[Congressional Record (Bound Edition), Volume 148 (2002), Part 10]
[Senate]
[Pages 13242-13244]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     A BUDGET DEFICIT REALITY CHECK

  Mr. VOINOVICH. I rise today to discuss an issue that I have been 
known to have some thoughts about from time to time, and that is our 
Nation's fiscal situation and this body's approach to its budget 
responsibilities, something the President and I have talked about on 
many occasions.
  The country's finances are in dire condition. We face a sea of red 
ink as far as the eye can see, and perhaps the worst thing about it is 
that few people in this body appear to recognize or acknowledge how bad 
that predicament is. The Federal Government is running a deficit and 
will for the foreseeable future, when just last year we had an on-
budget surplus. Despite this, Congress continues to spend money like 
drunken sailors, refusing to prioritize and make the tough choices 
necessary to stop the bleeding and get us back on track.
  In the rush to spend, we are not asking the basic question: Is this 
the best use of our limited funds at this point in time?
  I want to emphasize to my colleagues how critical our budget 
situation has become. Over the past year, the budget outlook has 
worsened dramatically. Last year, the Congressional Budget Office 
predicted a unified budget surplus of $313 billion. That is for fiscal 
year 2002. That means the Social Security surplus and the on-budget 
surplus together equals $313 billion. We all thought everything was 
going great, and I was extremely pleased because Congress believed that 
we might be able to once again use the entire Social Security surplus 
to reduce the national debt, after all, we did it in 1999 and 2000. As 
a matter of fact, during that period of time we reduced the national 
debt $365 billion, the first time that had happened in almost 30 years. 
Unfortunately, it is not turning out that way. Instead of reducing the 
debt, we are going to add to it. Seven months ago CBO released budget 
projections that showed the Federal Government is in much worse fiscal 
condition than we all thought. These new projections show that the 
Federal Government will spend the entire Social Security surplus in 
both the current fiscal year and in fiscal year 2003.
  Today, our fiscal condition continues to deteriorate. Figures from 
the Senate Budget Committee show that we will likely suffer a budget 
deficit of $152 billion this year. That means that this year we will 
borrow and spend the entire $157 billion Social Security surplus and on 
top of that we are going to have to borrow another $152 billion through 
the issuance of new debt. Put another way, the Federal Government will 
borrow a total of $310 billion this year. This is new debt on top of 
the staggering $6 trillion national debt we already owe.
  It is no wonder that our constituents have such a hard time grasping 
the magnitude of the national debt when it is counted in unfathomable 
terms like trillions of dollars.
  Unfortunately, next year it gets even worse. For fiscal year 2003, 
which begins October 1, if we maintain our current course of spending 
we will borrow and spend the entire $176 billion Social Security 
surplus and issue $194 billion in debt on top of that. Already, next 
year's budget deficit totals $370 billion, and that is before any 
supplemental spending, which we all know is inevitable.
  If anyone believes these discouraging numbers can be turned around by 
a growing economy, I think they ought to understand that these 
projections for 2003 are based on a healthy inflation-adjusted economic 
growth rate of 3.4 percent.
  I would like to draw everyone's eyes to this chart that I am talking 
about for fiscal year 2002 and fiscal year 2003. This year, fiscal year 
2002, we were projected to have a $313 billion surplus, but instead we 
are going to take the Social Security surplus that the President and I 
talked about using to pay down debt and spend that to operate the 
government. Then on top of that we are going to borrow another $152 
billion. So we are going to borrow nearly $310 billion.
  Next year, the Social Security surplus will be $175 billion. Instead 
of using that money to pay down debt, we are going to spend it to run 
the Government, and then we are going to add another almost $200 
billion of additional debt.
  When people come to see me in my office and want something from the 
Federal Government, I ask the question of them: Is it so worthwhile 
that we should borrow the money? Does it justify spending the Social 
Security surplus or causing the Treasury to issue new debt?
  We are filling the gap today in the only way we know; that is, we are 
putting the Treasury back in the business of auctioning new debt to 
raise the billions of dollars needed to pay for the Government's 
operations this year.

[[Page 13243]]

  What I find very telling about the Treasury auctions is the duration 
of some of the new bonds. They mature in roughly 10 years. What that 
tells me is the U.S. Treasury recognizes the Federal Government will 
need to borrow money for a long time. This speaks volumes about our 
long-term budget predicament. We better take notice.
  What we really need is a fiscal reality check. We are sinking deeper 
and deeper into deficits. But most disturbing of all, I don't hear any 
outcry. No one seems to be paying any attention. What I do hear are 
constant calls for more Government programs and for more Government 
spending.
  The fact that our Nation faces several serious challenges right now, 
including a serious national security challenge, does not exempt us 
from the basic rules of fiscal policy. In fact, I believe the national 
security crisis we now face demands of us an even more vigilant look at 
what we are doing with our spending to make sure the needed funds go to 
the most pressing priorities.
  Spending without check, wrapping every pork project in the flag and 
calling it a national security priority, saying yes to every major 
interest group, and playing politics with the public's purse are all 
irresponsible behaviors that will sentence us to another long term of 
deficit spending and increased national debt.
  We recently passed a farm bill that even leading farm legislators 
decried as too expensive. Besides returning to the failed farm policies 
of the past, this legislation increased agricultural spending by $80 
billion over the next 10 years. We have also just finished a Defense 
authorization bill that contains huge increases. The Senate-passed bill 
authorizes $393.4 billion in spending. That is an increase of $42 
billion or about 12.2 percent over last year. We cannot have it all.
  The White House is calling for a $45 billion increase in defense 
spending and a big increase in spending on homeland security. These are 
serious needs and deserve our attention. They require making some 
tradeoffs to meet them. We do need to increase defense spending, but 
let's examine whether $45 billion is the right number. I was heartened 
to learn that the House of Representatives acted to move about $2.3 
billion in funding from defense allocations to other programs. The 
Senate should do the same, and then some, instead of forever increasing 
funding by adding additional spending to the total. We need to make 
some tough decisions to make tradeoffs and shift funding within given 
budget totals.
  At the same time, the record growth of domestic spending over the 
past several years has been nothing short of meteoric. Given the huge 
increases many agencies and programs have had, do we really need to 
continue feeding them at these huge levels? If anything, I think 
agencies need a breather to spend the money Congress has been shoveling 
their way over the past several years. Anyone looking for the location 
of the recently departed surplus, need look no further than the huge 
increases in discretionary spending for fiscal years 1998 to 2002.
  This is the chart that shows it: Agriculture, the average growth was 
5.2 percent; total growth was 21 percent from 1998 to 2002; Commerce, 
51 percent; Defense, 24 percent; Education, 60 percent; Energy, 23 
percent; Health and Human Services, 50 percent; HUD, 44 percent.
  These are unbelievable increases in spending. That is a lot of money 
in the pipeline. The fact is, at this stage of the game, we need to 
look at the spending we have already done during the last several years 
and scrutinize our domestic priorities to make sure our most pressing 
needs receive our limited budget dollars. This means making tough 
choices, telling some people no, and having the guts to stand up to 
groups that are considered untouchables and say we cannot afford them 
right now.
  I am talking about lots of other requests we will be getting. For 
example, we are talking about Medicare and what we are going to do 
about that. What we have to understand is we just cannot rack up huge 
bills today that will come due tomorrow because tomorrow's bills will 
be even bigger than today's. I am talking about Social Security and 
Medicare. These two critical programs are headed toward serious 
financial trouble and will require huge infusions of cash to keep them 
going. On top of that, there is widespread agreement, myself included, 
that we need to provide a prescription drug benefit to seniors. And it 
is not going to be cheap. This is the issue now before the Senate.
  We face a situation in a couple of decades in which spending on 
Social Security, Medicare, and other entitlements will equal what we 
spend today on the entire Federal Government. In a few short years, the 
percentage of overall spending that is left for defense and other 
domestic needs will be very little. To their credit, David Walker, the 
Comptroller General, and CBO Director, Dan Crippen, have made this 
point over and over again, before committee after committee, but no one 
seems to be listening.
  Make no mistake, we will meet these obligations. The trillions of 
dollars in special issue Treasury bonds held by the Social Security 
trustees are going to be redeemed and made good by the Treasury. Some 
beltway pundits might dispute the reality of the Social Security trust 
fund, but they are dead wrong. The liabilities in the trust fund are 
real. The day will come, in 2015 or 2016, when the money coming into 
Social Security will not be enough to cover all the payments, and we 
will have to reach into that Social Security trust fund and begin 
redeeming those IOUs. To pay those IOUs we either have to borrow more 
money or raise taxes.
  The fact is the day of reckoning is rapidly approaching. We need to 
start being concerned about it. Remember the money that was supposed to 
be kept in the lockbox to pay down the debt? I remember the lockbox. I 
was going to bring my lockbox from my office to demonstrate my point. 
We will not see the money in that lockbox paying down debt for probably 
a decade. We won't see an on-budget surplus for at least 10 years at 
the rate we are going.
  Mr. President, I want my colleagues to recognize that the surpluses 
we refer to are on a unified basis. The public is being told we might 
go back to that unified budget. But I hope they understand that the 
unified budget includes the Social Security surplus. When we talk about 
a surplus, the surplus we are talking about includes the Social 
Security surplus. In my book that is not a true surplus because it 
requires raiding the Social Security surplus. The people that know, 
understand we will be using that Social Security surplus for a long 
time; not to pay down debt but to pay for the regular operation of the 
Federal Government.
  When the day arrives in 2015 or 2016 and that Social Security surplus 
disappears, we will have to find additional money to pay for Social 
Security and Medicare.
  Our budget process is broken and needs to be fixed. This year, the 
Senate is increasingly resigned to the fact that we will not adopt a 
budget resolution. I say, shame on the majority. This is the first time 
since 1974 that the Senate has not passed a budget resolution. What it 
tells us about the State of the budget process is this: It is a 
critical document that we need to manage our money, and we did not even 
write one. In its current form, the budget process is weak and 
meaningless and does nothing to control the endless congressional urge 
to splurge.
  When the Budget Enforcement Act expires in September, Katy bar the 
door on the floor of the Senate when the spending rampage begins.
  I fully support my colleagues efforts to extend the discretionary 
spending caps and extend the pay-go rules. These are important steps in 
reestablishing fiscal discipline. The problem is, these safeguards are 
not enough. These good rules have been circumvented repeatedly in the 
past, so we know that rules to enforce fiscal discipline can be ignored 
unless there is a broad-based sense of urgency that we must address our 
budgetary crisis. Until we change our thinking and recognize we must 
live within our means, we will continue to face a mounting deficit 
despite the rules.

[[Page 13244]]

  In the absence of an enforceable budget document this year, one key 
step for enforcing budgetary discipline in Congress would be to adhere 
to the aggregate discretionary spending total of $759 billion proposed 
in the President's budget and in the budget resolution that passed in 
the House of Representatives.
  Many of my colleagues say it is not possible to limit spending to 
that amount. I disagree, and I applaud my colleagues in the House who 
understand that we have to make those hard choices. Drawing a line in 
the sand at $759 billion is a way to do that.
  A few weeks ago my friend from Kentucky, Senator Bunning, and I sent 
a letter to the President with 34 signatures from Members of the Senate 
pledging to back him up if he vetoes excessive spending bills. I hope 
the President will exercise his veto authority for any bills that would 
likely increase spending beyond $759 billion.
  But the President has to understand that if he vetoes any spending 
over $759 billion, we cannot hold to that figure unless we shift money 
from the defense budget.
  What I am suggesting is that we shift some of the money from the 
defense budget to the domestic side, rethink some of the large 
increases in domestic spending that are in the 2003 budget, and spread 
that money around to meet our other domestic needs. That means taking 
on things such as NIH, that we all love. That has almost increased 50 
percent during the last several years.
  The President knows, as a former State Governor, that when you have a 
financial problem, what you do is reconsider your spending plans. If 
you have some peaks in spending, you have to reduce those so you can 
make more money available to stay within your budget. This 
administration has to understand if they receive every dime they want 
for defense spending and do not do anything about the peaks they have 
on the domestic side of the budget, we are going to have a catastrophe 
at the end of this year. They will get their money for defense, the 
domestic money will be forthcoming, and we will go far beyond the $759 
billion.
  We will do the same thing that happened in the 1980s when I was mayor 
of the city of Cleveland and watched what was happening here in 
Washington. The President got his defense money, others got their 
domestic spending, and this terrible debt that we have, the $6 trillion 
debt we are paying for today is a result of that fiscal 
irresponsibility. We have to make sure it doesn't happen again.
  As I said, these are the kinds of hard choices I had to make as a 
mayor and Governor. I did not have the option of just borrowing the 
money from our pension funds. I could not do that. If I told the people 
of Ohio, for example, when I was Governor, I was going to use the 
Public Employees Retirement Funds to run the State of Ohio, they would 
have run me out of office. But here in the Federal government it 
apparently is OK for Congress to use the Social Security money. It is 
unbelievable to me. We should be doing what cities are doing in this 
country today, what States are doing in this country today, and what 
families are doing. There are a lot of families in this country today 
who are reallocating their resources because the money is just not 
coming in. They are changing their priorities, and we should do the 
same thing. We are no better than America's families.
  If people around here could not borrow the money or use pension 
funds, I can tell you things would be different. That is why we ought 
to have a balanced budget amendment, so we have the same kind of fiscal 
restraint we had as Governors and mayors and county officials.
  This year is an anomaly, however, and I hope not to see it repeated. 
I hope that next year we will have in place an invigorated budget 
process that helps Congress resist its worst urges and control spending 
in a responsible way.
  Yesterday, Federal Reserve Chairman Alan Greenspan said:

       . . . that the underlying disciplinary mechanisms that form 
     the framework for Federal budget decisions over most of the 
     past 15 years have eroded. The administration and Congress 
     can make a valuable contribution to the prospects for the 
     growth of the economy by taking measures to restore this 
     discipline and return the Federal budget over time to a 
     posture that is supportive of long-term economic growth.

  If we do not get things under control, we are not going to have the 
economic growth necessary to take care of all our needs. That is why I 
have been developing a budget process reform bill with Senator 
Feingold. This bill will extend important aspects of the existing 
budget process, such as the spending caps and PAYGO.
  In addition, the bill contains several provisions aimed at providing 
more information on the true state of the budget so people understand 
what is going on around here. It is not hocus-pocus.
  The bill requires accrual accounting for Federal insurance programs. 
It requires CBO and the Joint Tax Committee to report how legislation 
changes interest costs. It requires the GAO to issue an annual report 
on the magnitude of liabilities facing the Federal Government. And it 
convenes another budget concepts commission, which last met in 1967, to 
assess whether the fundamental measures for the Federal budget are the 
right ones.
  With some tough new guidelines to rework the budget process, a 
willingness to accept the fact that future expenses are as real and as 
important as today's, and the guts to make the tough choices necessary 
to prioritize our spending, we might just have a shot at achieving 
sound fiscal health.
  Today, the Federal budget deficits are not as big as those we faced 
in the 1980s compared to the economy as a whole. But we are headed 
quickly in that direction. Given the rampant spending proclivities of 
Congress, it will not be long before our situation becomes just as bad 
as it was in the 1980s. I implore my colleagues to understand that we 
are on the edge of an abyss. We must stop before we commit fiscal 
suicide.
  A lot of people will say that the 1980s were pretty great, but it is 
also part of the reason, as I mentioned, that we have the enormous debt 
we have today. I remind my colleagues that we spend 11 percent of the 
annual Federal budget to pay for our fiscal irresponsibility of the 
past; i.e., we were not willing to either pay for or do without things. 
We borrowed the money, used the Social Security surplus, and that is 
why we have the debt we have today.
  We are now engaged in the war against terrorism at home and abroad, 
and we have some very pressing domestic needs. We have to understand 
that we cannot get the job done by practicing business as usual. We 
have to understand that. We just cannot do that anymore.
  The decisions we make this year are going to have enormous impact on 
the United States of America, our ability to maintain a competitive 
position in the world, and on the quality of life of our children and 
grandchildren. Our country and their future are in our hands.
  Let history record that we had the courage to prioritize our Nation's 
needs within the framework of fiscal responsibility--to make tough 
choices and exercise tough love today, for our children's and 
grandchildren's tomorrows.
  I yield the floor. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. REID. 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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