[Congressional Record (Bound Edition), Volume 149 (2003), Part 7]
[House]
[Pages 9042-9048]
[From the U.S. Government Publishing Office, www.gpo.gov]




              DEFICITS, THE DEBT AND FISCAL RESPONSIBILITY

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 2003, the gentleman from Washington (Mr. Smith) is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. SMITH of Washington. Mr. Speaker, I appreciate the opportunity to 
come and address the Chamber this evening. I want to talk about 
deficits, the debt and fiscal responsibility.
  There was a time in this country when those issues were very, very 
important. It dominated public debate in this country in the 1980s and 
well into the 1990s as we saw our deficit on a yearly basis explode and 
the overall debt go up to levels that started to concern people. There 
was a constant battle to try to figure out how to get that debt under 
control and get our budget balanced on a yearly basis.
  In recent years, that debate has drifted away. Part of that makes 
sense. After 9/11, with the slowdown in the economy, with the war in 
Iraq, there is no question that it makes a certain amount of sense to 
run short-term deficits in at this point. In emergency situations, that 
is what you do.
  My concern and the concern of the New Democrats, which I represent 
and work with, is that far from simply saying, well, for the time being 
we are not going to pay as much attention to deficits, it has gotten to 
the point in Congress and with the White House where it seems like they 
do not care about them at all, they do not care what the numbers are 
and they do not think they are important, and that is a very, very 
dangerous policy and one that we must correct.
  So this evening I want to talk about, first of all, putting it back 
into context and letting folks know where the deficit is at, where the 
debt is at. In recent years we have not focused on it that much, and I 
think people have totally forgoten what those numbers are. It is 
important to be aware of what those numbers are.
  The second issue is to remind folks that the deficit and the debt 
matter. We have heard some truly bizarre talk here in recent months, 
coming primarily from conservatives, conservatives who just a few short 
years ago were arguing that we ought to have a

[[Page 9043]]

constitutional amendment to balance the budget, we ought to require 
that it be balanced, never have it be an option to run a yearly 
deficit. Those same people are now saying deficits probably do not 
really matter that much.
  I think they were probably wrong in both, requiring a constitutional 
amendment and now in saying that the deficits do not matter. Deficits 
do matter. Now, there are times when you should probably go ahead and 
run one because of an emergency situation, so a constitutional 
amendment to balance the budget would unduly restrict our Federal 
Government. But to go from that to saying that they just do not matter 
at all is ridiculous. So what I want to start out with is showing where 
the numbers are at and just how bad things have gotten.
  First of all, as we head toward fiscal year 2003 coming to a close in 
October, the projections are now that that deficit, when you add in the 
supplemental for the war that is going to pass this week in Congress, 
that deficit will approach $400 billion, just for the one year. That is 
a higher dollar figure deficit than our Nation has ever seen, by a 
comfortable margin. I think the highest deficit we had, even during the 
really bad times of the early 1990s, was $290 billion.
  When you look long term at the 10 year picture, that is where it gets 
even bleaker. That is what we are talking about this week with the 
budget resolution that the House and Senate are trying to reach 
agreement on.
  The budget resolution, in theory, is a 10 year blueprint for where we 
want our budget to go. That blueprint right now has us going in debt, 
in debt to a level never before imagined.
  So I have a chart here that shows this and where we are going. This 
is from the Goldman Sachs study that the gentleman from Ohio (Mr. Ryan) 
mentioned earlier. It starts off by showing what the official CBO 
projection is. The official CBO projection is that over the course of 
the next 10 years, we will have an $890 billion surplus.
  So basically they are assuming, despite the existing $400 billion 
deficit that we are going to run this year, in the out years, as we get 
further down, we will have sufficient surpluses to make that up and get 
us up to this very happy figure of an $891 billion surplus. The problem 
is that there are a lot of assumptions in that number that simply will 
not come to pass, and those assumptions are laid out in the Goldman 
Sachs analysis.
  First of all, economic growth has been far slower than CBO expected. 
If that economic growth hits modest levels over the course of the next 
10 years, instead of the overly optimistic projections from CBO, that 
knocks over $1 trillion off of this $891 billion figure.
  In addition, will $891 billion does not take into account the 
emergency supplemental, which, of course, we are going to pass, 
probably sometime in the next 48 hours, and that will be somewhere in 
the neighborhood of $80 billion, which, again, comes out of that 
figure.
  Now, it is also worth noting that this $80 billion figure may not 
turn out to be the total cost of the war in Iraq. As the gentleman from 
Illinois (Mr. Emanuel) and others were talking about earlier, there are 
big plans to spend even more money on the rebuilding of Iraq, which may 
well need to be done, but that will drive this figure up even further.
  Finally, we have a little thing called the alternative minimum tax, 
or at least finally on this top set. The alternative minimum tax is 
something that is going to have to be fixed. It was set up a while ago, 
and it is incredibly complicated, but the bottom line is in the next 
few years, if we do not change the alternative minimum tax, middle-
class taxpayers are going to have to start paying it. It is going to 
get down to the point where your average middle-class taxpayer will not 
be able to take the deductions that they are used to taking and they 
will be hit with this tax. Well, to fix that, it would cost $500 
billion over that 10 year period. So for these three things, the 
adjustments bring us down below the $891 billion figure and put us into 
deficit.
  Then we have a series of other issues. If you assume the president's 
tax cut, that is another $509 billion, plus making the 2001 tax cut 
permanent, which is part of the President's proposal as well, is 
another $624.
  Then in defense, CBO does not assume a significant increase in 
defense spending. The President's budget does. Given where we are at 
right now in the world, it seems that the President is right, we are 
going to increase spending on defense. If we increase that modestly, 
that is another $536 billion more than CBO projected.
  Non-defense discretionary, one of the assumptions in the President's 
budget that helps make it look more fiscally responsible than it is is 
the assumption that somehow we are just going to dramatically cut all 
non-defense discretionary spending.
  Well, historically that has not happened. This is what happened 
during the time of the Gramm-Rudman-Hollings proposals. These proposals 
would come out in the early eighties and say over the course of the 
next 6 or 7 years we are going to make these cuts, and then, 
inevitably, they would never happen and the numbers would be higher 
than expected.
  So even assuming a modest growth, 2 percent, which is less than what 
inflation would probably be over that period, or at least inflation 
plus population growth, even assuming a 2 percent modest growth, you 
lose another $350 billion.
  Lastly, we have the oft-talked about issue of a prescription drug 
benefit. I do not think there is a significant politician, House, 
Senate, Democrat, Republican, White House, who has not said we should 
not do a prescription drug benefit. Well, if we do, it is going to cost 
something. The figure Goldman Sachs picked on was $600 billion. That 
may be $400 billion or $500 billion, it may be more than this.

                              {time}  2045

  But whatever it is, if we do a prescription drug benefit, that is 
another thing that CBO did not count on.
  Lastly, once we add up all of these additional expenses, they drive 
up the debt, and when we drive up the debt, we drive up the debt 
service. It is just like when you owe more money on a credit card, your 
minimum payment gets higher and your interest payments get higher. 
Those interest payments are projected to be $878 billion. So when we 
add all of this up, what we come up with is instead of a $891 billion 
surplus over those 10 years, you wind up with a $4.2 trillion deficit 
over the course of those 10 years. I now know what this $777 billion 
figure is. This is counting the 891. So basically, if we add all of 
these up, that reduces this down to a negative 777, and then we add it 
all the way up and get 4.2.
  As the gentleman from Wisconsin (Mr. Ryan) pointed out when he spoke 
earlier, even this figure is a little optimistic, because this counts 
Social Security surpluses against it. If we take those Social Security 
surpluses out, put them aside, as we should do, because that money is 
going to be needed to pay for Social Security as the baby boom 
generation starts to retire, this figure gets over $6 trillion. Right 
now, in the entire history of the country, we have ran up a debt of 
around $6 trillion. If we go forward along the path that the President 
and the majority in Congress is proposing, we will equal that in the 
next 10 years. Another $6 trillion in debt will be lumped upon us.
  So it is important to keep these figures in mind, even if it is not 
at the top of the agenda right now, as folks are distracted, 
understandably so, by the war in Iraq and other issues. These figures 
need to be put into our minds and we need to remember, this is where we 
are headed, towards another $6 trillion in debt over the course of the 
next 10 years, with very modest assumptions. This does not even have 
any emergencies. It seems like every year we have an emergency within 
the farm community and we have to fund that. Who knows where the next 
natural disaster might hit or where the next military conflict might 
come up that would change all of these numbers dramatically.
  The bottom line is, the numbers show us heading into long-term, 
structural deficits and huge debt.

[[Page 9044]]

  Which brings us to the next argument and that is the one that the 
conservatives have been throwing out there recently that oh, come on, 
deficits do not really matter. It is not really that big of a deal. The 
economy can move forward and everything is fine. One of their favorite 
arguments is that deficits do not, in fact, drive up interest rates. 
Because consistently, one of the arguments against running deficits and 
in favor of fiscal responsibility is that it is good for the economy. 
The basic argument is, if the government has a balanced budget, 
interest rates will stay low because the government will not be out 
there gobbling up all of that excess cash and driving up interest 
rates.
  Well, conservatives look at a couple of historical figures. They have 
gone back to the 1970s when, in fact, interest rates were very high and 
deficits were not, and then they have gone to the late 1980s and early 
1990s when deficits were high and interest rates really were not and 
they said, see, one thing does not really have to do with the other.
  First of all, deficits and how they effect interest rates happens 
over a long period of time. It is not immediate. And it simply defies 
economic wisdom to say that the amount of money that the Federal 
Government is gobbling up has no impact whatsoever on what that money 
is going to cost. That is what interest rates are: the cost of money. 
So it just does not make any sense that it will not drive up interest 
rates. But beyond that, even if it did not drive up interest rates, if 
we run deficits year after year, the bottom line is, sooner or later, 
we run out of money. Sooner or later, the only thing the Federal 
Government is going to be able to do is pay this number down here, pay 
interest on the debt. Sort of like you get so far in debt, all you can 
do is make the minimum payment on your credit card, and as that number 
goes up, spending for everything else, for every other priority in this 
country must go down.
  If we run these types of numbers, 10, 15 years from now, the 
generations that follow us, the Congresses that follow us will have no 
money whatsoever to meet the needs of their day, and there will be 
needs. As we look around the country now, we can see many, many 
crushing needs. In education, the IDEA, the Individuals With 
Disabilities in Education Act, has been underfunded by tens of billions 
of dollars for years. Transportation. We have huge infrastructure needs 
in this country. Back to education. School construction. It is 
estimated that we have somewhere in the neighborhood of a $300 billion 
need for school construction. We will not meet that. Health care. 
Access to health care is in crisis. In my State, reimbursement rates 
for Medicare and Medicaid are so low that providers are frequently not 
accepting Medicare and Medicaid patients and they have got nowhere to 
go.
  The bottom line is there are needs that require funding. There are 
needs now, and there will be needs in the future. And if we continue to 
run up deficits like this, blow the debt through the ceiling, blow the 
debt payments through the ceiling, we will have no money to address 
those needs, our infrastructure will collapse, and the economic impact 
will be devastating.
  Bottom line: fiscal responsibility matters. If we drive home no other 
point in this hour this evening talking about fiscal responsibility and 
deficits, I hope it is that. Let us not get carried away with other 
issues and forget that fundamental point: balanced budgets and fiscal 
responsibility matter, and they are good for this country, and we 
should fight as hard as possible to see that those policies are 
enacted, that we get the budget balanced, that we put ourselves on a 
long term path towards fiscal responsibility. That will help this 
country grow economically and will help us be in a position to meet our 
needs for the future. The budget resolution that is coming out this 
week in the House and the Senate will not come close to being fiscally 
responsible. We need to make sure that we get that under control.
  I am pleased this evening to be joined by a couple of my colleagues 
who wish to discuss this issue. We have my fellow cochair of the New 
Democratic Coalition, the gentleman from Wisconsin (Mr. Kind), and I 
yield to him.
  Mr. KIND. Mr. Speaker, I thank the gentleman from Washington State, 
my friend, for taking a little bit of time this evening to discuss one 
of the paramount issues facing the United States Congress tonight, and 
that is the budget resolution and trying to put together the frameworks 
of the budget for the next fiscal year and for the next 10 years.
  This is important. At a time when our young men and women in uniform 
are fighting so well and so bravely in Iraq and our thoughts and 
prayers are obviously with them tonight, the Nation's business, 
nevertheless, continues here. And even though most of the media and 
most of the attention has been rightly focused on the military campaign 
in Iraq, this debate that is coming up later this week and which will 
be with us for many weeks to come is very crucial, because it is about 
fiscal responsibility and the long-term economic outlook for our 
Nation.
  As the gentleman indicated, we happen to be privileged to be cochairs 
of the New Democratic Coalition. It is a large group on the democratic 
side of pro-growth, moderate and centrist Democrats believing in making 
crucial investments for growth opportunities in our Nation and in the 
people so we can expand the boundaries of opportunity for all of our 
citizens, so they can be full participants in the global economy and in 
the new economy that is before us.
  We also work very hard in maintaining fiscal discipline in our 
decisions. Something that was very much on people's minds in the mid 
1990s when the gentleman and I got elected for the first time to the 
United States Congress, a lot of the talk and a lot of the concern on 
both sides of the aisle then was really about budget deficits and what 
we need to do, working together and as a Nation to reign that in, to 
start making sound fiscal choices in order to set up future generations 
for success. The gentleman may recall as well as I do that at that 
time, during the early and mid 1990s, when we were first running for 
office, there was an almost uniform consensus, even on the other side, 
decrying the fact that there were large budget deficits, claiming that 
that was horrific and that it stifled economic growth, and there was by 
and large bipartisan consensus with that viewpoint which was proven 
through the track record of the previous decade.
  Back then, when they pursued large spending increases, mainly in the 
defense area, but also coupled with huge tax relief, it led to 
unprecedented budget deficits which exploded the national debt. It 
quadrupled our national debt during the 12 years in the 1980s and the 
first couple of years of the 1990s, and everyone found that astounding. 
Now, what we are hearing from the other side is deficits do not matter. 
In fact, it is not just the leadership in Congress that has been saying 
that, but it has been the leadership on Pennsylvania Avenue coming out 
of the White House trying to claim to the American people that deficits 
somehow, some way, magically do not matter anymore in regards to 
economic performance.
  Well, that belies the history and the performance of our economy. As 
the gentleman indicated tonight and as I firmly believe, deficits do 
matter, while it may be understandable that in the short term, in the 
time of an economic slowdown and military action in Iraq, we may have 
to run some short-term budget deficits in light of these new 
challenges.
  What is most disturbing about the Republican budget resolution that 
will come up later this week is they have no long term plan to reverse 
the situation. What is being projected right now by their own Office of 
Management and Budget and their own Congressional Budget Office are 
deficits for as long as the eye can see. Over $300 billion, the largest 
in our Nation's history, for the next fiscal year alone, and that does 
not even include the emergency supplemental request that the President 
just sent to Congress in order to give the troops the resources they 
need. That will be another $80 billion plus that will be on top of the 
$300 billion of deficits. So we will be very quickly and

[[Page 9045]]

very fast approaching over $400 billion in deficits for the next fiscal 
year alone.
  Why is this important? It is important because it is happening at 
exactly the worst moment in our Nation's history, when we have an aging 
population, when we have 80 million of the so-called baby boomers 
rapidly approaching their retirement age and about to begin entry into 
the Social Security and Medicare system, and at the time when we should 
be trying to practice fiscal discipline and get the Nation on sound 
fiscal footing in anticipation of that demographic time bomb going off 
and protecting the monies in the Social Security and Medicare trust 
funds, anticipating this aging retirement boom that is rapidly 
approaching. Just the opposite is being proposed on the other side. In 
fact, they are proposing large tax cuts on top of the ones that already 
passed in 2001, and they are going to pay for that, in part, by taking 
all of the money out of the same Social Security and Medicare trust 
funds that virtually everyone in this chamber just 2 years ago are on 
record as saying that we will not do. It is very disturbing that this 
is going on and there is very little attention being paid to that.
  But they are also planning on doing it on the backs of some very 
important people in our Nation, not least of which are our current 
veterans. It is astounding to me that in their zeal in order to protect 
the President's proposed tax cuts that they are doing it by masking the 
true enormity of the budget deficit, but also trying to balance the 
budget on the backs of some of the most vulnerable and some of those 
who we owe promises to, such as veterans' health care services, 
including service-related disability health care. In their budget 
resolution that was before us just a couple of weeks ago, they were 
proposing about $16 billion worth of cuts with veterans' health care 
services, which is astounding when we think of the military campaign 
and the incredible devotion and sacrifice that so many young men and 
women in uniform are making on behalf of our Nation in the country of 
Iraq today.
  But it is not just us who discovered what was going on, it was all 
the veterans' organizations throughout the country that quickly 
recognized what they were trying to pull and submitted letters to 
Speaker Hastert and to the gentleman from Ohio (Chairman Nussle), the 
chairman of the Committee on the Budget. Let me just quote from a few 
of the letters that were submitted, one from the Commander of the 
Disabled American Veterans in which he stated in his letter, and I 
quote, ``Has Congress no shame? Is there no honor left in the hallowed 
halls of our government that you choose to dishonor the sacrifices of 
our Nation's heroes and rob our programs, health care and disability 
compensation, to pay for tax cuts for the wealthy?''
  Here is a letter from the Commander of the Paralyzed Veterans of 
America in which he stated, ``We do not consider payments to war-
disabled veterans, pensions for the poorest disabled veterans, and GI 
Bill benefits for soldiers returning from Afghanistan to be fraud, 
waste, and abuse.''
  And one from the American Legion: ``This budget defies common sense. 
There must be a better way to provide tax relief to the American people 
than to balance the budget on the backs of disabled veterans.''
  We owe the veterans nothing; they earned it. And here in their 
attempt to try to protect these huge tax cuts leading to unprecedented 
budget deficits, setting up future Congresses and future generations of 
Americans for failure because of the fiscal mess that is being created, 
they are going to try to bring forward later this week a budget 
resolution that calls for exactly that.

                              {time}  2100

  Before I turn back to my friend, the gentleman from Washington, I 
will draw attention to a very important article that appeared in the 
New York Times today. It is called ``No New Tax Cuts.'' It was written 
by some very famous people here in Washington and throughout the 
country that have spent a good deal of their public careers focusing on 
budgetary issues. It is a bipartisan group who are highly esteemed and 
well respected, even here in this Congress, made up of former Senator 
Bob Kerry; former Senator Sam Nunn; Pete Peterson, one of the co-chairs 
of the Concord Coalition; former Secretary of the Treasury Robert 
Rubin; former Senator from New Hampshire Warren Rudman; and also former 
Federal Reserve chairman Paul Volcker.
  They are warning the Congress in a letter in the New York Times today 
about the fiscal course that we are about to embark upon if these large 
tax cuts go through in light of the current projections.
  Let me just quote briefly from the article that they coauthored; all 
of whom, by the way, are members of the Concord Coalition. This is a 
nonpartisan group that does focus on Federal budgetary policy.
  In their article they state, and I quote, ``Our children and 
grandchildren are facing unthinkable payroll tax burdens that could go 
as high as 33 percent to pay for these promised benefits.'' They are 
referring to Social Security and Medicare. ``It is neither fiscally nor 
morally responsible to give ourselves tax cuts and leave future 
generations with an even higher tax burden.''
  I know my colleague, the gentleman from Washington (Mr. Smith), has a 
vested interest in it because he has a young child himself. I am the 
father of two little boys who are only 4 and 6. The last thing that 
either one of us wanted to do when we came to this Congress 6 years ago 
was to leave a huge legacy of debt for our children to have to wrestle 
with.
  If the programs are important enough today to authorize them and to 
call for them, then this generation of Americans should have the moral 
responsibility to figure out a way of paying for them, rather than 
borrowing and spending, borrowing and spending, and accumulating this 
huge national debt.
  In conclusion, Mr. Speaker, again, these authors of the article do 
feel that deficits matter. In their concluding paragraph they state 
why. I quote again: ``Congress cannot simply conclude that deficits 
don't matter. Over the long term, deficits matter a great deal. They 
lower future economic growth by reducing the level of national savings 
that can be devoted to productive investments. They raise interest 
rates higher than they would be otherwise. They raise interest payments 
on the national debt. They reduce the fiscal flexibility to deal with 
unexpected developments. If we forget these economic consequences, we 
risk creating an insupportable tax burden for the next generation.''
  That, I think, summarizes the very challenge that we face this week, 
and it is not too late. We can still get together in a bipartisan 
fashion and come together at the kitchen table like any family would 
do, dealing with family finances and figuring out what decisions we 
need to make so we do not pass a tremendous burden on to the children 
of our family. That is really what is at stake.
  Budgets are all about priorities, and hopefully this Congress will 
wake up and realize that our children's future should be one of the 
first priorities that we keep in mind. Let us pass a sensible, fiscally 
responsible budget that we can, years from now, look back on and say, 
yes, we had to make some tough decisions, but they were the right 
decisions under the right circumstances, and our children are the 
primary beneficiaries as a consequence.
  Again, I thank my friend, the gentleman from Washington, for the 
leadership he has shown on this very issue and for trying to secure a 
little time in order to talk about this, which is very important, even 
in light of the current military campaign in Iraq.
  Again, we wish the troops there our best. They are constantly in our 
thoughts and prayers, along with their families and their loved ones. 
We all, I think, agree that we hope to see a very quick and successful 
and safe conclusion to the military campaign in Iraq.
  Mr. SMITH of Washington. Mr. Speaker, I thank the gentleman for his 
comments.

[[Page 9046]]

  I just want to follow up on how this is the exact wrong time to run 
up deficits because of the baby boom generation and their coming 
retirement.
  I think there might be a tendency to say, we have heard this doom and 
gloom before. In the late eighties, early nineties, we had huge 
deficits, big debt, and people said we could never get out from under 
it. Lo and behold, by the late 1990s we were actually running 
surpluses.
  We were fortunate. We had a booming economy. A high-tech economy took 
off, productivity went up, and we were able to do that. There may be a 
tendency to think, see, the problem can be fixed.
  We are in a much different situation now, as the gentleman said. We 
are going to reach the point in the early part of probably about 2014, 
2015, when those Social Security surpluses that we have all grown used 
to, having huge surpluses in Social Security in order to offset debts 
in the other part of the budget, they are going to be gone. We are not 
going to have that money to rely on.
  What is more, the other part of the budget is going to now have to 
start covering the deficits in Social Security and in Medicare. So with 
the baby boom generation retiring, we are not going to be so fortunate 
this time.
  Mr. KIND. Will the gentleman yield on that point?
  Mr. SMITH of Washington. Absolutely.
  Mr. KIND. I think one of the crucial differences between now and what 
occurred during the 1980s with the economic policies that were pursued 
was that we had the decade of the 1990s to reverse course, and 
fortunately we did. With the Clinton administration and the tough 
budgetary decisions that they had to make in 1993, it set the Nation 
back on a course of declining deficits through the nineties; and then 
actually a few years when we were running real budget surpluses, which 
led to the protection of the Social Security and Medicare trust fund 
and a downloading of the national debt, thereby reducing the interest 
burden on that national debt.
  It was an incredible economic dynamic made by past Congresses making 
tough decisions in order to reverse course of the huge budget deficits 
that were created during the 1980s and the first part of the 1990s. 
Unfortunately, we do not have the luxury of time anymore. We are 
rapidly running out of time with the boomers' retirement just around 
the corner.
  That is why it is all the more important that we do not waste this 
opportunity with the budget resolution that may be before us later this 
week; and that we get together, again in a bipartisan fashion and with 
the President at the table, as well, to figure out what we need to do 
to reverse course with these truly frightening budget scenarios looking 
at $400 billion-plus deficits for many, many years, which will only 
hurt long-term economic growth by driving up long-term interest rates 
because of the squeeze on the available capital that is available in 
the marketplace.
  So time is of the essence. This really is not an academic debate. We 
can punt for the next year or a couple of years down the line, but 
these are decisions that I feel have to be made right now. Someone has 
to stand up and talk about this. I am glad the gentleman decided to 
take some time tonight to do it.
  Mr. SMITH of Washington. Mr. Speaker, I thank the gentleman for his 
help.
  Mr. Speaker, I yield to the gentleman from Washington (Mr. Inslee), a 
proud member of the baby boom generation that is soon to bankrupt us, 
although I will not hold him entirely responsible.
  Mr. INSLEE. Mr. Speaker, I am happy to join my colleagues here this 
afternoon to speak against this new Republican policy of eternal 
deficits. I am happy to speak against it because I think it represents 
sort of a ``three-strikes-and-you-are-out'' economic policy which 
really will doom America for quite a long period of time for three 
separate reasons.
  Before I talk about those reasons, I want to note that this probably, 
as far as I can tell, is the biggest political flip-flop in the last 
couple of millenia of American history. That may be perhaps a little 
bit of an overstatement.
  But as I recall the proud traditions of the Republican Party under 
Eisenhower, Rockefeller, and many good Republicans who preached the 
gospel in every political church in America that deficits clearly were 
a mark of evil, they fought for years against deficits. They came here 
and they sought constitutional balanced budget amendments, which they 
are still seeking.
  Now, after decades of propounding this basic bedrock principle, their 
answer is, never mind, we were just kidding. Now that they have decided 
that tax cuts for Ken Lay at Enron are more important than a balanced 
budget, they have decided that their decades of fundamental economic 
beliefs and theories were just a bunch of hokum.
  They were right then, but they are wrong now. They are wrong for 
three reasons.
  Number one: The Federal deficit that is now attempted to be foisted 
on the American people by this Republican majority is the biggest 
contribution to waste, fraud and abuse in the U.S. Government that is 
possible. It is waste, fraud and abuse because the biggest number of 
items of clear waste, fraud and abuse in the Federal Government is the 
interest paid by American taxpayers to service the Federal debt.
  That waste, fraud and abuse is an enormous number. It is close to the 
defense budget of the United States. For every $100 that American 
taxpayers pay in taxes, $14 goes to pay interest on the Federal debt 
that has been accumulated over the years of multiple generations and 
multiple Congresses. So $14 of every $100 every taxpayer pays does not 
buy a single soldier, it does not buy a single police officer, it does 
not get a single pharmaceutical prescription drug benefit; it goes 
right down the rat hole. This $14 figure out of every $100 will grow if 
the Republican budgets of longtime fixed deficits that will grow over 
the next decade prevail in these Chambers.
  That would be a sad day, because frankly, a lot of my friends in the 
Republican Party have also been quite vocal and eloquent about the need 
to end waste, fraud and abuse in government. Now, by their own budgets, 
they seek to increase the money of taxpayers going down that rat hole 
of paying interest on the Federal debt.
  Mr. Speaker, I cannot understand what Republican would take cheer 
from knowing they are going to waste more of the taxpayers' money to go 
down this black hole, but they certainly are. The reason they are is 
that they have decided it is more important to them, apparently, and of 
course I do not know this for sure, but the only assessment one could 
make is they have given greater priority to tax cuts rather than a 
balanced budget.
  The second reason, perhaps not as important as the last reason, but 
important nonetheless, this deficit is a dead weight around the United 
States' economy. I listened to Mr. Greenspan tell us that these 
deficits have the potential of increasing interest rates. Once the 
economy starts to rebound, once it starts to come back, he told us that 
we face the prospect of interest rates going up and choking off the 
eventual recovery.
  I do not think it is just his testimony that is persuasive to me; it 
is listening to the financial people that I represent, my constituents.
  I was on the ferry boat the other day and talking to a fellow that 
sells municipal bonds. We were talking about the fact that they have 
had a lot of municipal refinancing going on, besides homeowners, with 
the current low interest rates.
  But he was concerned, as a lot of people are in various sectors of 
the economy, that once we start to get out of this shadow and start 
picking up, that as soon as we start to get some growth in the economy, 
boom, interest rates go up because the Federal deficit continues to 
fuel that fire, and we are back into recession.
  This is like taking a big anchor and tying it to the leg of the U.S. 
economy, and it is a Republican anchor. It is a sorry thing to see that 
my colleagues

[[Page 9047]]

on the other side have decided to embrace these deficits that they 
know, because of their own economic theory, are a drag on the economy.
  It is interesting, I believe the new Assistant Secretary of the 
Treasury just a couple of years ago wrote a book, a textbook, saying 
how interest rates can go up as a result of these deficits, and now he 
has had this great epiphany. He has heard this voice from the heavens 
telling him, well, I must have been wrong. I guess tax cuts are more 
important, and he is working for the Bush administration. We know it is 
wrong, but it can cause enormous havoc in the economy.
  Perhaps, the other reason I have come to speak on the tax cut, 
economic models can come or go. We have different viewpoints. 
Economists feel different about what the theories are, the economic 
models.
  The one thing all Americans ought to agree on is the value of 
protecting our children. We are three fathers here tonight talking. We 
know all fathers and mothers care about their kids. The one value all 
of us ought to hold, Republican and Democrat alike, east and west, 
north and south, tall and short, is do not put a burden on our 
children.
  This is a moral issue much deeper than any particular economic 
theory. I think we all ought to share it. It is a very sad day when the 
majority party has decided to break that moral bond to our kids to put 
this indebtedness on them.
  Just one more comment and then I will close. The thing that is 
extraordinarily sad about this is that this is not a surprise. Our 
short-term deficits are in part due to war and recession. Part of the 
deficit on the short-term basis is clearly the war and the recession. 
However, we know these are intentionally inflicted, conscious, 
premeditated deficits. They are going to be here for decades because we 
know we are getting older and the baby boomers are going to retire.
  This is a premeditated moral and economic crime. I am speaking 
against it. I am pleased that some of the Senators in the other Chamber 
have stood up on a vote of courage and have prevented some of these tax 
cuts going through. I hope they can continue some of that profile in 
courage, and we can get a budget that does not break the bank and our 
children's backs.
  Mr. SMITH of Washington. Mr. Speaker, I thank the gentleman.
  I just want to close by saying, it does not have to be this way. 
There is absolutely no reason our Nation cannot put us on a fiscally 
responsible path in the next 10 years.

                              {time}  2115

  Now, I will be honest. I do not believe we can balance the budget 
this year. We have too many pulls upon us between the economy and the 
war and various other concerns, but over the 10-year period of time we 
could quite easily put together a budget that is balanced.
  I think the reasons we have not gotten there is because politics over 
the course of the last 20 years, certainly over the course of the last 
five or ten, in an accelerating fashion has become more and more about 
promises. And at the end of the day that is why I feel that the 
Republicans, and in some cases some Democrats, have tried to argue the 
deficit does not matter because the deficit is inconvenient. When you 
are out on the stump trying to get elected, people want tax cuts and 
they want spending programs. Fiscal responsibility in the short term 
does not put any money in anybody's pocket and it is a hard thing to be 
in favor of.
  You want to promise things. You want to promise a prescription drug 
benefit. You want to promise a big tax cut. You want to promise more 
money for the military or more money for education or more money for 
veterans. And those promises add up to far more than we could ever 
possibly deliver. And as those promises add up, we dig ourselves a 
deeper and deeper hole so that when we actually get back to Congress or 
in the White House and we have to make the decisions that are necessary 
to move our country forward, we have that huge stack of promises coming 
up behind us that we do not think that we can get out from under.
  Mr. Speaker, I guess I will close on a bipartisan note. While it is 
certainly true to say that the Republicans right now are behaving in a 
very fiscally irresponsible manner, they have turned on a dime from a 
rich history of fiscal responsibility for political reasons, it is fair 
to say that Democrats have not always been fiscally responsible either. 
In many cases they have supported more programs than our government can 
support. It is a bipartisan problem but it can also be fixed in a 
bipartisan manner. There are Republicans and there are many Democrats 
who believe in balanced budgets and fiscal responsibility. As a group, 
we need to rise up and make sure that our voices are heard and our 
policies get enacted. We cannot afford to have deficits for as far as 
the eye can see. We certainly cannot afford to have $4 trillion in 
deficits racked up over the course of the next 10 years.
  If we do, future generations will be dealing with a mess of a size 
this country has not seen. Fiscal responsibility matters. Let us always 
remember that and pledge to work on it.
  Mr. Speaker, before I am done I want to recognize the gentleman from 
Wisconsin (Mr. Kind).
  Mr. KIND. Mr. Speaker, I thank my friend for yielding to me before we 
yield back the remainder of our time. I think the gentleman has touched 
upon a very important point and we need to just restate it. And that is 
the essence of budgeting is all about decision making, but it should 
also be about taking responsibility for what is taking place today. And 
the easiest thing for a politician to be able to say to people back 
home or to run on the campaign is, You can have it all. You can have 
all these programs that you care about. We can fight this war in Iraq 
and do the rebuilding, and you can have large tax cuts on top of it and 
you can have it all.
  But you cannot because decisions have to be made. And if you pursue 
that type of economic policy, if you pursue that type of political 
message, what you leave the American people then are these massive 
budget deficits because the current generation of Americans are not 
stepping forward and taking responsibility for the decisions that are 
being made today. And what this, in essence, constitutes then is 
taxation without representation because it will be our children and it 
will be our grandchildren that will have to be the ones to clean up the 
fiscal mess that is being created today. And it is not fair to them 
because they too often are the neglected voices, the future of this 
country, when, in order to sell a certain type of philosophy or 
economic policy, you try convincing the American people that they can 
have it all. They can have this huge increase in defense spending that 
we are seeing right now and they can have a large tax cut at the same 
time which was exactly the same economic policy that was pursued in the 
1980's and first part of the 1990's.
  It has been said that what we are debating today is deja voodoo 
economics all over again. And I believe that because this is history 
repeating itself. Where we saw with the decisions made in the early 
1980's led to a quadrupling of the national debt and the detrimental 
economic effect it had on our Nation, and now we are back in that same 
type of scenario. And it is not too late. And hopefully we will be able 
to engage in a bipartisan conversation in this Congress and get the 
President and his people back involved in this. And let us come up with 
a long term plan recognizing the short term demands on the Treasury 
that we currently have, the obligations to fight international 
terrorism, to do Iraq right, not only winning the war but winning the 
peace. But let us also have a long term plan in order to set up future 
Congresses and our kids for a chance to succeed with this aging 
population which we all know is going to happen and which everyone does 
not really want to talk too much about. But this is the time for us to 
make these decisions, not when we have 80 million Americans suddenly 
retiring and entering these very important programs. I thank the 
gentleman for yielding to me.

[[Page 9048]]


  Mr. SMITH of Washington. The gentleman's remarks reminded me of a 
line from the President's State of the Union speech this year. Very 
early on in his speech he said that the paramount goal of his was that 
we shall not pass our problems and our challenges on to future 
Congresses. Now, I think what the President was alluding to at that 
point was Saddam Hussein and Iraq; and I happen to agree with him on 
that for one. I think it was bold and courageous to step up and address 
that problem and not pass it on to future Congresses.
  But I could not help but be struck by the irony of a line saying, We 
shall not pass our problems on to future Congresses. If you think about 
it basically what he was saying was but we shall pass on the bill. That 
is not responsible. When you run up deficits like this, that is the 
very definition of passing your problems on to future Congresses. It is 
irresponsible, unworkable, and not in the best interest of the future 
of this country. I am absolutely convinced we can do better, that we 
can put together a fiscally responsible budget that best prepares us 
for the future and allows future economic growth.
  I want to thank my colleagues again who came out to speak with me 
tonight on this issue. This is not the last time we will be talking 
about it. Fiscal responsibility is a never-ending job.

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