[Congressional Record (Bound Edition), Volume 148 (2002), Part 3]
[House]
[Pages 3732-3738]
[From the U.S. Government Publishing Office, www.gpo.gov]




                               THE BUDGET

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 3, 2001, the gentleman from Florida (Mr. Davis) is recognized 
for 60 minutes as the designee of the minority leader.
  Mr. DAVIS of Florida. Madam Speaker, tonight several of us are 
gathered to talk about the budget resolution we passed today, how we 
got to where we are, and where we need to go in order to protect our 
Nation's priorities.
  I will start by yielding to the gentleman from Wisconsin (Mr. Kind), 
as soon as he is set up; but we also have joining us tonight the 
gentleman from South Carolina (Mr. Spratt), the ranking Democrat on the 
Committee on the Budget, to talk both about how we got to where we are, 
exactly what we believe the facts to be, because at a minimum the 
American public deserves to at least have the facts before we debate 
our different opinions about how we achieve the Nation's priorities; 
and then to talk a little bit at the conclusion about some of the 
solutions we have proposed that were rejected.
  These solutions were not even allowed to be debated today on the 
floor of the House of Representatives. But we are confident they will 
be brought up in the Senate and, hopefully, will be part of a 
bipartisan solution, because we cannot achieve a solution in this body, 
working with the President and the Senate, unless it is truly 
bipartisan.
  So at this time I yield to the gentleman from Wisconsin (Mr. Kind).
  Mr. KIND. Madam Speaker, I thank my colleague for yielding to me, and 
I want to thank him for his leadership on the Committee on the Budget. 
He has been actively involved in trying to shape bipartisan budget 
agreements, and his knowledge and insight on the subject is invaluable 
to the institution, and his leadership is appreciated; and I thank him 
for all his hard work.
  Today, anyone tuning into the deliberations on the House floor 
probably witnessed one of the most important debates we could have in 
this session of Congress. It sets the terms of the budget for the rest 
of the year. And not just for this year, but for many years to come. 
The budget resolution, although nonbinding, establishes the parameters 
of where spending is going to occur and how we are going to pay for 
these budget priorities.
  That is why the debate we had, I felt, was very important and very 
constructive, because it not only affects the Nation in the coming 
fiscal year, but it

[[Page 3733]]

will affect our seniors who are currently in the Social Security and 
Medicare programs, the baby boomers, 77 million of whom are rapidly 
approaching that retirement age in just a few short years and will 
start entering some of these very important programs, and also the 
younger generation, our children and grandchildren, who will be asked 
to clean up, so to speak, the various mistakes that I feel we are 
making as a Nation and as a body in the budgets and the economic 
policies that are then pursued over the next couple of years.

                              {time}  2045

  Unfortunately, the budget resolution that was before us today was a 
budget resolution that only Enron could love. It was full of smoke and 
mirrors, gimmicks, sleight of hand, and deceit, not in the parameters 
of the budget resolution, but in how we were going to pay for it and 
what was going to be sacrificed in the course of the coming year and 
years based on the decisions that we will be making in the months to 
come.
  Even though we have been debating 10-year budget plans with 10-year 
forecasts, the majority party decided to go with the 5-year. Perhaps 
they realized with the $2 trillion tax cut passed last year the effect 
of the explosion of tax cuts in the second 5 years of this decade and 
the tremendous impact it is going to have in creating annual structural 
deficits again.
  They also used budget calculations from the OMB within the Bush 
administration, rather than the established CBO numbers that we have 
reached bipartisan agreement in using before in scoring all pieces of 
legislation, not just budget resolutions, but for obvious reasons, 
because the OMB numbers coming out of the administration are much more 
rosy and optimistic than what the CBO numbers show. The Director of the 
CBO is appointed by the majority party. Why they would reject their CBO 
numbers can only be explained from the fact that the numbers are based 
on more realistic economic growth scenarios and the impact of the 
policy decisions contained in the budget resolution.
  Interesting enough, it was in 1995 when the Republicans came into the 
majority for the first time in a while that they shut the country down 
by demanding that the Clinton administration use Congressional Budget 
Office numbers rather than their own OMB numbers. A few years later, 
they flip-flopped on that issue out of political expedience. Medicare 
spending in the next decade, they are underestimating the true impact 
of Medicare costs.
  Yogi Berra was fond of saying this is deja vu all over again. The 
budget resolution that we just debated is really a throwback to the 
economic policies and the budgets that were passed back in the 1980s 
and the first part of the 1990s. My constituents are surprised to learn 
when I tell them that the $7.5 trillion national debt that we now hold 
as a Nation, that 86 percent of that national debt was accumulated 
during the 1980s and early 1990s. So this large debt that we have 
outstanding already is a relatively recent phenomenon attributed to the 
policies that were pursued in the 1980s and the first part of the 1990s 
which led the country down the road of annual structural deficits, and 
using the money that is contained in the Social Security and Medicare 
trust fund for other measures.
  Unfortunately, the budget that passed today, even after 1 year when 
virtually every Member of the House of Representatives is on record as 
saying we will not touch those trust fund monies, in fact, dips into 
those trust funds for other government expenditures.
  Just to remind Members who voted for that budget resolution today 
what they said as recently as last year in regards to the sanctity of 
the trust fund, which I happen to agree with, and as a member of the 
New Democratic Coalition, we have been working hard to establish fiscal 
responsibility and keeping hands off these trust funds, realizing this 
demographic retirement boom is around the corner.
  Last June the gentleman from Illinois (Mr. Hastert) was on the floor 
stating, ``I was very pleased today that the House passed the Social 
Security and Medicare Safe Deposit Box Act. This important legislation 
will protect every penny of the Social Security and Medicare surpluses. 
American workers deserve to know that these important programs will be 
there for them when they retire.''
  The budget resolution passed by the Speaker and his party pillages 
and raids the lockbox proposal that passed last year.
  House majority whip, the gentleman from Texas (Mr. DeLay), again 
during last year's debate, ``Trust must be put back into the Social 
Security Trust Fund. The Republican lockbox legislation locks away the 
entire Social Security surplus and prevents the funds from being spent 
on other government programs.''
  House majority leader, the gentleman from Texas (Mr. Armey), during 
last year's debate, ``I think it is very important for us to remember 
that the first thing this Congress did was to continue to keep a 
firewall between our Social Security and our Medicare Trust Funds and 
the rest of the American budget so no dime's worth of Social Security 
or Medicare money will be spent on anything other than Social Security 
and Medicare.''
  Here we are today dipping heavily into those trust funds.
  Finally, the House Committee on the Budget chairman, the gentleman 
from Iowa (Mr. Nussle), again last year, ``This Congress will protect 
100 percent of the Social Security and Medicare trust funds, period. No 
speculation, no supposition, no projections.''
  That is why many of us during the course of the debate were raising 
alarms in regard to the path which we are embarking upon with the 
budget resolution. But we were reminded by the gentleman from South 
Carolina (Mr. Spratt), the ranking member of the Committee on the 
Budget, that we also need to maintain some fiscal discipline and not 
think about the next election or the next election cycle 3 years from 
now, but start thinking about the next generation. Our own ranking 
member, the gentleman from South Carolina (Mr. Spratt), is quoted as 
saying during the context of last year's budget debate that set us on 
the course of these annual structure deficits, ``Today I have one 
priority, one overriding objective, and it is simply this: To make sure 
that we do not backslide into the hole we just dug ourselves out of. 
That is my overriding objective, and that is why I have a problem with 
the Republican resolution, because it leaves so little room for 
error.''
  Madam Speaker, 1 year later we have seen how wrong that budget 
resolution was. There was no built in flexibility for a September 11, 
for an economic slowdown, and some of these other national emergencies 
that we must deal with, and hopefully deal with in the short term and 
get back on fiscal footing again.
  What is different today that did not exist in the 1980s and 1990s is 
we no longer have the luxury of time. We could run some structural 
deficits during the 1980s and 1990s contributing to the $5.7 trillion 
in national debt because we had the rest of the 1990s to recover from 
that. Through the budgets that were passed in 1993 and 1997, it put us 
back onto a road of fiscal sanity. We were actually able to run budget 
surpluses in the last 4 years, wall off the Social Security and 
Medicare trust fund, use the surplus to download our national debt and 
put us on a firmer financial position to deal with the impending baby 
boom generation's retirement. We do not have that luxury today.
  If we continued down that road that existed in the 1980s and first 
part of the 1990s, we will not have time to recover. This is not a 
debate about the baby boom retirement, this is a debate fundamentally 
about the future of my two little boys, Johnny and Matthew, who are 5 
and 3. It is their generation that is going to be asked to clean up the 
fiscal mess that is being created in today's Congress, by postponing 
these long-term decisions, by dipping into these trust funds, placing 
IOUs that will have to be paid back virtually simultaneously when the 
IOUs with the

[[Page 3734]]

rest of the national debt have to be paid back.
  Madam Speaker, I do not think there is any fiscal possibility or way 
for them to do it when it is time for them to assume the reins of 
leadership in this country, for their generation to deal with the aging 
population, and this massive population that will be existing there 
drawing from the Social Security and Medicare programs for many years 
to come. This is really a generational argument that we are having.
  Whether we are going to be thinking long term, thinking about the 
future of our children and grandchildren, helping them to be able to 
assume the leadership and make the policy decisions that they will be 
asked to make in the years to come, rather than continuing this black 
hole of fiscal irresponsibility and adding to their obligations and 
their burdens when they reach the age of responsibility.
  Those are just a couple of issues that I wanted to raise here tonight 
with my colleagues. I think they are important for us to emphasize and 
talk about. I think it is important for the American people to tune in 
for this debate and weigh in to this debate. This is not about whether 
Democrats support the war against terrorism. We are united on that 
front. This is about how we can still do that and maintain fiscal 
discipline and the promises for our aging population, but also the 
promises we should be making to our children and to future generations.
  On that front we are failing them miserably unless we can engage the 
administration on a budget summit which has been proposed by the 
leadership of our party, getting the President to the table in order to 
negotiate a bipartisan agreement of how we can turn this down and get 
back onto the road to fiscal solvency, walling off the trust fund 
monies, and downloading the national debt, because we still have time 
before this massive retirement boom begins to hit our country, which is 
the greatest fiscal challenge which the country will face for many 
years to come.
  Mr. DAVIS of Florida. Madam Speaker, I yield to the gentleman from 
Texas (Mr. Turner), a leader of the Blue Dogs, a paragon of fiscal 
responsibility among Democrats and Republicans, and a leader on budget 
issues since he arrived in Congress in 1997.
  Mr. TURNER. Madam Speaker, I thank the gentleman for yielding. It is 
a pleasure to join my colleagues tonight on the House floor to talk 
about the debate that has been ongoing all day in this House regarding 
the budget resolution for the upcoming fiscal year.
  For many of us it was a very difficult and disappointing day in this 
House, a day when 435 Members debated the future budget of our Nation, 
and by a margin of just 6 votes chose to abandon fiscal discipline to 
raid the Social Security trust fund and to cease the efforts that we 
have made for the last 4 years to balance the budget and pay down our 
debt.
  The choice that we had before us on the floor today was very clear. 
We can go back to deficit spending, raid Social Security, increase our 
debt; or we could have chosen to continue down the path of fiscal 
responsibility, balancing our budget, saving Social Security, paying 
down debt.
  The Republicans on the floor of this House today suggested that we 
are in war and that their budget was justified because we are in war. 
All of us in this House, every Member agrees completely that we must 
dedicate whatever funds are necessary to win the war against terrorism. 
No dollar should be spared in this effort.
  But is it right to ask the young men and women in uniform who are 
fighting this war to also pay for it? That is the effect of what 
happened here on this floor today. Does the majority party believe that 
it is right to commit to spend whatever is necessary to fund this war 
without an equal commitment to pay for it? Does the majority party in 
this House really believe that calling on young men and women in 
uniform who are today, tonight, sacrificing for our Nation, risking 
their very lives, to also be the ones that will have to pay the debts 
that are created by this budget?

                              {time}  2100

  Does the majority party in this House really believe it is right to 
spend whatever is necessary to win the war on terrorism while at the 
same time telling those 18- and 19- and 20-year-old soldiers that they 
will be called on to pay for this war when they are in their prime 
income-earning years? In my humble judgment, that is not the true 
spirit of American patriotism.
  Deficit spending, borrowing money from the Social Security trust fund 
to fight this war is not only fiscally irresponsible but it is morally 
reprehensible. It is an injustice to pass the cost of today's war on to 
the very generation that is tonight fighting this war. What father in 
any American family would choose to leave an inheritance to his 
children consisting of a pile of debts, a pile of bills? That is the 
choice the majority party made in this House today.
  After 3 years of budget surpluses achieved by courageous votes of 
Members of previous Congresses, the majority today refused to face up 
to the fiscal realities of today. Just 1 year ago, the Congressional 
Budget Office projected that we would have 10 years of surpluses. This 
year, the Congressional Budget Office projected that we would show 
deficits for the next 10 years. At your house or mine, in your business 
or mine, that would prompt us to change course. But not in this House 
today. Instead, this House chose to go down the path of fiscal 
irresponsibility. Yes, it was a sad day for the American people in this 
House and on this floor this afternoon, because the majority decided it 
was okay to raid the Social Security trust fund to fund their budget.
  On at least four occasions on the floor of this House since 1999, 
this body has voted overwhelmingly to protect the Social Security trust 
fund, to put it in what we call the lockbox, pledging never again to 
spend Social Security funds, the retirement fund of every American, to 
cover debts incurred in the rest of the budget. If any corporate 
officer in America raided the employees' retirement fund, they would be 
guilty of a felony and they would be locked up for a very long time. 
But here in Washington, after promising never to do it again, the 
Republican leadership has presented a budget that, without apology and 
without remedy, raids the Social Security trust fund and returns us to 
deficit spending and fiscal irresponsibility. This was the wrong choice 
for the future of America. I am pleased to be on this floor tonight 
with my colleagues who believe in fiscal responsibility, to stand up 
for balancing the budget, paying down the debt and protecting Social 
Security.
  Mr. KIND. If the gentleman will yield, I just picked up on a very 
important issue that the gentleman raised this evening and, that is, 
who is ultimately paying for the increase in spending or for the tax 
relief that just passed last year. The gentleman talks about the young 
men and women who are serving our country now in harm's way overseas 
and we are blessed that we have such gifted and talented and dedicated 
individuals looking out after our liberties and our freedoms across the 
globe in this battle against terrorism. But someone ultimately pays. 
Unfortunately, while at the same time the majority party delivered tax 
relief for the most wealthy last year, they are asking to pay for that 
along with the spending increases in defense and in homeland security 
through FICA taxes, which we all know is the most regressive form of 
tax in the Nation, because it is working families, it is low-income 
working families who have to pay 100 percent of their obligation in 
FICA taxes to the treasury every year. Those FICA taxes are what goes 
into the Social Security and Medicare trust funds. So by raiding those 
trust funds, we are basically saying that we are going to be delivering 
tax relief to the Bill Gates and the Warren Buffets of this country 
while at the same time we are going to continue collecting these FICA 
taxes from hard-working families who, by the way, are the ones offering 
their young sons and daughters to fight this battle overseas and they 
are also being asked to shoulder a disproportionate burden, financial 
burden, in

[[Page 3735]]

paying for all this stuff. I could not think of anything more 
inequitable, anything more unfair that we can do to these working 
families today than the type of economic policies that have been 
pursued. I thought that that was an important point that the gentleman 
raised this evening.
  Mr. TURNER. The gentleman from Wisconsin is certainly accurate in his 
assessment, and I think what it comes down to is that in this Nation, 
at this time of war, all Americans need to recognize that it is not 
just those young men and women in uniform that are sacrificing for our 
Nation but all of us must be willing to do so, because our failure to 
do so does mean, as the gentleman suggests, that the very generation 
that is fighting this war will later be the generation that is called 
upon to pay for it.
  Mr. DAVIS of Florida. Madam Speaker, I yield to the distinguished 
gentleman from North Carolina (Mr. Price), a senior member of the House 
Budget Committee.
  Mr. PRICE of North Carolina. I thank the gentleman for yielding and 
for taking out this special order tonight to let us continue the budget 
debate that has gone on today and that is of such importance to the 
future of the American people.
  Madam Speaker, it was only 10 months ago that we were hearing 
projections of $5.5 trillion worth of surpluses over the next 10 years 
in this country. What has happened since then is a fiscal reversal that 
I believe historians will tell us is unmatched in our history, where we 
have gone from a $5.5 trillion projected surplus to a projected surplus 
of essentially half a trillion dollars, and even that is probably an 
overestimate, because the budget numbers that our Republican friends 
are working with do not include lots of things that we know are 
probably going to have to be changed and that they are already 
advocating themselves. It is a sobering reality that we are dealing 
with. But instead of dealing with that reality and putting us on a path 
to improving our situation, the budget our Republican friends have put 
out here today and that the House has approved is, I am afraid, not 
only going to ratify the situation but actually deepen our difficulty.
  The Social Security surplus is estimated to be about $1.2 trillion 
over the next 6 years. That was a surplus that we had hoped to not 
spend on other things but instead to apply to buying down the national 
debt and therefore preparing ourselves to meet Social Security's 
obligation in the next decade. But now that Social Security surplus is 
going to be spent under this Republican budget. Over 86 percent of that 
surplus is going to be spent.
  This chart will illustrate the reality. Last year we were projecting 
a surplus in the non-Social Security portion of the budget of $100 
billion in the near term and then well up into several hundred billion 
dollars later in the decade. Now, a year later, the Bush budget, passed 
by this House today, put forward by the Republican leadership, now 
shows that there not only is no non-Social Security surplus but that we 
are actually in deficit in the non-Social Security portion of the 
budget, and that means we will be borrowing from Social Security in 
order to meet our obligations.
  Mr. DAVIS of Florida. Will the gentleman yield?
  Mr. PRICE of North Carolina. I will be happy to yield.
  Mr. DAVIS of Florida. It seems to me that it is important to 
understand how we got to where we are to avoid repeating history and 
going deeper into this hole. I know the Congressional Budget Office 
which is widely regarded as a nonpartisan, apolitical office analyzed 
what caused the reversal you have just referred to, how we went from 
surplus into deficit. Many people believe it is entirely based on the 
events of September 11 and the money that we understandably have spent 
and will continue to spend to deal with security at home and abroad.
  But could the gentleman elaborate a little bit on what the 
Congressional Budget Office has explained is the cause of this sudden 
change from surplus to deficit?
  Mr. PRICE of North Carolina. The Congressional Budget Office 
estimates that actually less than 10 percent of this reversal, less 
than 10 percent of the disappeared surplus, is related to the war on 
terrorism. Forty-three percent of it has to do with the President's tax 
cut, which our Republican friends shouted through last year with 
assurances that there was plenty of slack, plenty of running room, that 
we could do this safely and have a trillion left over. But 43 percent 
of that fiscal reversal has to do with that tax cut and less than 10 
percent with the war on terrorism.
  This chart will illustrate the situation. All legislation, including 
the war on terrorism, accounts for 17 percent and the war on terrorism 
is about half of that. These technical changes and economic changes 
have to do with the economic downturn and some of the additional costs 
in Medicare and Medicaid. It is not all any one factor. But the 
predominant factor is indeed last year's tax cut.
  Mr. DAVIS of Florida. If the gentleman will further yield, as I 
recall there was a Democratic tax cut proposal last year that differed 
in the size from what was ultimately passed as the Republican tax cut 
and one of the reasons for that was the Democratic tax proposal also 
included a plan to more aggressively pay down the massive Federal debt 
and also built in a cushion to be more conservative, is that correct?
  Mr. PRICE of North Carolina. Absolutely. The gentleman is correct. A 
year ago we were debating Republican and Democratic budget 
alternatives. The Republican alternative left no margin for error. It 
basically said let us take the surplus and spend it on a tax cut and 
let us risk going into the Social Security surplus. The Democratic plan 
was far more balanced. We also proposed a tax cut, a tax cut that was 
aimed at estate tax relief, aimed at putting money in families' pockets 
who most needed it. That was a proposal that I think could have gotten 
widespread support. But our Republican friends insisted on going way 
beyond that. We also had built in a disciplined, systematic program of 
debt reduction, of buying down the national debt. We also provided for 
some needed investments in defense, in prescription drug coverage under 
Medicare, and other pressing national priorities. Most of the American 
people, I think, agreed that this was a more balanced approach and one 
that left a greater margin for error in case the economy did not 
perform as we hoped. Now we know in reprospect that our plan would have 
been far superior and would have avoided this fiscal turnaround that we 
have now seen.
  Mr. KIND. The gentleman has talked about debt reduction, our plan for 
debt reduction. Obviously during the course of the debate today and 
also last year, the Republican majority talked about the merits of tax 
relief and how it could theoretically stimulate the economy, generate 
more revenues and encourage more growth. They truly believe that. I 
understand their argument. Could the gentleman explain to us a little 
bit about the merits of debt reduction and the fiscal reasons for that 
and the type of economic benefit that that could bring for the Nation.
  Mr. PRICE of North Carolina. I thank the gentleman. That is an 
extremely important point. It is very disappointing to realize that now 
for 3 years we have been actually buying down the national debt. We 
have reduced the publicly held debt by something like $400 billion. 
That has strengthened our country, strengthened our economy, and made 
us pay less interest each year on that debt service. Why do we want to 
reduce the debt? Because it is a huge drag on this economy to owe $3.5 
trillion in externally held debt. The debt service alone on that burden 
is $200 billion a year. Any one of our constituents could think of more 
productive public and private investments. That is simply money down 
the rathole; $200 billion a year in interest payments. I think the 
greatest problem is the burden this represents for future generations, 
particularly at precisely the time when the baby boomers are going to 
be retiring. These surpluses we are running in Social Security are not 
going to last

[[Page 3736]]

forever. Baby boomers are going to start retiring in about 6 or 8 more 
years and then around 2015 or 2016, all of a sudden we are going to be 
putting out more money in Social Security benefits than we are taking 
in in Social Security revenues. What do we have to do at that point? We 
have to start cashing out those bonds that the Social Security trust 
fund has been holding all these years. The best single way we could 
prepare for that obligation is to reduce that publicly held debt, so 
that we are no longer laboring under that burden, no longer putting out 
$200 billion worth of interest each year. But I am afraid the situation 
has precisely been reversed and this budget today that we have been 
discussing foresees and, in fact, facilitates a huge turnaround in our 
debt situation.
  Mr. KIND. If the gentleman will yield further, I am always interested 
in listening to Chairman Greenspan when he testifies before our various 
committees, in the Committee on the Budget, for instance. He is always 
explaining to us such inherent positive features of debt reduction, not 
the least of which is the impact on long-term interest rates which can 
be a hidden tax relief. By keeping debt reduction in check and reducing 
it will have the beneficial effect of reducing long-term interest 
rates, making it cheaper for businesses to borrow money, to invest in 
capital, to create jobs and to hire more people working, making it 
cheaper for people to afford car payments and home payments and student 
loan payments and credit card payments. To them, at the Federal 
Reserve, whether it is Chairman Greenspan, Chairman Volcker before him, 
the real key to a lot of economic stimulation and growth in the country 
is what happens with long-term rates.

                              {time}  2115

  Through increase in debt and deficits, we have raised those long-term 
rates because of the reaction from the bond market and financial 
markets. By maintaining fiscal discipline and reducing our debt burden, 
it enables those financial markets to reduce the long-term interest 
rate burden that all working families and all businesses have to 
confront with.
  Mr. PRICE of North Carolina. I think the gentleman is absolutely 
right. Even before the tragic events of September 11, it was clear that 
the fiscal policies of our Republican friends and of the Bush 
Administration were being read by the markets in ways that simply were 
keeping those long-term interest rates up and were showing that the 
fiscal projections did not have much credibility. Of course, with this 
budget we passed today, that problem has been compounded.
  A year ago we were looking at essentially paying off the publicly 
held debt by around 2008 and being in a far stronger position in this 
country to do what we need to do, most particularly to meet our 
obligation to Medicare and to Social Security. Now, unfortunately, we 
are looking at $3 trillion debt levels, an accumulation of $4 trillion 
more in debt, for as far as the eye can see. This is an enormous fiscal 
turn around, and if you doubt it has some effect on our yearly bottom 
line, this chart should illuminate that impact.
  Mr. DAVIS of Florida. Madam Speaker, I would like to further 
elaborate that just a couple of years ago that interest payment figure 
the gentleman cited was closer to $225 billion, and, just to put that 
in context for the folks at home, that was almost as much as we spent 
on Medicare for the entire country for that year.
  The good news was we were starting to reduce that interest payment, 
but now, as I think your chart points out, we are going to actually 
start borrowing more money again, driving up that interest payment, 
wasting money and potentially jeopardizing these historically low 
interest rates that consumers have been enjoying, as the gentleman from 
Wisconsin (Mr. Kind) has said.
  Mr. PRICE of North Carolina. The gentleman from Wisconsin (Mr. Kind) 
is absolutely right about the threat to the long-term interest 
situation, and the gentleman from Florida is right about the 
implication of this kind of debt service, burdening us down each year.
  I think the year the gentleman is referring to, the interest payments 
were actually more than Medicare. As I recall, interest payments were 
the third largest item in the whole Federal budget, surpassed only by 
Social Security and by the defense budget.
  Mr. SPRATT. If the gentleman will yield, last year, as you well know, 
we were literally having a debate about how fast we could pay off the 
Treasury debt held by the public, which is a little less than $3.5 
trillion. Republicans were trying to tell us we were providing too 
much, more than could actually be purchased and bought back.
  Now what we see from CBO, this is the Congressional Budget Office's 
analysis of the President's budget dated March 6, the debt held by the 
public not only has not gone down, it is actually going up. In 2001, at 
year's end, the total debt outstanding owed to the public was $3.3 
trillion. In 2006, 5 years from then, the debt held by the public will 
be $3.6 trillion. It will actually go up $300 billion.
  Our Republican friends took to the well today and touted the fact 
that some $300 billion or $400 billion in national debt had been paid 
off. It was. It was paid off during the Clinton administration, as we 
got rid of the deficit and put the budget in surplus. But our objective 
last year was nothing less than to get that debt paid to a very, very 
low level, a negligible level, so when the baby-boomers retired 
Treasury would not be burdened with this external debt owed to the 
public and they could meet the obligations owed to the Social Security 
trust fund.
  Instead we see, looking at these numbers that CBO gave us just a week 
or two ago, in 2008, when the baby-boomers begin to retire, we will 
have outstanding debt owed to the public by the Treasury $3.479 
trillion, which is about $150 billion more than at the end of 2001. We 
will not have made any progress at all on the problem. That is such a 
radical reversal from where we were last year.
  Mr. PRICE of North Carolina. Madam Speaker, I thank the gentleman. In 
the meantime, of course, we will have sunk hundreds of billions of 
dollars into interest payments, which could have financed, for example, 
prescription drug coverage under Medicare about three times over, could 
have rebuilt our crumbling schools, shored up our infrastructure, could 
have done so many things for our country.
  Sometimes these numbers just seem beyond comprehension, but these 
national debt numbers are not just abstract numbers. They are a yearly 
drain on this country's resources which, unfortunately, this budget 
approved here today will only increase the problem.
  Mr. SPRATT. If I could go back to what we were discussing a minute 
ago, Chairman Greenspan, about 2 or 3 years ago when we first began to 
see daylight, we began to see the budget pull completely out of deficit 
and into surplus without counting the surplus in Social Security and 
Medicare, we were able to discern that on the horizon, Chairman 
Greenspan came to our Democratic Committee on the Budget caucus over in 
the Library of Congress and spoke to us behind closed doors, off the 
record.
  He said, look, the Fed can get short-term interest rates down, but 
only you, with fiscal policy, can really bring long-term rates down, 
and the way you do it is exactly the way what is unfolding right now. 
If you can convince the financial markets that you are going to retire 
$3.5 trillion of Treasury debt, then that will mean the Federal 
Government will not be in the markets crowding out private borrowers, 
driving up interest rates. Instead, for every dollar you pay off, it 
will be a dollar added to net national saving, and over time it will 
drive down interest rates, boost the economy and bring that long-term 
rate down.
  That in itself, if we could have accomplished it, would have been a 
long step towards ensuring the solvency of Social Security. That was 
why it was so critically important. This is not some obtuse debate of 
whether or not it is better to have less or more debt. It

[[Page 3737]]

is an absolutely essential element towards making Social Security 
solvent for the long run.
  Mr. PRICE of North Carolina. The gentleman is absolutely correct. We 
need to be systematically and in a disciplined way paying down that 
debt, and in these fortunate years where the Social Security trust fund 
is running a surplus, that is exactly the way that surplus should be 
applied; not for tax cuts, not for new spending, but for debt reduction 
and for the strengthening of the future of Social Security. That is the 
path we were on, that is the path we have been now knocked off of.
  We all know that we have to do some extraordinary things at this time 
of national crisis, and you will find no disagreement here today about 
that, about the need to prosecute this anti-terrorism offensive, about 
the need to shore up our homeland defenses. But the entire fiscal 
solvency of the country cannot be wrapped up in the anti-terrorism 
offensive. We need to do this and to do it well and to do it right, but 
we need not to do it at the expense of our country's long-term fiscal 
strength and fiscal solvency. And that is the debate I am afraid our 
Republican friends have failed today, as they have projected actually a 
5 year budget. They have gone from 10 to 5 year numbers to make it look 
better, but the fact is our long-term budget prospects are being 
sacrificed.
  Mr. DAVIS of Florida. If I could inquire further of the ranking 
Democrat on the Committee on the Budget, the biggest fear I have with 
what happened today is that we have failed to adopt a credible 
blueprint.
  The budget resolution is supposed to be our blueprint. For those of 
us elected to Congress because we extolled the virtues of the balanced 
budget and paying down the debt because it was the right thing to do 
for our children and grandchildren and contributed to lower interest 
rates and helped preserve Medicare and Social Security, we measure 
every act we take here, whether it is a tax cut or spending proposal, 
by how it affects our ability to have a balanced budget and pay down 
the debt.
  Having adopted a budget resolution today which I think clearly fails 
the test of being an honest yardstick as we go forward, I would say to 
the gentleman from South Carolina (Mr. Spratt), I am terribly concerned 
as we start to debate spending proposals and tax cut proposals over 
here, we are not going to know where we are in relation to whether it 
is driving us further into deficit and how we are going to get into it.
  Does the gentleman have that fear?
  Mr. SPRATT. I will show the gentleman the disparity between the 
budget on the floor today and the President's budget, and the reason we 
said this budget we are voting on today is not a real budget.
  When the President sent up his budget, he asked for $675 billion in 
additional tax cuts, on top of the $1.35 trillion cut last year; 
another $675 billion. Some of it is for things that are going to come 
up, extenders, that are expiring tax provisions that are very popular 
and we will all vote for them. The research and experimentation tax 
credit is a good example. When it expires we will renew it. This budget 
today provided only $28.8 billion, an allowance of just under $30 
billion, versus the President's request for $675 billion. What is the 
right number?
  One of the biggest issues of all is what happens to last year's tax 
cuts. Passed last June, by agreement with the Senators who voted for it 
that made up the majority, the amount of revenue reduction was limited 
to $1.35 trillion. To shoe horn that into the budget, it was phased in 
over time, and then in the year 2010 everything that was phased in 
would suddenly become a pumpkin, it would expire, we know that is not 
going to happen.
  Nevertheless, when we got this 5 year budget, they limited it to 5 
years because that precluded them from having to deal with the 
decision, what happens if you make this tax cut permanent? It has a 
huge effect on revenues and a backwash effect at the present time.
  CBO says the impact on revenues from making that permanent is an 
additional $659 billion, that much less revenue, $659 billion. Our 
Republican colleagues on the committee, when asked, said no, we have 
not made a decision about that. This budget makes no implication.
  The next day the Speaker said, absolutely, the repealer, sunsetting 
that tax bill, will be rescinded. It will not stand. Reporters put the 
same question to Ari Fleischer at the White House. He said 
unequivocally, it will be repealed.
  That is a $659 billion item. You should reduce your revenues in this 
budget by that amount and ought to have an honest budget. Not a single 
penny of that tax policy is reflected anywhere in this 5 year budget. 
That is why we said this is not a real budget. This is the tip of an 
iceberg. We are not dealing with reality here.
  Mr. PRICE of North Carolina. If I could inquire further of our 
ranking member, is there any provision in this budget for emergency 
spending?
  Mr. SPRATT. None at all, even though we know from historic experience 
it averages about $6 billion a year. Let me give credit to our 
chairman, the gentleman from Iowa (Mr. Nussle). Last year he wanted to 
baseline that amount of money. He wanted to take the historic average 
and put it in the budget every year so we would not have a supplemental 
that would add it in later. The appropriators and some others did not 
like that idea, and he ultimately lost and he simply dropped it this 
year. But you may as well get ready, it will be there. We will have to 
spend that amount of money. You will have to add it to the bottom line.
  Mr. PRICE of North Carolina. Is there any provision for the 
supplemental appropriations bill that we know will be before us in a 
few weeks?
  Mr. SPRATT. None at all.
  Mr. PRICE of North Carolina. Is there any provision for altering the 
Alternative Minimum Tax so millions of Americans don't bump up against 
that?
  Mr. SPRATT. We know that 1.7 million taxpayers last year had to deal 
with the AMT, the Alternative Minimum Tax. We know from the Treasury 
Department over the next 10 years that number will grow to 39 million 
taxpayers, mostly middle income Americans. The gentleman was here when 
that bill passed. I was here. It was not intended for middle income 
Americans. It was intended for upper bracket taxpayers.
  Consequently, when they find out that deductions and credits and 
preferences that we promised them in the Tax Code are not fully 
available because of this thing called the AMT, they are not going to 
like it. They will be numerous, rising to 39 million taxpayers.
  I am sure we will eventually relent and have to modify that and 
should modify the AMT. But every time we bring it up and say you have 
to factor this in to the future planning for revenues, sooner or later 
we have to do something about the AMT, it gets shoved forward, gets 
ignored.
  That is another element that was simply omitted in the consideration 
of this budget and a reason we said this is not a real budget. This is 
not everything that has to be captured and taken into account.
  Mr. PRICE of North Carolina. So as bad as these figures look, about 
the disappeared surplus from $5.5 trillion to $0.5 trillion, that is 
actually an optimistic view.
  Mr. SPRATT. It could very well be worse. There are several things to 
bear in mind: The surpluses come from a projected, estimated $5.6 
trillion. That includes Social Security, all the way to $0.6 trillion. 
From $5.6 trillion to $0.5 trillion; $661 billion if we implement the 
President's budget as he sent it up. That is his number. That is their 
estimate.
  However, the President assumes that Medicare will grow at a rate of 
growth that is $225 billion less than CBO assumes. The President 
assumes that revenues will be $110 billion higher than CBO assumes. The 
President assumes that discretionary spending can be held to about $200 
billion non-defense discretionary spending, held about 10 percent below 
the rate of inflation over the next 10 years.

                              {time}  2130

  That is probably doable, but it has not been done before, and it is 
doubtful.

[[Page 3738]]

  Add all those things together, and that .6 is gone, too. If they are 
wrong about those three assumptions, we wipe out what is left of any 
kind of surplus, which means we have fully consumed the Social Security 
surplus, because that is what it is, the Social Security.
  Mr. DAVIS of Florida. Madam Speaker, I think the gentleman from South 
Carolina (Mr. Spratt) has referred to probably one of the most 
devastating aspects of the budget resolution, and that is the Medicare 
feature.
  As the gentleman has mentioned, if we were to have used the true set 
of numbers that have been relied upon for years, roughly the amount of 
money available to spend on Medicare would be about $100 billion less 
than is projected today in the Republican budget resolution.
  Mr. SPRATT. Two hundred twenty-five billion dollars less. That is the 
difference between CBO and OMB. CBO says it will be $225 billion higher 
than OMB estimates. OMB is estimating a very low percentage rate of 
growth, 4.5 percent in the next couple of years, which is a dramatic 
departure with the last several years.
  Let us hope it happens, but I doubt that it will.
  Mr. DAVIS of Florida. Madam Speaker, I ask the gentleman, where does 
that leave us on two critical challenges we face: first, assuring there 
is a reasonable and fair rate of reimbursement to doctors and hospitals 
in rural areas and overcrowded other hospitals; and how do we begin to 
credibly fund a Medicare prescription drug benefit, given those 
numbers?
  Mr. SPRATT. If the gentleman will continue to yield, what the 
Republicans have done in this budget is set up a reserve account. In 
that reserve account, they have put $89 billion to take care of 
provider payment adjustments, hospitals, doctors, home health care.
  We have an agency called MEDPAC which advises Congress on the 
Medicare and Medicaid programs, and in particular, on reimbursement 
rates that are paid providers. They have recommended in all cases 
increases, and in some cases they have indicated that, for example, the 
physician reimbursement formula is flawed and needs to be adjusted 
upward because it has understated what they are entitled to.
  In any event, the total of their recommendations over 10 years comes 
to $174 billion. That is half the amount of money that the Republicans 
have put in this reserve fund over 10 years.
  That has to come out of the provision for Medicare prescription 
drugs, because what they have done is put in one pot the sum of money 
that will pay for Medicare prescription drugs and provider payment 
adjustments, and the provider payment adjustments could eat up half the 
amount of money and leave very little left over for Medicare 
prescription drugs.
  But then what happens if CBO is right and OMB is wrong? Then we have 
to take $225 billion from $150 billion and we only have the remainder, 
$125 billion to pay the providers, who are seeking $175 billion, and to 
pay for Medicare prescription drugs. It is obviously ludicrously 
inadequate.
  Yet, they touted the prescription drug program repeatedly here on the 
floor, without telling everybody who is going to be a prescription drug 
beneficiary, or hopes to be, they are going to be in competition for 
the providers for the little bit of money that is left in that account.
  Over 5 years, if CBO's Medicare estimate is right, there is less than 
$40 billion over 5 years, spread over 5 years, 40 million people, to 
pay for prescription drugs. We cannot do it.
  Mr. PRICE of North Carolina. Madam Speaker, I thank the gentleman 
from Florida (Mr. Davis) again for taking out these special orders and 
allowing us to explore these issues in more depth in a way that the 1-
minute sound bites on the House floor do not permit.
  It is a real service, and I am grateful for being able to participate 
in it.
  Mr. DAVIS of Florida. I would just like to close by saying we have 
attempted tonight to identify in what we believe to be a credible way 
the problems facing this Congress, Madam Speaker.
  Earlier today we had the debate on beginning to talk about the 
solutions. One of the solutions that were proposed by a number of us 
that we hope the Senate will take up on a bipartisan basis is a trigger 
which would force the Congress to confront the painful fact that we are 
going deeper into deficit spending, and that once we do manage to get 
control of this war on terrorism and we pull out of the recession, that 
the Congress would be forced to develop a 5-year plan to balance the 
budget, to begin to use an honest set of numbers so we can again begin 
to prepare for the Social Security and Medicare, for the retirement of 
the baby boomers, to credibly talk about how we fund a prescription 
drug benefit for Medicare, and to get back to paying down the debt, 
reducing our interest payments as a Federal Government, and 
contributing to lower interest rates for consumers at home.
  Madam Speaker, that concludes our presentation tonight.

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