[Congressional Record (Bound Edition), Volume 149 (2003), Part 2]
[House]
[Pages 2749-2755]
[From the U.S. Government Publishing Office, www.gpo.gov]




                    THE STATUS OF THE FEDERAL BUDGET

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 2003, the gentleman from South Carolina (Mr. Spratt) is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. SPRATT. Mr. Speaker, I wanted to address a very grave matter that 
affects our country, and that is the status of our budget. It is hard 
to believe that just 2 years ago when we began the budget process as we 
do now this country looked forward to a surplus of $5.6 trillion. That 
was the projection of the Office of Management and Budget of the Bush 
administration in January of 2001. We have come a long, long way since 
January of 2002, since that fiscal year was concluded.
  In the last fiscal year of the first Bush administration, there was a 
deficit of $290 billion. That was the deficit that President Clinton 
found on the doorstep waiting for him when he came to the White House 
on January 20, 1993. On February 17 he sent us a budget that would deal 
with that deficit, and over the next 8 years every year, every year, 
the bottom line of the budget got better, better to the point that in 
1999 for the first time in 30 years, we balanced the budget.
  In the year 2000, we had a surplus of $236 billion. So from 1992 
until the year 2000, we took the budget from $290 billion in the red, 
in deficit, to $236 billion in surplus, a phenomenal record. President 
Bush the Second came to office, and we gave him an advantage that no 
President in recent times has ever enjoyed, a balanced budget, a budget 
that had a surplus the first year he was in office of 126, $127 
billion.
  Today, 2 years later, this is what has happened. That surplus 
cumulative over 10 years, the years 2002 through 2011, has declined 
from $5.644 trillion as projected by the Bush Office of Management and 
Budget to $2.122 trillion in the red, in deficit. From $5.6 trillion 
dollars in the black to $2.1 trillion in the red, that is a swing in 
the wrong direction of $7.2 trillion over a period of 2 years. We have 
never seen that at least since the Great Depression, such a dramatic 
fiscal reversal in our account.
  That is what we want to address to you tonight because as this next 
chart will show, we face some decisions in the next couple of months 
that will determine the fiscal fate of this country for years to come. 
This is where the Bush administration began 2 years ago. This was a 10-
year surplus, $5.6 trillion. They now say, and these are the numbers 
presented to us just last week by the Office of Management and Budget, 
that there was an overcalculation, a miscalculation due to the economy 
of $3.174 trillion so that the real surplus was really $2.463 trillion, 
$2.4 trillion instead of $5.6 trillion.
  That is only part of the bad news. The rest of it is that the Bush 
administration bet the budget on this blue-sky forecast and over the 
last 2 years has committed $2.6 trillion in enacting policies, two 
thirds of which went to tax cuts. We have more than spent the 
cumulative surplus during that period of time so that this year we 
start with a cumulative deficit of $129 billion.
  But the point to note here is that we are going to decide this year, 
in the next few months, whether we take that deficit, $129 billion in 
the red, a bad enough reversal since 2002, and add to it almost $2 
trillion so that we add to the national debt $2.1 trillion. If we do 
that, it will be because we have chosen to do that. We could possibly 
out of abundance of charity say to those who passed the budget 2 years 
ago they thought they had a $5.6 trillion surplus, we told them we 
thought they were overstating it, but we will acknowledge that maybe 
this was negligence, this was a mistake, this was a miscalculation. Now 
we have to say if they go forward knowing what they know using their 
own projection, they will be deliberately, willfully, wantonly, and 
intentionally adding $2.1 trillion to the national debt.
  Notice that this period of time is a critical period of time in our 
country's fiscal history because this is when the baby boomers, 77 
million of them now marching to their retirement, first begin to retire 
in 2008. In 2010, 2011 they begin to draw not only their Social 
Security but their Medicare. So this is a period of time when we should 
be husbanding our resources so we can meet our obligation to the baby 
boomers who will be retiring in huge numbers and will double in time 
the number on Social Security and Medicare. Instead, during that very 
period of time we are incurring, if we follow the budget proposals 
before us, mostly the tax cuts proposals that have been made, $2.122 
trillion in additional debt.
  A large part of that additional policy will go to tax cuts. This 
chart shows the Bush tax cut in 2001, $1.349 trillion in revenues 
committed to that tax cut. This shows what we did a couple of years ago 
when we had a first stimulus package to try to get us out of the 
recession that we felt ourselves slumping into. Now the Bush 
administration has come up with an additional tax cut. They want to 
exclude dividends from taxation. I can understand why that would be 
appealing to a lot of people, but the revenue cost to us of the latest 
Bush tax proposal is another $615 billion. Those tax cuts made in June 
of 2001 were not permanent. In order to shoehorn them into the budget, 
they

[[Page 2750]]

artificially terminated or truncated the taxes at the end of 2010.
  If we make them permanent, which the Bush administration is 
proposing, that adds another $692 billion. Then there is another 
problem we will not even get into tonight, but it is on the tax agenda. 
Democrats and Republicans, the Congress and the White House will soon 
have to face the problem of the alternative minimum tax. Pretty soon 
millions of Americans will be paying more in the alternative minimum 
tax than they pay under the regular taxation. If we add all of those 
together and add the debt service that we have to pay additionally 
because we have used these tax cuts to dispense with our revenues, we 
have got a tax agenda here of $4.4 trillion. And this is coming at a 
time when I said we have some critical obligations to meet, we are 
draining the revenues dry.

                              {time}  1945

  Let me just stop on this point and recognize my friend, the gentleman 
from Texas (Mr. Edwards).
  Before doing so, look at the next 5 years. These are numbers taken 
straight from the Bush budget, the Office of Management and Budget. 
Over the next 5 years, this year, 2004, 2005, 2006, 2007, 2008, they 
are proposing to spend a deficit of more than $400 billion in every one 
of those years.
  What is distressing is not necessarily the size of these deficits to 
start with. If we are, after all, in a slumping economy, you would 
expect to see a deficit then. But there is no abatement, no reduction. 
There is no diminution of this deficit in any of these years.
  These are the numbers you get if you back out Social Security. The 
total amount of deficits we will incur in the general fund of the 
budget if we follow this plan over the next 5 years, 2004 through 2008, 
is $2.14 trillion. As I said earlier, that is not the result of what we 
did previously; that is the result of decisions we are about to make 
now. This is where it will take us.
  Notice that they stop at the end of 5 years. Last year and in 2001 we 
had a budget that went out 10 years, because we had found from 
experience that fiscal discipline was served by projecting the 
consequences of your fiscal actions out as far as you could, and 10 
years was deemed to be a good projection period. But if you run this 
out 10 years, the situation only gets worse.
  Mr. Speaker, I now would like to yield to my friend, the gentleman 
from Texas (Mr. Edwards) to pick up here and talk about some of the 
consequences in this budget for programs that all Americans support.
  Mr. EDWARDS. Mr. Speaker, I want to thank the gentleman from South 
Carolina for leading the fight for fiscal responsibility in Congress.
  Mr. Speaker, just 2 years ago the Bush administration promised my 
then-3 and 5-year-old sons that by the time they graduated from high 
school, America would have no national debt. A lot can happen in 2 
years. Now, under the fiscal policies of this administration, my now-5 
and 7-year-old sons are told that before they finish elementary school 
this administration will add $1 trillion to $3 trillion in addition to 
the total $6 trillion national debt that we presently have.
  To average Americans, what does the national debt really mean? $6 
trillion, $5 trillion, what does it matter?
  Let me talk about the difference. It is said there is one tax in 
America that cannot be repealed. It is called the debt tax. It is the 
interest on the national debt. Last year alone, over $320 billion was 
paid in interest on the total national debt of America. That is $320 
billion that taxpayers have to be responsible for now and in the future 
just to pay the interest on the national debt.
  The fact is that not only does the debt tax hurt us by having to pay 
additional taxes to the Federal Government to pay interest on the debt, 
but every business is burdened with the debt tax. When you have a 
deficit, once the economy gets back on its feet, you are going to drive 
up interest rates. Every homeowner pays part of the debt tax because 
they have to pay higher interest on the mortgages on their homes. Every 
consumer that borrows and uses a credit card will have higher taxes in 
effect because of the Bush administration increase in the national 
debt.
  Now, once in awhile, Mr. Speaker, an idea comes along in Washington, 
D.C. that is so incredibly unfair that, frankly, it is hard to even 
believe anyone would propose it seriously. Let me talk about a specific 
provision of the most recent Bush budget.
  This week and in the weeks ahead there will be 12,500 brave men and 
women, Army soldiers from my district, from Fort Hood, that will be 
deploying for the Iraqi theater. Within weeks or months they could well 
be fighting to defend the interests of this country, perhaps even 
giving their lives for our country.
  I found it astounding that the same administration which has ordered 
these brave men and women, mothers and dads, to go off to potential 
combat in Iraq, has the gall to suggest that we should be cutting their 
children's education funds at the same time they are getting on the 
airplane to defend our country thousands of miles away. It is hard to 
believe that it is even true, but it is true.
  Look at the Bush budget. They are cutting the vital Impact Aid 
Military Education program at the very time they are asking our sons 
and daughters, mothers and dads, to go off and defend our country in 
the Middle East and Southwest Asia. In fact, the two school districts 
surrounding Fort Hood, the Coppers Cove and Killeen districts around 
Fort Hood in my district in central Texas, will lose under the Bush 
administration proposal $21 million in impact aid this year because of 
the proposed cuts in that program.
  What is compassionately conservative about that? What is fair about 
that? The truth is, nothing is compassionate about that; nothing is 
fair about that.
  Mr. Speaker, we ask our servicemen and women to make incredible 
sacrifices for our country, and it is immoral for us to be cutting 
their children's education funds even as they go to potentially fight 
for our country.
  I hope the American people will be as outraged about not only the 
largest deficit in the history of America proposed in this budget, but 
will be just as outraged by the unfairness to our servicemen and women 
all across America by cutting their children's education programs while 
they are going off to war.
  Mr. Speaker, there are many things we could talk about in this 
budget, but one of the things I would like to ask the distinguished 
ranking member about is, I have heard in recent days from Republican 
colleagues that the Bush administration tax cuts, both those already 
enacted and those proposed, really are not a significant part of the 
reason we now have this year proposed the largest deficit in the 
history of America.
  I would like to ask my colleague, the gentleman from South Carolina 
(Mr. Spratt), if that is true. Have these proposed taxes and enacted 
tax cuts really had a minimal effect on the fact we are in such a deep 
deficit hole now?
  Mr. SPRATT. Mr. Speaker, on the chart I have just displayed it is 
clear from the Office of Management and Budget that the real surplus 
adjusted for the real economy over the last couple of years is not $5.6 
trillion, but $2.4 trillion. Out of that $2.4 trillion in real surplus, 
the Bush administration has already cut $1.349 trillion and $42 
billion; add those two together and you get easily $1.4 trillion. 
Nearly two-thirds of the remaining surplus has been cut, has been 
diminished, due to tax cuts already passed now in the face of the fact 
that there is no remaining surplus.
  After you factor in these tax cuts and factor in the spending 
increases, mainly for defense and homeland security, which we all 
supported, but nevertheless, his budget left no room for contingencies 
like that, when you factor in those additional spending items, the 
surplus not only disappears, it goes deep in deficit for as far as the 
eye can see.
  Mr. EDWARDS. Mr. Speaker, if the gentleman will yield further, I 
appreciate the gentleman pointing out those facts. I would also point 
out on this chart that the Bush administration's

[[Page 2751]]

total tax agenda, including tax cuts already enacted plus proposed tax 
cuts, total in impact, if you count that increased debt tax, the 
interest we have to pay when we borrow money, it is over $4.3 trillion. 
Even by Washington, D.C., standards it seems to me a trillion here and 
a trillion there really is a significant amount of money.
  I find it astounding that we are cutting taxes for some of the 
wealthiest people in America, and at the same time, telling soldiers at 
Fort Hood in central Texas, right next to the Crawford ranch, you have 
to go off and fight for our country, but by the way, as they are 
getting on the plane, give them a note, we are going to cut your 
children's education fund.
  We hear a lot of talk, and I will finish with this, about values in 
Washington, D.C., and family values. But I think we in public office 
should be judged not by rhetoric, but by our record and by the 
priorities we set in the Federal budget.
  There is something wrong with the values of an administration that 
would propose cutting impact military education funds not to pay for a 
war against Iraq, but to pay for the tax dividend for the other 
constituent of mine who said he made $1 million in dividend income last 
year, and because this administration does not want him to pay one dime 
in taxes, will get a $335,000 tax cut.
  Would the gentleman care to comment about the values of those 
priorities?
  Mr. SPRATT. Mr. Speaker, let me enlarge upon the point the gentleman 
is making, and that is, as bad as the Bush administration says, when 
pressed, where is your solution, what plan do you have? Cut spending, 
cut spending.
  In truth, as the gentleman is pointing out with a very specific 
example, there are plenty of spending cuts built into this budget 
already. One of them is impact aid, which amounts to the Federal 
Government saying to military installations, we are not going to pick 
up the full impact of the children of military dependents in the public 
schools in that particular locality. We are going to let the local 
folks pay that and not do what other employers do and continue 
contributing some of the costs of it. That is one example.
  The gentleman from North Carolina is going to get up and give another 
example about the larger education bill that already is cut in this 
bill. If you took the whole budget for discretionary spending, the 13 
appropriation bills that the gentleman's committee reports and we pass, 
which constitutes the discretionary budget, if you take all of 
nondefense discretionary spending and cut it all out, it would not 
replace the $400 billion deficit in the general fund we expect next 
year.
  Mr. EDWARDS. Mr. Speaker, that is a good point. If the gentleman will 
let me ask one last question, and then I will defer to other members 
that want to speak on the largest deficit in the history of America, 
there are a lot of Americans that believe that this largest proposed 
deficit in America's 200-plus-year history is because, my gosh, we are 
going to have to pay for the war against Iraq.
  Could the gentleman tell me and the American people factually, is the 
$300 billion deficit proposed for this 1 year alone related to that?
  Mr. SPRATT. That does not include the war against Iraq. That does not 
include the war against terror. The Secretary of Defense told us the 
other day, if and when those costs come, we will send up a 
supplemental. If you add that to the bottom line, it gets worse.
  Mr. EDWARDS. We could have a $400-plus billion deficit. I did 
calculate it. I think the maximum Pell Grant for a young, bright high 
school senior from a low income family, wanting to improve his or her 
life and career with a college education, they get about $4,000 a year. 
If you assume 4 percent interest on the $300 billion deficit this year 
alone, that means my children's generation, my little boy's generation, 
will pay $12 billion a year, that is B as in boy, $12 billion a year in 
tax for the rest of their lives until the day they die simply to pay 
the interest on this year's proposed deficit.
  That amount of money, if we had a more fiscally prudent budget 
without some of these tax cuts that I think are irresponsible, that 
would allow us to have 3 million young Americans receive a $4,000 Pell 
Grant. Something is wrong with these values and something is wrong with 
this budget.
  Mr. SPRATT. Let me now yield to the gentleman from North Carolina 
(Mr. Etheridge), who used to be the Superintendent of Education in 
North Carolina, to further the effects of some of cuts in education in 
this budget.
  Mr. ETHERIDGE. Mr. Speaker, I thank the gentleman for yielding.
  Let me follow up something that my good friend from Texas covered; 
whether one agrees with this or not, this is actual fact. Before I was 
the State Superintendent of Schools in North Carolina, I chaired the 
appropriations committee for the general assembly, and prior to that I 
was a county commissioner.
  What we are really doing in saying to local governments about pulling 
back impact aid, and in many of the cases, in many of the communities, 
in Fort Bragg in my district, many of these communities find themselves 
dependent on the impact aid. But what happens is they are getting 
impact aid because you have a large Federal installation not paying 
local property taxes. If you pull that out, in effect you are saying to 
the rest of the citizens in that jurisdiction, we are going to raise 
your taxes. We are going to say to the county commissioners to raise 
them or to the local governments at a time when roughly, what, 70-plus 
percent of the States are running huge deficits.
  Mr. Speaker, it is incomprehensible that this administration would 
place these kinds of burdens on local governments across this country. 
And I agree with my friend, the gentleman from Texas (Mr. Edwards), who 
said not only Fort Hood, but at Fort Bragg, which is the 9/11 post in 
this country, we are going to send you off, but the people that you are 
going to leave behind are going to pick up the tab, because those of us 
in Washington are not going to do what we need to do, and those of us 
left are going to raise your taxes another way.
  Let me touch on a couple of other issues when it comes to education. 
It bothers me greatly, because if we truly want to turn this around, we 
have got to have prudence now in budgeting.
  Mr. Speaker, it boggles my mind that we have come through the 
deficits of the last 10 years to get to some high ground and a balanced 
budget, and we did not learn a thing. We jumped right back in that 
briar patch with no end in sight, and we now say deficits are okay.

                              {time}  2000

  They are not okay. Because we are going to double the amount of 
interest over the next few years, and my children and grandchildren 
will pick up the tab; and that is wrong.
  Let us just look at some of the numbers that are proposed in this 
budget. These are the consequences of running deficits: cuts in No 
Child Left Behind. I supported that legislation because I thought it 
was fair and it would make a difference for children, because the 
President committed to fund it. And what does he do? He has cut the 
funding, and I will have a proposal on that before too long. This 
budget proposes cuts of $22.6 billion for programs that are under No 
Child Left Behind, which is $9 billion below the amount authorized in 
2004, and $199 million below the amount needed to maintain at just the 
2002 level.
  Now, we have to understand that there are more children coming to 
school, there are more children with needs, there is more tutoring that 
needs to be done because we are ratcheting up accountability. It is a 
program for disaster for the public schools of America; and this 
administration, I do believe, knows that, and they ought to know 
better.
  Mr. SPRATT. Mr. Speaker, what the gentleman is talking about is the 
authorization act Mr. Bush signed and signed into law and took credit 
for.
  Mr. ETHERIDGE. And this body bipartisanly passed it.
  Mr. SPRATT. The authorization act calls for $9 billion more in the 
fiscal year 2004 than his budget in this year's request.

[[Page 2752]]


  Mr. ETHERIDGE. That is exactly right. And the schools are depending 
on that money, and at a time, as the gentleman knows, when States are 
cutting because they do not have the resources, trying to hold up their 
end on education; and we are not living up to our bargain. This 
administration has not been honest with, I think, our schools and the 
American people.
  It eliminates 47 education programs in this budget, proposed budget. 
Those programs amount to $1.6 billion just in the CR we are now 
operating under, on the flat line, $1.6 billion. That is a lot of money 
when you get out to a local school building in rural America or 
wherever you may be.
  Let me just talk about some of the major cuts. The 21st Century 
Community Learning Centers, an outstanding program that gives schools 
money to do some creative things that make a difference.
  Mr. SPRATT. After-school programs, primarily?
  Mr. ETHERIDGE. Absolutely.
  Mr. SPRATT. Before-school programs.
  Mr. ETHERIDGE. Absolutely. We absolutely have to have these if we are 
going to tutor youngsters who are behind and need to catch up. Mr. 
Speaker, $1.2 billion below the level authorized. Teacher quality 
programs, the very thing we have to do if we are going to improve 
education in America. We have to improve opportunity for the staff that 
are teaching our children. What did we do? What does the President 
propose? Mr. Speaker, $3.1 billion, down 5.2 percent from the previous 
level. I will just go through the percentages. It is just shameful.
  Educational technology. At a time when we are really trying to put 
more technology in the schools because we are in a technological world, 
and so many schools need the resources, 9.6 percent cut from the 
previous level. More children out there, more needs, and we are 
cutting.
  Impact Aid, we just talked about, 14.2 percent. Vocational education, 
26 percent proposed cut; 26 percent.
  Mr. Speaker, it reminds me of a story I heard once when I was little. 
The guy said he was not going to kill his pig, he would just do a 
little bit at a time, and somebody saw a pig running around the yard 
with three legs, and he said, I am just eating a little bit at a time. 
That is what we are doing to education. We are not going to kill it all 
at once; we are just going to kill it a little bit at a time, until it 
is so crippled it cannot work. It is absurd.
  We need people to work on equipment and machinery. I was at a school 
last week; a superintendent came up to me just last night talking about 
Impact Aid. He said, if we cut it, our schools are going to be in deep 
trouble. This was in Cumberland County. One of the teachers talked 
about vocational education. This is where they turn money into 
technology for computer labs. I was in a computer lab working with 
children.
  Funding for the improvement of education, down 91.2 percent. I do not 
know why they did not go ahead and get it all.
  I mean it just makes no sense. It was a good program, but what they 
want to do is just enough out there to make people mad.
  Perkins loans, 61 percent proposed cut.
  I could go on. I think folks who are watching get the message. It is 
one thing to say I am for education; it is one thing to say I want to 
help. It is another thing to not follow through and give the resources. 
I have talked to more teachers and school folks in the last few weeks. 
They really and truly believe, whether it is true or not, that they are 
set on a course to fail, because we are giving them all the ingredients 
to make the cake and nothing to go in it, but we are expecting them to 
come out with a fine baked product.
  I would remind all of my colleagues, education is a lifelong process, 
and we cannot start and stop it. We have to keep it going. Teachers 
understand it; students realize it. It takes resources to get the job 
done. I recognize that at the Federal level we only put in about 7 to 9 
percent, depending on where we are. Some counties it is more, because a 
lot of it is specific to need. Not all of this is specific to need, 
because No Child Left Behind is need-based and categorical. But without 
it, we are really saying, we really did not mean it. We really did not 
mean it.
  That was a great plan, we got a lot of good press on it, we have had 
our press clippings, we have been around the country, and now we are 
going to move on to something else. That is not education. That is not 
about building the future of America, and this administration knows 
better. I am going to be on the floor in the well of this House every 
day, every week; and we are going to keep reminding them. We have to do 
the funding because if we do not, we will not have a future. We cannot 
keep running deficits because huge deficits have consequences; and the 
consequences are, we run up the debt, we have huge interest payments, 
and it squeezes out domestic programs, and children pay a heavy price, 
and we rob our future so a few people can look good now.
  Mr. SPRATT. Mr. Speaker, the gentleman's point, and the point of the 
gentleman before him, was that even in this budget with big deficits, 
$400 billion and more every year for the next 5 years, $2.1 trillion in 
the general fund, additional deficits, additional debt; even with those 
bottom lines, we have these significant cuts already made in this 
budget, and we are still running almost a half a trillion dollars in 
the red every year.
  Mr. ETHERIDGE. Sure, and the gentleman's point is it will get worse.
  Mr. SPRATT. Mr. Speaker, to further explain and clarify other things 
that are buried in this budget is the gentleman from Virginia (Mr. 
Scott), to whom I now yield.
  Mr. SCOTT. Mr. Speaker, I thank the gentleman for giving me the 
opportunity to again show this chart which shows over the years the 
spending of the Federal Government.
  Now, a picture is worth a thousand words. We see under the Johnson, 
Nixon, Ford, Carter administration in yellow where the deficit was; we 
see what happened to the deficit during the Reagan and Bush years; and 
we see when Bill Clinton came in office under Democratic leadership, we 
passed a budget that reduced the deficit. Now, when this vote was taken 
in 1993, not a single Republican supported that budget. And right after 
that happened, we reduced the deficit. Slowly but surely each year the 
deficit became less and less and less until we started running a 
surplus. When President Bush came in, we reversed course. We cannot 
produce charts like this by accident.
  Now, we have been asked, where is your plan? There is our plan. When 
the Democrats controlled the budget, that is, when the Democrats 
controlled the House in 1993 and the Senate in 1993 and the President, 
we passed the budget. In these years, President Clinton vetoed many 
Republican budgets. They tried to close the government down, he vetoed 
the budget anyway, because they were fiscally irresponsible. So 
President Clinton was the controlling force of the budget during his 
administration and produced those years. The budget introduced by 
President Bush was passed when he came in office, and this is what 
happened. We wonder what the plan is for the future.
  As it has been mentioned, when he came in office, in 2000, there was 
a surplus. September 11 happened with only 3 weeks left in the fiscal 
year, so this was going to happen anyway, that is, spending virtually 
all of Medicare. The following year we spent all of the Medicare 
surplus, all of the Social Security surplus, and then $160 billion 
more. In 2003, almost $300 billion, after we spent all of Social 
Security and Medicare; and if we adopt the policies of the 
administration, we are going to be spending all of Social Security and 
Medicare for years to come.
  Now, what kinds of tax cuts are we recommending now? I mean, we do 
not produce numbers like this by accident.
  We have tax cuts like the repeal of the taxes on estates over $2 
million. A husband and wife, $2 million tax-free going to the next 
generation. $2 million. Then we start taxing after that. So when we 
talk about repealing the estate tax, we are talking about repealing the 
tax on dead multimillionaires. That is what we are talking about.

[[Page 2753]]

When we add to that the idea that they want to stop taxing dividends, 
we have a bizarre vision for America where people can inherit great 
wealth, invest it in stocks, live off the dividends tax-free, no tax on 
the estate, on the inheritance, no tax on the dividends. When we add to 
that some other provisions in this budget where we protect capital from 
taxes, we know what Leona Helmsley was talking about when she said, 
only little people pay taxes, because those with great wealth can 
shelter that wealth with no estate tax, no tax on dividends, and the 
other little provisions in the bill where capital is not taxed, only 
little people will pay taxes. Every time we cut another tax, it is down 
here. We have already gone through the surplus and Social Security and 
Medicare.
  Now, what is the impact of this? When we started, the projection was 
that the entire national debt would be paid, held by the public, we 
would have paid off all of that by 2008, and going into pay-off of all 
of the debt on the trust funds by 2011, 2013. We would be debt-free. 
Instead, we are on this line: more and more debt.
  Now, we cannot run up debt without consequences. What is the first 
consequence? The debt tax. This is what the family of four pays every 
year in interest on the national debt. As we run up more debt, we have 
to pay more debt tax, more interest on the national debt. It is around 
$4,500 for a family of four now; and because we are running up the 
debt, by 2008, almost $6,500 every year, a family of four will have to 
pay just on the debt.
  We do not get anything for that. That has already been spent.
  Now, when we look at how the debt tax is exploding and the burden on 
the Federal Government on just interest on the national debt is 
exploding, we have an interesting phenomenon that we have to deal with, 
and that is Social Security. We are running a surplus in Social 
Security now. By 2037, we will be running a huge deficit. We need to be 
piling up resources, reserves so that as the baby boomers retire and 
the expense of Social Security gets less and less, we have some way to 
pay it. No, instead, we are running up massive debts when we have the 
surplus.
  What is the plan to pay Social Security later on? I would suggest 
that they have no intention of paying Social Security.
  Mr. SPRATT. Mr. Speaker, if the gentleman will yield, let me just 
clarify the chart the gentleman has, which is very graphic. The blue 
bar charts, the blue bars above the horizontal axis show the surplus 
that is accumulating in Social Security, for now.

                              {time}  2015

  But it is for a limited period of time, intended to be used for 
parents, for the retirement of the baby boomers. The red bars that get 
deeper and deeper as you approach 2037 show the net cash outflow in the 
Social Security trust fund beginning in about 2017, which is not that 
far away, 13, 14 years from now.
  Mr. SCOTT of Virginia. When we consider that we are spending the 
entire surplus, to continue spending at that rate, we will not have 
that surplus in 2017. So we are going to have to figure out, have some 
plan to figure out how to pay that. Are we going to raise taxes? Are we 
going to cut spending? The gentleman has already indicated that we 
could eliminate the entire Federal budget that is nondefense, 
discretionary spending, we can eliminate the entire budget, that is, no 
roads, no education, NASA, everything, State Department, foreign aid. 
Get rid of all of it. Not cut it, eliminate it, and not be able to 
cover the on-budget deficit that we are running up now.
  So where are we going to get it? Are they going to raise taxes in 
2017? And then not only do they not have the cushion, since we do not 
have the reserve, we are spending it; how will we come up with this 
money? Frankly, I do not think they will come up with the money. They 
will just repeal Social Security. And if that is not the plan, they 
ought to have some way of explaining how they will pay Social Security 
in the future.
  The President, in one of his addresses to Congress, said he intended 
to maintain Social Security for those retiring and those close to 
retirement, which suggests to me that these people down here will not 
have any Social Security. If they have no coherent plan, they ought to 
admit that they will eliminate Social Security. And if they intend to 
pay Social Security, they ought to have some coherent plan to show how 
they are going to do it. All they are doing now is running up debt. We 
cannot continue to do that. A family of four is already up to $6,500 
interest on the national debt. It is getting worse before it gets 
better.
  How are they going to pay Social Security? I think they have a 
stealth plan to eliminate Social Security when the burden becomes too 
deep. They have got all these retirement plans so that all those who 
are privileged to have inherited wealth, they will be all right. But 
the vast majority of Americans with no pension plan will be back where 
they were before Social Security was there.
  We need answers. They are not delivering answers. They are not making 
any tough choices like we made in 1993, tough choices that converted 
deficits into surpluses. They are not making any tough choices. All the 
easy choices. Anybody who wants a tax cut gets one. Anybody who wants 
some spending gets spending, unless it is education or something 
important. You do not get those. How are they going to pay this?
  So I think they need to come forward and explain how they will do 
this without eliminating Social Security. And if you listen to their 
remarks talking about personal responsibility, you assume that sooner 
or later your retirement will be your personal responsibility. There 
will not be any Social Security to keep you out of poverty.
  Mr. SPRATT. I thank the gentleman from Virginia (Mr. Scott).
  Now I yield to the gentleman from Tennessee (Mr. Cooper) who was here 
from 1983 until 1994 when he ran for Senate from Tennessee. But before 
leaving the House of Representatives he cast one of the hard votes that 
a number of us mustered the courage to pass and that was a vote for the 
Clinton budget in 1993, which laid the foundation for a decade of 
fiscal progress during the 1990s, a period when the bottom line of the 
budget got better and better and better every year until finally, in 
1998-1999 we were in surplus for the first time in 30 years.
  Mr. COOPER. Mr. Speaker, I thank my good friend, the gentleman from 
South Carolina (Mr. Spratt). I appreciate your leadership on these 
vitally important issues. I think many patriotic Americans wonder what 
those moments are in American history when we really do reach a turning 
point; and to be honest with you, in all the congressional debates 
there are very few real turning points. But I would like to suggest, as 
the gentleman has already suggested, 1993 was a turning point when this 
Nation literally reversed its fiscal policy and finally set our Nation 
on track towards reaching surpluses which many Americans had given up 
on ever seeing again.
  And I would like to suggest that this year, 2003, is another such 
turning point, as we dig deeper into the hole of deficits and plunge 
future generations into what is likely to be a permanent and 
unresolvable debt load.
  Our friend, the gentleman from Virginia (Mr. Scott of Virginia), has 
already pointed out this chart, and I would like to suggest that this 
should be on everyone's screen saver, on every computer in America as 
we put the deficit in perspective.
  They were relatively inconsequential in the Carter years, the Nixon/
Ford years. But then with President Reagan we plunged into a sea of red 
ink which many Americans thought was irreversible. Then in the crucial 
budget vote in 1993, suddenly we got an upturn, even developing a 
surplus.
  But then again, another pivot point in American history under George 
W. Bush and his budgets, we are reaching even graver levels of deficit 
and debt.
  I think the gentleman will recognize that many of our constituents 
just have an instinctive feeling that, well, the President is a 
Republican and, therefore, he is conservative and, therefore, his 
budget must be conservative.

[[Page 2754]]

  Mr. Speaker, does the gentleman from South Carolina think that 
deficits of this magnitude are conservative?
  Mr. SPRATT. Absolutely not.
  Mr. COOPER. As I recall, the gentleman has already said these are 
about to be the largest deficits in history. Is that conservative?
  Mr. SPRATT. We warned that this would happen, but we did not see, 
even in our admonitions, the severity of the problem we have before us 
now.
  Mr. COOPER. As I recall, the gentleman has said that the deficit for 
fiscal year 2004 is supposed to be about $300 billion, not counting the 
war in Iraq, not counting the war in Afghanistan, not counting the war 
on terrorism, not counting other important problems that need to be 
solved in our Nation. So the deficit may well be $400 or even $500 
billion.
  A temporary deficit is one thing. As we know, sometimes a deficit is 
appropriate to stimulate the economy, but what we are talking about are 
permanent structural deficits in our economy.
  Mr. SPRATT. If the gentleman will yield, the gentleman was in the 
investment banking business for a period. He knows the name Goldman 
Sachs. And I understand one of their economists today said they predict 
that the unified deficit for this year will be in the $400 billion 
range. That means that is after netting out, backing out the Social 
Security surplus. The unified deficit, by their projection, will be in 
the $400 billion range this year.
  That is depressing enough, but the problem is those deficits continue 
on and on and on without any abatement.
  Mr. COOPER. The gentleman is so correct. And a huge deficit like that 
hurts our economy. It creates higher interest rates. It hurts the 
employment statistics. And as I think most of the world knows, under 
the Clinton years we had the most robust economy in the history of this 
Nation or the history of the world. Surpluses helped us. Fiscal 
discipline helped us. That is important for us to realize now as we are 
returning to the era of massive budget deficits.
  The gentleman from South Carolina (Mr. Spratt) has displayed great 
leadership, but I worry so many folks back home find these numbers too 
large to be comprehended. They are confused. They are over-burdened in 
their daily lives. They are worried about the war. They are worried 
about unemployment. They do not know really how to grapple with numbers 
of this magnitude. But this chart shows it better than anything else, 
this sea of red ink that we are passing on to the next generation.
  President Bush mentioned in his State of the Union that each 
Congress, each President should take care of its own problems, but this 
budget is not doing that.
  Mr. SCOTT of Virginia. Mr. Speaker, does the gentleman from Tennessee 
(Mr. Cooper) remember the vote in 1993?
  Mr. COOPER. Mr. Speaker, I do. It was a very close vote. As I recall, 
it was by a one-vote margin the Clinton budget was passed.
  Mr. SCOTT of Virginia. Mr. Speaker, does the gentleman remember how 
many Republicans voted for that budget?
  Mr. COOPER. Mr. Speaker, as I remember, zero. In fact, they 
excoriated the President's budget saying that it would lead to 
depression and other crises in the economy.
  Mr. SCOTT of Virginia. And we made those tough choices without any 
Republican help, House or Senate.
  And does the gentleman remember what they did in the next election? 
When they demagogued that vote, said we made the tough choices, 
criticized those choices, and they won 50 seats in the next election.
  Mr. COOPER. Mr. Speaker, many Members were defeated for having done 
the courageous thing, for having been a profile in courage.
  Mr. SCOTT of Virginia. Mr. Speaker, now we turn over a surplus to 
President Bush and he has made no tough choices. He has cut taxes and 
increased spending. Have they recommended any tough choices?
  Mr. COOPER. Mr. Speaker, they are few and far between in this budget. 
It is a massive document of some 20,000 pages, I suppose. It contains 
many crippling cuts to our programs. Our colleague from North Carolina 
mentioned several of them in the education area. There are so many 
features that I hope the public will be aware of and we will try to 
bring out in the debate.
  One feature that is particularly concerning to me is an 
unconstitutional provision that is in the President's budget. It is 
little known. It is on page 318 of the analytical prospectus of the 
second or third volume of the budget. It actually says, if Congress has 
not completed its business by October 1 of this year, the budget will 
automatically revert to the President's budget; whereas, the 
Constitution of the United States gives that power exclusively to the 
Congress of the United States, not to the White House.
  And that allows this administration, with a handful of Senators, to 
clog up the budget process, and then automatically, without a single 
vote taken by this body, turn over the budget to this administration. 
That is one of the most radical proposals I have ever heard mentioned 
in public policy debates. And yet it is in this President's budget.
  That is why I asked, as I mentioned to the gentleman from South 
Carolina earlier, this is not a conservative budget. There is a radical 
budget. This is an irresponsible budget that is leading our Nation 
perhaps on the road to ruin. No American wants to see that.
  It is the responsibility of a two-party system to point out problems. 
And certainly Democratic budgets in the past have sometimes not been 
perfect, but we can be proud of this record of actually achieving a 
budget surplus for the first time in American history, I think, since 
before the Depression, 3 straight years of surplus were achieved. And 
that is an important record of achievement that we need to continue, 
not a road with this massive flood of red ink.
  Mr. SPRATT. Mr. Speaker, the point I was making at the outset is, 2 
years ago OMB projected a surplus of $5.6 trillion. The Bush 
administration then enacted a massive tax cut taking advantage of that 
big surplus. They now acknowledge that they overstated, miscalculated 
by some $3.2 trillion. It really was not $5.6 trillion in surplus. It 
was more like $2.4 trillion in surplus.
  The problem is that tax cuts have largely already committed that 
amount of money. As we begin this fiscal year, instead of having a 
cushion fund, a huge surplus of $5.6 trillion, we are in the red. We 
have fully dissipated that surplus and we are in the red $129 billion.
  But they, knowing that, proposed additional tax cuts and additional 
measures that would drive us deeper in the red over the next 5 years to 
the tune of $2.1 trillion which is intentional. You could at least 
excuse what happened before as negligent miscalculation. I do not. I 
think they should have seen the storm clouds gathering over the economy 
and understand that the surplus was overstated; but chalk it up to 
negligence. This is willful, wanton, and intentional.
  Mr. SCOTT of Virginia. Mr. Speaker, when the gentleman talks about 
the calculation being a miscalculation, is some of the calculation not 
a recalculation based on how poorly the economy was doing after the 
President's budget was adopted?
  Mr. SPRATT. Mr. Speaker, there is no question about it. A lot of the 
economic effect was already in place before 9/11. That is a key point 
to understand.
  Mr. SCOTT of Virginia. Mr. Speaker, after the President's budget was 
adopted, the economy kept going down and down. And so some of this 
recalculation is an acknowledgment that the President's budget had 
caused the economy to tank, and they had to recalculate it based on the 
new numbers.
  When President Clinton's budget was adopted, they always 
underestimated the effect because that budget was improving the economy 
and every year the economy was doing even better than expected. The 
stock market was improving; unemployment was going down.
  When this President's budget was adopted, things just kept getting 
worse. And they had to recalculate it based on that new forecast. So it 
is all

[[Page 2755]]

not just technical miscalculations. Some of it, a lot of it, is 
recalculation based on how poorly the economy was doing.
  Mr. SPRATT. Furthermore, we now know that the surplus is gone, per 
OMB. They have acknowledged it. CBO, the Congressional Budget Office, 
says the same thing. That ought to be an alarm sound calling for us to 
begin developing plans like the plan we developed with the President's 
father in 1990, the Budget Summit Agreement, the Clinton budget in 
1993, the Balanced Budget Agreement of 1997. Three times in the 1990s 
we did extra-special exercises on the budget that ratcheted down and 
helped put us in a surplus for the first time in a generation.

                              {time}  2030

  This budget acknowledging the problems it has got now and in the 
foreseeable future does nothing. The most that they offer is a new 
disdain for deficits. They basically say deficits do not matter, a 
trillion here, a trillion there; it is no big deal.
  Mr. SCOTT of Virginia. Mr. Speaker, will the gentleman yield?
  Mr. SPRATT. I do.
  Mr. SCOTT of Virginia. Does the gentleman know who said the budget 
deficit is a stealth tax that pushes up interest rates and costs the 
typical family $36,000 on an average home mortgage, $1,400 on an 
ordinary student loan and $700 on a car loan?
  Mr. SPRATT. That is Senator Dole, I think. The point we are trying to 
make now is that we may have a tax cut today, but if it ends up causing 
the government to incur more debt, the debt has to be paid. It has to 
be serviced. Interest on it has to be paid; and eventually, the people 
that pay taxes will have to service that debt, and there is a debt tax, 
a stealth tax that will come due, not in the near term, but whenever we 
do not have a surplus to charge it to anymore, and we do not, then what 
we do is charge it to the next generation, and that means our children 
and grandchildren.
  So we can have it all in this budget. They pay the tax. They pay the 
bill, the debt tax.
  Mr. COOPER. Mr. Speaker, if the gentleman would yield, the gentleman 
is so correct. He made an extremely important point a moment ago. So 
many people in the other party feel that deficits do not matter, 
deficits do not matter; and I think that philosophy is not only wrong, 
it could lead our Nation into serious economic trouble for decades to 
come.
  I would like to suggest to the gentleman, I even heard some of my 
colleagues across the aisle say that deficits are a good thing. There 
is an article today in the New York Times quoting a leader in the other 
party saying that a deficit is a good thing because they shrink the 
size of government; and I would suggest that sort of philosophy is not 
only not conservative, it is one of the most radical approaches to 
government that I have ever heard of, to pretend that red ink of this 
volume and dimension does not matter and that it could actually be a 
good thing.
  Mr. SCOTT of Virginia. The gentleman indicated that deficits reduce 
the size of government. Is this budget coming in not presented to us 
larger than the one before? So it does not reduce the size of 
government. When we cut all these taxes and reduce revenue, we are not 
reducing the size of government. We are just running up debt on which 
we have to pay interest.
  Mr. COOPER. As the gentleman from Virginia so wisely pointed out, 
that puts a debt tax, an unrepealable tax on future generations for all 
time in the amount of $12 billion forever just due to the debt we are 
running up this year. That is an irresponsible fiscal policy. That is a 
radical fiscal policy. It is not a conservative fiscal policy.
  I think that is what so many of our constituents back home are 
failing to realize because these numbers are so large, the problems 
seem so vast, they are preoccupied with the war and with their own 
personal situation, that when they are presented with a multitrillion 
dollar budget, it is hard to take it seriously, when, in fact, we are 
reaching a turning point in American history, and we do need to take 
action, we need to bring these problems to the American people's 
attention so that they can respond and call for fiscal responsibility 
and fiscal sanity because we are not seeing enough of that today in 
Washington, D.C.
  I would like to commend the gentleman from South Carolina and the 
gentleman from Virginia for their comments.
  Mr. SPRATT. Let me wrap up and let us bring it to a conclusion 
because the gentleman has been in investment banking for the last 6 or 
7 years, and the gentleman knows that traditional economic theory for 
as long as we have known anything about it has held that deficits have 
the same effect that any supply and demand function has. The government 
goes into the capital markets. In addition to private borrowers, it 
elbows out the private borrowers. It runs up interest rates, and high 
interest rates stifle growth in the long run.
  So we may get a little bit of kick right now out of running a 
deficit, but in the long run we have got the debt to pay; it is a 
fiscal drag on the economy.
  Secondly, it is a form of dissaving. When the government borrows the 
money it is just like an individual borrowing money. He is dissaving 
rather than actually saving and that takes away from the savings pool 
that we have got for capital formation and building the productive 
assets of this country, and over the long run it means we are not as 
productive as we otherwise would be.
  Then, finally, there is a moral aspect, which I just mentioned. When 
we charge our excesses to the deficit, we are charging it to the next 
generation, namely, our children and grandchildren. No way around it. 
Everybody's recognized that moral aspect in the past. This is an 
intergenerational thing. They will not only have to pay our Social 
Security deficit and Medicare deficit, they will also have to pick up 
the accumulated debts, the other things that we chose not to pay in our 
time because of this budget.
  Mr. COOPER. The gentleman is an excellent economist, and another 
great economist is our own Federal Reserve chairman, Alan Greenspan, 
who said, History suggests that an abandonment of fiscal discipline 
will eventually push up interest rates, so deficits do matter, crowd 
out capital spending, lower productivity growth, and force harder 
choices on us in the future.
  We should be listening to Alan Greenspan. We should be listening to 
the gentleman from South Carolina and the gentleman from Virginia 
because deficits do matter. They are hurting this economy, and we need 
to return to the fiscal discipline that we saw in the previous 
administration and live within our means because our Nation is 
embarking on long-term structural deficits today that we may never be 
able to erase.
  Mr. SPRATT. Mr. Speaker, on that point we conclude. I thank the 
gentlemen for participating.

                          ____________________