[Congressional Record (Bound Edition), Volume 148 (2002), Part 12]
[Senate]
[Pages 17275-17277]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       THE BUDGET AND THE ECONOMY

  Mr. CONRAD. Madam President, appropriately, there has been a great 
deal of discussion over the past week about the fiscal status of the 
country, the condition of our budget, and our national economy. I would 
like to take a few minutes to respond to some of the false claims that 
have been made by the Bush administration and by some Members of the 
Senate over the last 10 days.
  First, I would like to respond to some of the remarks made by the 
President when he was at a fundraiser in Iowa on Monday. The President 
said the following there. He said:

       [W]e have a budget that focuses on setting priorities and 
     focuses on getting us back to a balanced budget. But there 
     has been no budget out of the United States Senate. They 
     haven't passed a budget. They have no plan to balance the 
     budget. . . . It's of concern, because if you have no budget, 
     it means there's no discipline. And if there's no discipline, 
     it's likely that the Senate will overspend.

  If there was ever a case of someone accusing another of their own 
shortcomings, this is it. My grandmother once told me: Sometimes what 
people say about others reveals more about themselves than it does of 
those who they seek to characterize.
  This is that circumstance. These comments by the President, I find 
deeply disturbing. It is unfortunate that the President continues to 
deny any responsibility for the Nation's dive back into deficits and 
for increasing debt.
  Instead, he desperately tries to blame others for the deficits that 
his own policies have created.
  Let's look at the President's first claim, that he and the House 
Republicans have a plan that ``focuses on getting us back to a balanced 
budget.'' No, they do not. That is not true. The President must know it 
is not true. They have no plan that gets us back into balance. In fact, 
the plan they have drives us deep into the deficit swamp. That is the 
truth.
  You will recall 1 year ago, the President told us, with great 
confidence, that we could expect $5.6 trillion of surpluses over the 
next decade. We warned, at the time, that that was a risky gamble, that 
one could not count on a 10-year forecast, that there was enormous risk 
associated with it.
  The President insisted not only that there was going to be $5.6 
trillion of surpluses over the next decade, but he and his 
administration told us privately that there is probably going to be 
much more money than that.
  We said: No, we think it is highly unlikely that we will see that 
level of surplus.
  And just 1 year later, what we find is, if the President's spending 
and tax policies over the next decade are adopted, instead of $5.6 
trillion of surpluses, we will see $400 billion of deficits. The 
President says it is the fault of the Democrats, that they are spending 
the money.
  Madam President, this will happen without a dime of spending by 
Democrats. These numbers only include the President's own proposals for 
spending and additional tax cuts. They lead us from a circumstance of 
last year being told we had nearly $6 trillion of surpluses to one in 
which we now see $400 billion of deficits, if his policies are adopted.
  In many ways, this is the best case scenario because it does not take 
into account that the President will be using trillions of dollars of 
Social Security money on top of this.
  This chart shows--I will put it in the Record; I know it is too small 
to read from afar--but one can see the red. The red are the deficits. 
If you don't count Social Security money, if you don't take Social 
Security money, as the President proposes, and use it for other things, 
we see red ink throughout the entire rest of the decade. In fact, over 
$2.7 trillion of money is being taken from Social Security to pay for 
other things under the President's budget plan. That is a recipe for 
fiscal disaster. And it is the President's plan, make no mistake about 
it.
  I ask unanimous consent the chart I just referred to be printed in 
the Record.
  There being no objection, the chart was ordered to be printed in the 
Record, as follows:

                                        CHANGES IN BASELINE SURPLUS AND DEFICIT TOTALS, JANUARY 2001-AUGUST 2002
                                                                [In billions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    2002       2003       2004       2005       2006       2007       2008       2009       2010       2011     2002-11
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total CBO surplus--January 2001        313        359        397        433        505        573        635        710        796        889      5,610
Total CBO surplus/deficit--              5          6         61        111        135        175        213        263        309        454      1,733
 March 2002....................
Total CBO surplus/deficit--           -157       -145       -111        -39         15         52         88        133        177        323        336
 August 2002\1\................
Total CBO surplus/deficit with        -157       -159       -138        -76        -44        -23         -2         36         70        108       -386
 President's proposed budget
 policies......................
Without Social Security........       -315       -329       -326       -282       -268       -265       -264       -245       -230       -211     -2,734
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\The CBO baseline projection assumes no change in current policies governing taxes or entitlement spending and that discretionary appropriations in FY
  2003 through FY 2011 will equal the level enacted for FY 2002 (including FY 2002 supplemental appropriations), adjusted for inflation.
 
Source: CBO estimates of January 2001, March 2002, and August 2002 baselines. SBC estimates of President's budget based on CBO baseline estimates and
  the President's proposed policies.

  Mr. CONRAD. The President, again, says the problem is spending. Let's 
look at what the nonpartisan Congressional Budget Office tells us is 
the reason for this disappearance of the surplus. Nearly $6 trillion of 
projected surplus from last year, gone. There is nothing left. If we 
adopt the President's budget and spending plan, there are no surpluses, 
only deficits, some $400 billion. And that is the good news because 
that assumes that the President takes every penny of Social Security 
surplus over the next decade. So the real deficits are much worse than 
the $400 billion that I have shown under the President's plan. The true 
deficits, not counting Social Security, not taking Social Security 
money to use it for other purposes, is not $400 billion; it is $2.7 
trillion.
  Where did all the money go? Here is what the Congressional Budget 
Office told us.
  Thirty-four percent of the disappearance of the surplus went to the 
tax cuts the President pushed through Congress that were passed last 
year, and that he signed into law.
  Twenty-nine percent is from overestimations of revenue by his 
administration; that is, outside of the tax cuts. So revenue is down 63 
percent, not counting lost revenue from the economic downturn; it 
accounts for 63 percent of the disappearance of the projected 
surpluses. Twenty-two percent of the disappearance is because of 
spending, spending on national defense and homeland security. That is 
where the increases have been. The President supported every penny of 
those increases in spending. That is where the money has gone. In 
addition, 15 percent

[[Page 17276]]

of the disappearance of the surplus is the result of the economic 
downturn. That is where the money has gone.
  For the President to assert it is Democrats who have been 
overspending is not supported by the facts. The facts are, the 
overwhelming reason for the disappearance of the surplus is the tax 
cuts the President proposed and pushed through Congress. The second 
biggest reason for the disappearance of the surplus is his 
administration's overestimates of revenue apart from the tax cuts. The 
third biggest reason is spending on defense and homeland security, 
every penny of which the President supported. And the smallest reason 
for the disappearance of the surplus is the economic downturn.
  The President, regrettably, is pointing fingers at everyone else but 
refusing to acknowledge his own responsibility for this dramatic turn 
in the fiscal condition of the country. The President says: It is the 
attack on the country and the economic slowdown.
  Those are two reasons, but, in fact, they are the smallest reasons 
for the disappearance of the surplus. The biggest reasons are the tax 
cut he pushed and his overestimations of revenue. Those are his 
responsibilities and his failures.
  Remarkably, the President's answer to all of this is to advocate more 
tax cuts. Let's dig the hole deeper. We already see an ocean of red ink 
over the next decade. We see under the President's plan the taking of 
over $2 trillion from Social Security to pay for his tax cuts and other 
things. And the President's answer is: Let's have more tax cuts, $400 
billion more in this decade for making the tax cuts passed last year 
permanent, and a cost in the next decade of $4 trillion.
  I hope people are listening. I hope people are thinking about the 
implications of this. We already face an ocean of red ink. And what the 
President is proposing is, let's get it bigger; let's have more red 
ink.
  The PRESIDING OFFICER. The Senator has used 10 minutes.
  Mr. CONRAD. I ask unanimous consent for an additional 10 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CONRAD. Madam President, if we adopt the President's proposal, 
this country will be digging a hole so deep that we will face 
enormously difficult choices in the future: massive cuts in benefits, 
massive tax increases, huge debt, unsustainable, all of them. But that 
is the direction the President has us headed in fiscal policy.
  I know people are distracted and thinking about war with Iraq and 
thinking about a war against terrorism. And those command our 
attention. But we must also pay attention to the fundamental financial 
strength of America. The President has us on a disastrous fiscal 
course, with deficits all the rest of this decade, the President is 
proposing making them much deeper in the next decade, right at the time 
the baby boomers retire.
  We must understand, we are in the sweet spot of the fiscal future of 
America. Right now the trust funds of Social Security and Medicare are 
throwing off huge surpluses. Yet under the President's plan, all that 
money, every dime of it over the next decade, is being taken and used 
for other purposes, used to fund the tax cuts, to pay for other 
priorities.
  What is going to happen when these baby boomers retire and they are 
eligible for Social Security and Medicare? This is not a matter of 
projections. The baby boomers have been born. They are alive today. 
They will retire, and they will be eligible for Social Security and 
Medicare. But they are going to find the cupboard is bare because the 
President has advocated and pushed through Congress a policy that uses 
all of the money.
  Let's now consider the President's second claim that the Senate has 
no budget plan. We reported out of the Senate Budget Committee back in 
March a 10-year plan that would have made available to the President 
all of the resources requested by him for defense and homeland 
security, but still we paid down as much as $500 billion more in debt 
than the President's budget. To say we have no plan is simply wrong. We 
have a plan, a very clear plan, a very detailed plan that also 
contained a circuitbreaker to put the Nation back on a path to balance 
without raiding the Social Security trust funds and to do it within 5 
years.
  I would like to do it this year but that is no longer possible. But 
it is critical we adopt a plan that does return fiscal responsibility. 
We have presented that plan. It has passed the Budget Committee. Sadly, 
our counterparts in the House, instead of adopting a 10-year budget 
plan, as is traditional, as the President proposed, that could have 
been sent to a conference with the Senate, the House of Representatives 
passed only a 5-year plan. Why? Because they wanted to hide the 
enormous cost in the second 5 years of the President's plan to make the 
tax cuts permanent and to add even more tax cuts.
  Further, the House used overly optimistic OMB numbers instead of the 
Congressional Budget Office projections of costs and revenues; again, 
misleading the American public as to our true financial condition.
  The House set spending for such priorities as education and law 
enforcement and highway construction at levels so low that the House 
Republican leadership can't even get their own Members to vote for the 
appropriations bills on the floor of the House of Representatives. They 
want to wait until after the election because they know they dare not 
go to the American people with proposals to do such things as the 
President proposed as cutting the highway program 27 percent or 
virtually eliminating the COPS Program that has put 100,000 police 
officers on the street. How wise is it to eliminate the COPS Program 
when we are subject to terrorist attacks?
  These factors have made it virtually impossible for the House and 
Senate to ever reach agreement on a budget resolution this year.
  In June, in the Senate, a group of us, on a bipartisan basis, offered 
a budget agreement for the next year containing the key elements of 
what the Budget Committee proposed, including the setting of realistic 
spending limits and renewing expiring budget enforcement mechanisms so 
we could maintain fiscal responsibility.
  What did the Bush administration do? They engaged in a furious 
lobbying effort against it--against setting a realistic cap on 
spending, against extending the budget enforcement procedures to help 
maintain fiscal discipline. It seems shocking now to hear the President 
say he is worried about deficits because he and his administration 
blocked the efforts to protect us against those very events.
  The fact is that we got 59 votes for that proposal on a bipartisan 
basis. We needed a supermajority, which is 60. Even though we had 59, 
we needed 60. So that spending cap wasn't put in place and we did not 
get the budget enforcement procedures extended.
  The bottom line is that we set a realistic and appropriate spending 
cap. The administration is opposing it in a desperate attempt to look 
fiscally conservative given the massive deficits that have returned on 
their watch. Yesterday, one of my colleagues came to the floor and 
complained that spending is too high and it is the reason for the 
return to deficits.
  The place where spending has increased is in defense and homeland 
security, every penny of which the President asked for, every penny of 
which passed here with huge, bipartisan majorities. Those measures that 
are still pending will pass with huge bipartisan majorities.
  While it is true that defense and homeland security spending has gone 
up, it is very important to put into context what has happened to 
overall Federal spending over the last 20 years. What one sees is 
overall Federal spending--going back to 1980, it was 22 percent of GDP. 
In the previous Bush administration, it was close to 22 percent of 
gross domestic product. It has come down to 18.4 percent. Federal 
spending has been coming down as a share of our national income.
  It is true we have now had a blip up. We have had that blip up 
because of the attack on America. Yes, we have increased defense 
spending; yes, we have

[[Page 17277]]

increased homeland security spending--at the request of the President 
of the United States. He was right to do so. Even with that, we see--
looking ahead--a decline in the share of national income coming to the 
Federal Government.
  Federal spending, while certainly a part of this calculation and a 
contributor to the increased deficits because of the increases for 
national defense and homeland security, is not the major reason for the 
return to deficits and the increasing debt. It is a reason, but it is a 
relatively small reason.
  The same can be said of discretionary spending, which is for all of 
the things that are not mandatory. Mandatory spending is Social 
Security, Medicare, farm program--that is mandatory spending. 
Discretionary spending is for things such as parks, roads, law 
enforcement, and defense. You can see that discretionary spending has 
come down quite sharply since 1981.
  Again, we see a blip up because of homeland security and national 
defense. It is also quite remarkable to see members of this 
administration complaining about the discretionary spending cap we 
proposed when they are coming out at the same time estimating that a 
war against Iraq could cost literally hundreds of billions of dollars.
  Just this Monday, we saw the President's chief economic aide say the 
cost of the war with Iraq may top $100 billion. More than that, Mr. 
Lindsey dismissed the economic consequences of such spending, saying, 
``It wouldn't have an appreciable effect on interest rates or add much 
to the Federal debt, which is already about $3.6 trillion.''
  I am from North Dakota. In North Dakota, $100 billion is still real 
money. That is big money. The President's Chief Economic Adviser--maybe 
it is part of the reason we are in such financial straits as we are, 
because this man doesn't understand the significance of $100 billion. 
He said it really makes no difference. On the other hand, they say $9 
billion more so that we don't cut the Federal highway program by 27 
percent, so we don't eliminate the COPS program, so we don't cut 
education--that $9 billion is a disaster, but $100 billion doesn't 
matter. That is a policy that does not add up.
  So where has the Bush fiscal policy left us? The fact is that the 
surplus is gone. The Federal debt has come roaring back. You will 
remember that last year the President promised us he would have maximum 
paydown of the Federal debt. Now we see that that is not true either. 
The debt held by the public in 2008, he told us last year, would be 
virtually eliminated. Now we see, instead of having virtually no debt, 
we are going to be stuck with $3.8 trillion of debt. That has serious 
consequences for the country.
  The President, who said he would have maximum paydown of the national 
debt, came and asked for a maximum increase in the debt limit. In fact, 
the only larger request for an increase in the debt limit came from his 
father when he was President. He asked for a $915 billion increase in 
the debt. This President asked for $750 billion. The consequences of 
this enormously increased debt--increased from what we were told last 
year--is that the interest costs to the Federal Government have 
tripled, from $620 billion, over the next 10 years, to $1.9 trillion. 
These policies have real consequences, and real effects, and real 
impacts on our national economy.
  Last year, the President said maximum paydown of the debt. Now what 
we see under his policy, instead of maximum paydown of debt, is that we 
will have maximum taking of money from the Social Security trust fund 
to pay for other things. In fact, the remarkable reality of what we 
confront is that the President, under his plan, will take every penny 
of the Social Security surplus over the next decade to pay for his tax 
cuts and other things. This is the time when we are on the brink of the 
retirement of the baby boom generation.
  This is what we face in the longer term. Right now, the trust funds 
of Social Security and Medicare are throwing off large surpluses. But 
that money is being taken under the President's plan to pay for other 
things, including his tax cut. And we know that, starting in the year 
2016, these trust funds go from cash positive to cash negative, and 
they do it in a very big way. We need to get ready for this reality. 
That is why we proposed less of a tax cut, more money to paying down 
debt, more money to secure the long-term solvency of Social Security. 
The President rejected that plan in a reckless way and has put us on a 
fiscal course that means more deficits, more debt, more economic 
insecurity, higher interest rates, lower economic growth, lower 
employment.
  It is critically important that there be a balance in what we do in 
Washington. It is not healthy to have only one side to a debate. That 
is what we have seen in the last week. It is time for our side to speak 
up, to stand up, and to fight back because much is at stake for our 
Nation.
  I thank the Chair and yield the floor.
  The PRESIDING OFFICER. The Senator from California.
  Mrs. FEINSTEIN. Madam President, I rise to address a forest issue, 
but since Senator Wyden and I have worked closely on this, I ask 
unanimous consent that his remarks directly follow mine.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. FEINSTEIN. I thank the Chair.

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