. 
But when we have forecasts of strong economic growth, to build in a 
policy that says the way we pay for the operations of this Government 
is to take money from the Medicare trust fund and the Social Security 
trust fund--count me out. I don't care what name you call me, I don't 
want any part of it. I don't care if I am the only vote that says: I am 
not, at a time of economic growth, for using the trust funds of 
Medicare and Social Security to fund the other operations of 
Government. That is wrong. I believe it is wrong in every way. And I 
want no part of it. But that is where we are headed.
  Mr. DORGAN. I wonder if the Senator would yield for a question.
  Mr. CONRAD. I am happy to yield.
  Mr. DORGAN. Mr. President, I noticed some press coverage today by 
some folks who were raising some questions about my colleague's 
numbers. I wonder if the Senator would answer this question. Is it not 
the case that this question of tax cuts and fiscal policy was always 
based on surpluses we do not yet have? Is it not the case that this 
rosy scenario everybody talked about--especially conservatives coming 
to the floor of the Senate--was: ``This economy is going to grow 
forever. Let's anticipate surpluses year after year after year. And 
let's put in place tax and spending decisions that anticipate that''?
  My colleague, Senator Conrad, and I and others repeatedly said the 
conservative viewpoint would be a viewpoint that says let's be 
cautious. Yes, when we have surpluses, let's provide some tax cuts. 
Let's provide some investments we need. But let's be a little bit 
cautious in case those surpluses don't materialize.
  Yet here we are, just a couple of months from those fiscal policy 
decisions, and we are going to have a midsession review by the Office 
of Management and Budget which is what I would like to ask the chairman 
of the Budget Committee about. That midsession review almost certainly 
will tell us this economy is much softer than anticipated and we will 
not have the surpluses we expected. Things might get better, but they 
might not. And if they don't, we might very well head back into very 
significant deficit problems.
  I ask my colleague, when does the Office of Management and Budget 
give us their midsession review? Is that supposed to be in July?
  Mr. CONRAD. Typically, we would get it in July or August. We are 
hearing already from the Congressional Budget Office that they 
anticipate that the forecast will be somewhat reduced because economic 
growth is not as strong as was anticipated. That means we will have 
less revenue than was in the forecast.
  My colleague and I warned repeatedly that these 10-year forecasts are 
uncertain. Nobody should be counting on every penny to actually be 
realized.
  Some said to us in rejoinder: There is going to even be more money. I 
remember some of my colleagues on the Budget Committee saying they 
think the forecast is too low.
  I hope over time that will be the case. I hope the economy strongly 
recovers. I hope we have even more revenue. That would be terrific. But 
I don't think we can base Government policy on that. We certainly can't 
bet on every dime of the revenue that is in a 10-year forecast.
  The reason it matters so much is because if we look ahead--these are 
the years of surpluses we are in now--but, according to the Social 
Security, what happens, starting in the year 2016, we start to run into 
deficits in both Medicare and Social Security. Medicare is the yellow 
part of the bars; Social Security is the red. These surpluses that we 
now enjoy turn to massive deficits.
  That is why some of us think we have to save the Social Security 
trust fund for Social Security and the Medicare trust fund for 
Medicare, and that while that is necessary, it is not sufficient. We 
need to do even more than that to prepare for what is to come because 
we have a demographic tidal wave called the baby boom generation. They 
are going to turn these surpluses we have now into deficits. And if we 
start, at a time of surpluses, by raiding the trust funds, this 
situation becomes much worse, far more serious.
  I don't think name calling is going to carry the question here. They 
can accuse me of medieval economics or antique fiscal conservatism. I 
don't think it is either one to say you ought to reserve the trust 
funds of Medicare and Social Security for the purposes intended. You 
ought not to use the money to finance the other functions of 
Government, however worthy the other functions are. I don't think we 
should use the money at a time of economic growth, which is what the 
administration is projecting for next year and beyond. Yet we see, 
according to the most recent numbers, that we are already into the 
trust funds. That is before a single appropriations bill has passed the 
Senate, before a single one has passed.
  The question is, Are we going to dig the hole deeper? What are we 
going to do about the President's defense request? He wants $18 billion 
next year. The effect over 10 years is in the range of $200 billion 
from a request like that. That is not in the budget. Since we are 
already into the trust funds, it simply means that if we were to 
approve such a request, we would go deeper into the trust funds and 
Medicare and Social Security to defend or to finance that defense 
buildup.
  How are we going to pay for natural disasters? At a time of economic 
growth, should we be funding natural disasters out of the trust funds 
of Medicare and Social Security? I don't think so. Should we fund the 
tax extenders by taking the money out of the trust funds of Social 
Security and Medicare? I don't think so.
  They may call that antique fiscal conservatism. I will wear that as a 
badge of honor, that policy of protecting the trust funds of Medicare 
and Social Security. Call me any name you want. That is exactly the 
right thing to do. Certainly in a time of economic growth, you should 
not be using trust fund money to fund the other needs of Government. 
That is shortsighted. It is irresponsible. It is wrong. I am not going 
to support it.
  I believe at the end of the day the American people will not support 
it because they have common sense. They know this doesn't add up. They 
know if you have already got a problem, you don't dig the hole deeper 
before you start filling it in. That is just common sense.

[[Page 12661]]

  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Nelson of Nebraska). The clerk will call 
the roll.
  The bill clerk proceeded to call the roll.
  Mr. BYRD. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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