[Congressional Record (Bound Edition), Volume 150 (2004), Part 3]
[Senate]
[Pages 3527-3567]
[From the U.S. Government Publishing Office, www.gpo.gov]




 CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 
                                  2005

  The PRESIDENT pro tempore. Under the previous order, the Senate will 
proceed to the consideration of S. Con. Res. 95, which the clerk will 
report.
  The assistant legislative clerk read as follows:

       A concurrent resolution (S. Con. Res. 95) setting forth for 
     the congressional budget for the United States Government for 
     fiscal year 2005 and including the appropriate budgetary 
     levels for fiscal years 2006 through 2009.

  The Senate proceeded to consider the concurrent resolution.
  The PRESIDENT pro tempore. The chairman of the committee, the Senator 
from Oklahoma, is recognized.
  Mr. NICKLES. Mr. President, I ask unanimous consent that the presence 
and use of small electronic calculators be permitted on the floor 
during Senate consideration of the fiscal year 2005 concurrent 
resolution on the budget.
  The PRESIDENT pro tempore. Without objection, it is so ordered.
  Mr. NICKLES. I suggest the absence of a quorum.
  The PRESIDENT pro tempore. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. NICKLES. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDENT pro tempore. Without objection, it is so ordered.
  Mr. NICKLES. Mr. President, as we begin consideration of the budget 
resolution, I want to urge our colleagues to be prepared for a long, 
busy week. Under the rules of budget law, we have 50 hours on the 
resolution. Last year I am not sure how many hours we had, but it was a 
lot more than 50. I believe we had 81 rollcall votes. It was a very 
difficult and long week. It was actually longer than a week. It spilled 
over into 2 weeks.
  It is our intention to finish this week. That is going to take the 
cooperation of all Members. The majority leader already announced for 
Members to expect long nights, long days, and a lot of votes. I urge 
our colleagues to be prepared for a long week. Please don't come up and 
say, I have a plane reservation at 3 o'clock. I don't think you can 
count on that. I think you have to assume you are going to be here for 
very long evenings during long days--especially on Wednesday, Thursday, 
and Friday--until we conclude this resolution. I want to make sure that 
is known.
  Saying that, I urge colleagues to work with my friend and colleague, 
Senator Conrad, and myself. If you have amendments, please present them 
to us. Give us time to consider them. Maybe we can accept them; maybe 
we can't; maybe they will have to be objected to. But at least give us 
a chance to review the amendments.
  Last year we ended up in a very demeaning process. We called it a 
vote-arama. But we had a lot of votes that were on sincere issues that 
were considered with very little debate. I would like to--one of the 
little legacy things--change the way we manage Senate budget 
resolutions. By saying that, I would like to avoid the vote-arama, or 
at least minimize it, and maybe have a certain number of votes on each 
side. Sometimes last year we voted on the same thing several times. I 
don't think that helps the Senate. I want us to represent the Senate 
very well.
  I want to warn our colleagues to expect a long week. Hopefully we 
will conclude. I would love to have it concluded Thursday night. I 
doubt that will happen. But we will work aggressively with all of our 
colleagues. And when we get into votes, we are going to be very pushy 
on trying to limit the time on those votes.
  I am just making mention of a couple of those things to let 
colleagues know they should expect a long week and late nights. It may 
be that Senator Conrad and those who are proposing amendments will work 
late and we will stack votes for the next morning. That might be my 
preference. But I will work with Senator Conrad, who is a very good 
friend and manager on the minority side, on this difficult challenge of 
passing a budget.
  Again, we have the budget resolution before us. I will be talking 
about that momentarily. It cuts the deficit in half. Actually, we cut 
it in half over 3 years. The deficits are far too high. Having $500 
billion deficits is not acceptable to this Senator, nor do I think it 
is acceptable to anybody. We charted a path to bring it down and bring 
it down rather abruptly. It will take the cooperation of all people to 
conclude this week, and also to make that happen. That is not easy 
easily done.
  Again, I urge the cooperation of all of our colleagues and look 
forward to working with my colleague, Senator Conrad, for the remainder 
of this week.
  I yield the floor.
  The PRESIDING OFFICER (Mrs. Dole). The Senator from North Dakota.
  Mr. CONRAD. Thank you, Madam President.
  I join the chairman of the committee in reminding our colleagues that 
this will be a long week with many amendments. I am very hopeful that 
we on our side can find a way to get more amendments considered on the 
front end more quickly--the chairman and I discussed this and I think 
we are of like minds on this--rather than having a big crush at the 
end. Maybe if we spent less time on amendments on the front end and 
more votes on the front end we could eliminate some of that gridlock at 
the end. I think the chairman is entirely correct. That would be good 
for the Senate. It would be good for the disposition of these 
amendments and a better way to reach a conclusion.
  The President has sent us a budget. I want to talk about that in part 
and then later on to talk about the chairman's mark.
  First of all, I want to discus the budget the President sent to the 
Congress. In the President's budget, it spends $991,000 a minute more 
than it takes in. That is truly a stunning statistic. Every minute, 
under the President's plan, this country spends $991,000 more than it 
takes in.
  In 2001, the President told us:

       Tax relief is central to my plan to encourage economic 
     growth, and we can proceed with tax relief without fear of 
     budget deficits, even if the economy softens.

  That is what he told us in 2001.
  Let us look at the result. We have seen the deficits absolutely 
skyrocketing. Here we are back in 2001, and we are still in the black. 
But look

[[Page 3528]]

at where we have gone. So the President was wrong when he asserted 
that.
  A year after the President's first budget, he said to us:

       . . . [O]ur budget will run a deficit that will be small 
     and short term.

  This is after we saw a return of deficits which the President said 
would not happen.
  In the second year, he told us:

       . . . [O]ur budget will run a deficit that will be small 
     and short term.

  That proved to be wrong as well. We don't see deficits that are small 
and short term. We see deficits that are large and long term. In fact, 
this chart shows the operating deficits under the President's plan from 
this year going to the end of the budget period. You can see these are 
massive deficits, by far the biggest we have had in our country's 
history.
  In the third year, the President told us:

       [O]ur budget gap is small by historical standards.

  Let us look at in fact what has occurred with respect to that claim. 
You can see this goes back to 1969. It shows the deficits in dollar 
terms. It shows these are record budget deficits, the biggest we have 
ever had. So the President was wrong again.
  The President said at the end of last year:

       Now, we've laid out a plan that shows the deficit will be 
     cut in half over the next five years, and that's good 
     progress toward deficit reduction.

  We have to ask, Is the President going to be wrong again?
  This chart speaks to that. It shows, I believe, that the President 
will be absolutely wrong again, and wrong by a big margin. The 
President says in the fifth year the deficit will be $237 billion. But 
that is only the case if you leave out lots of items. If you leave out 
the $30 billion of additional war cost the Congressional Budget Office 
tells us we will still be facing in that fifth year; if you leave out 
the money needed to fix the alternative minimum tax, which was, as you 
know when it began, a millionaire's tax. Now it is rapidly becoming a 
middle-class tax. In fact, about 3 million people are now affected by 
the alternative minimum tax. By the end of this period, we will have 30 
million to 40 million people affected by the alternative minimum tax.
  In addition, the President is not talking about the money he will be 
taking from the Medicare trust fund, or the Social Security trust fund. 
In that fifth year alone, the President will be taking $235 billion 
from the Social Security trust fund. That is much bigger than his 
entire projected deficit for that year. Every penny of this has to be 
paid back, and the President has no plan to pay it back.
  The same is true with the Medicare surplus--$22 billion he is 
borrowing from the Medicare trust fund, again with no plan to pay it 
back.
  Of course, we have the Congressional Budget Office reestimate. They 
have looked at the President's numbers and made a change. They think 
the number will be bigger than the President anticipated.
  If you add all of this up, instead of adding $237 billion to the debt 
in that fifth year, we believe under the President's plan he will be 
adding $600 billion to the debt.
  What we have, I believe, is a consistent pattern by the President to 
hide from the American people the full story of our fiscal condition. 
Here is just a few of the ways he is hiding the full effect of his 
plan.
  The first way he does it is he provides no new funding for ongoing 
operations in Iraq, Afghanistan, and the continuing war on terror, no 
new money past September 30 of this year.
  Does anybody seriously believe the war in Iraq, the war in 
Afghanistan, and the war on terror are going to end on September 30, 
which happens to be the end of the fiscal year? Does anybody believe 
that? That is what is in the President's budget. When we ask the 
President's representatives, they say: Well, it is hard for us to know 
what the cost will be.
  We can understand that. But the right answer is not zero, and the 
President is telling us there is no cost for the war on terror, no cost 
for the war in Afghanistan, no cost for the war in Iraq past September 
30 of this year.
  The Congressional Budget Office tells us that, instead of a zero, we 
ought to be putting in $280 billion for these costs for the period 2005 
to 2014. That is what they say the war cost will be going forward: $280 
billion. The President has nothing.
  But that is not the only place the President is failing to tell the 
American people what we really face. The Bush budget also hides the 
full story on the cost of extending the tax cuts. The President has 
come before us and said: Make all the tax cuts permanent. I wish we 
could do that. But look at what happens. This dotted line shown on the 
chart is the first 5 years. The Bush budget only covers the first 5 
years. But look what happens to the cost of the tax cut right beyond 
the 5-year budget window. The cost of the tax cut explodes.
  This is being hidden, in effect, from the American people. I think if 
they have a chance to see this information, they will realize the 
President has us on a fiscal course that simply does not add up. The 
deficits and debt absolutely skyrocket as we approach the retirement of 
the baby boom generation.
  It is not just the war cost or the cost of the tax cuts, but we also 
see the same pattern with the alternative minimum tax. The alternative 
minimum tax was the tax that was designed to catch millionaires, catch 
people who were filing and paying no taxes. Remember, back in the 
1980s, we had that circumstance where Congress found there were a 
number of people making, at that time, $200,000 a year, and there were 
22 of them who did not pay a penny of tax.
  In response to that, Congress put in place the alternative minimum 
tax. It affected a very small number of taxpayers. But it has not been 
adjusted since the time it was put in place, and now we have between 2 
and 3 million people caught up in the alternative minimum tax.
  But we have not seen anything yet because by the end of this 10-year 
period, they are telling us 40 million people will be caught up in the 
alternative minimum tax. The old millionaires' tax is swiftly becoming 
a middle-class tax trap. The President deals with the problem only for 
the first year in his budget. He does not deal with the soaring cost 
over the 10 years, again hiding the full story from the American 
people.
  But perhaps the biggest place--the biggest place--the President is 
hiding the full effect of his budget policies is with respect to Social 
Security. The President, after pledging not to use Social Security to 
pay for tax cuts or other expenditures of Government, is now using, 
over the next 10 years, every penny of Social Security surplus. And 
remember, the word ``surplus'' is not accurate because the money is not 
extra. This is money that is needed when the baby boomers retire. It is 
surplus for the moment. That is money that should be used to pay down 
the debt or prepay the liability.
  Instead, the President is taking it to pay for tax cuts and other 
things. He is taking every penny of Social Security surplus, not just 
this year, not just next year, not just for the next 5 years, but for 
the next 10 years under the President's plan--and all of that at the 
worst possible time, right before the baby boomers begin to retire. 
Those funds will be needed to keep the promise made to them.
  Remember, in 2001, the President told us he was going to have maximum 
paydown of the debt. He said he would virtually eliminate the debt. 
Well, he was wrong again. Because we see the debt exploded. The gross 
debt of the United States was $5.8 trillion in 2001 when he took 
office. We now project--using his tax cuts, the alternative minimum tax 
reform that will be required, and the ongoing war costs; just making 
those three corrections--the gross debt of the United States will 
skyrocket to $14.8 trillion in 2014.
  You wonder, where is all that money coming from. We are running up 
this huge debt. Where is this money coming from? Well, we have already 
seen the President is borrowing $2.4 trillion

[[Page 3529]]

from the Social Security trust fund--$2.4 trillion; every penny of the 
Social Security surplus. He is taking every penny available to borrow, 
and using it to pay for tax cuts and other things.
  But that is not the only place from which he is borrowing. He has 
borrowed already $545 billion from Japan, $149 billion from China; he 
has borrowed $69 billion from the so-called Caribbean banking centers; 
he has borrowed $58 billion from Hong Kong; he has even borrowed $43 
billion from South Korea. I do not think this makes us stronger. I 
think this makes us weaker. And that is what has happened.
  The President is very fond of saying it is the people's money; we 
have to give it back to them.
  Well, that may have made more sense when there was a surplus, but now 
that you are in deficit, it is the people's money, certainly, but it is 
also the people's debt. Where is the money coming from to finance this 
debt? It is coming from borrowing. We are borrowing from ourselves. We 
are borrowing from the Social Security trust fund, the Medicare trust 
fund, under the President's plan, and we are borrowing from countries 
all around the globe, money that will ultimately have to be paid back, 
and the President has no plan to do it.
  Here are the implications of this policy. This is from a story that 
was in the Washington Post on January 26 of this year: ``Economists 
Worry About Long-Term Effects of Weak Dollar and Heavy U.S. 
Borrowing.'' Here is what it said in the article:

       Currency traders fretting over that dependency--

  The dependency they are talking about is our need to borrow all this 
money, borrow from the budget deficit, now approaching $500 billion 
this year. We are also, in effect, borrowing from the rest of the world 
to finance our trade deficit, which is also about $500 billion a year.

       Currency traders fretting over that dependency have been 
     selling dollars fast and buying euros furiously. The fear is 
     that foreigners will tire of financing America's appetites. 
     Foreign investors will dump U.S. assets, especially stocks 
     and bonds, sending financial markets plummeting. Interest 
     rates will shoot up to entice them back. Heavily indebted 
     Americans will not be able to keep up with rising interest 
     payments. Inflation, bankruptcies and economic malaise will 
     follow.

  That is the risk the President is running with these enormous 
deficits as far as the eye can see. We have a circumstance where we 
have run deficits in the short term. That is more understandable. We 
have been wracked by an attack on September 11. We have had an economic 
slowdown. We have a war in Afghanistan and Iraq. I think we can all 
understand that we would expect to run deficits in that circumstance.
  The problem I see is the President's plan going forward. Because even 
when he sees economic recovery continuing, we are running deficits that 
are larger than anything we have seen in our country's history--not 
just for the next few years but the next 5 years and the next 10 years.
  When they said in the article that economists are worried about the 
long-term effect of the drop in the value of the dollar, here is what 
they are talking about.
  The dollar has declined more than 30 percent against the euro just 
since 2002. In other words, our currency has lost 30 percent of its 
value against the European currency in the last 2 years. That has 
enormous implications, both short term and long term.
  In the short term, it helps us celebrate abroad. If our dollar is 
worth less, it makes it easier for us to sell abroad. It makes it 
harder for us to buy from other countries, so that gives a boost in the 
short term to our economy.
  The problem is, if it continues for an extended period, then people 
who are investing in the United States in dollar-denominated securities 
may decide it is no longer advantageous to invest in dollar-denominated 
investments. They may decide it is time to diversify out of dollar-
denominated investments. That could have a very serious and negative 
consequence on the American economy.
  From the Washington Post this morning, I urge my colleagues to look 
at the story about Warren Buffett--Warren Buffett, the second richest 
man in the world, somebody who is a patriotic American--indicating that 
he is betting against the value of the U.S. dollar. He has bet $12 
billion against the value of the American dollar.
  I was just with a financial adviser, one of the most prominent 
financial advisers in America, who had a strategy meeting with one of 
America's wealthiest families. For the first time at their meeting, 
they decided to begin to invest in other than dollar-denominated 
investments because they believe the threat to the value of the 
American dollar to long-term American economic strength is being so 
undercut by these budget and trade deficits.
  We have to get serious about the long-term economic security of our 
country. Do not take my word for it. This is from the President's own 
budget document. It is the long-term budget outlook. If we adopt the 
President's spending plan and if we adopt the President's tax plan, 
this is what it shows. This is a very sobering chart. It tells us that 
right now we are in the budget sweet spot. Even though this represents 
a record budget deficit, the biggest we ever had, it shows things 
getting somewhat better on a so-called unified basis when Social 
Security money is being used to pay our bills.
  Look what happens in the long term as the baby boomers start to 
retire and the cost of the President's tax cuts explode: The deficits 
go right off the cliff, deficits that are utterly unsustainable and 
that fundamentally threaten the economic strength of the country. That 
is from the President's own budget document. That is their outlook of 
where this is all headed. This is a policy that cannot be justified 
over the long term. It is utterly unsustainable.
  If you do not want to trust the President's numbers--and I understand 
that after we have looked at the previous claims of what would happen--
this is what the Congressional Budget Office shows. It is exactly the 
same thing. This is their long-term budget outlook--again, a percentage 
of GDP so the effect of inflation has been taken out.
  They show, with the President's tax cuts, the need for alternative 
minimum tax reform, maintaining current spending policies, and, of 
course, the President is really increasing current spending because of 
the increases in defense and homeland security. Look what happens. The 
long-term deficits absolutely skyrocket.
  All of this is happening at the worst possible time, as this chart 
shows. This chart shows the tax cuts explode as the trust fund cash 
surpluses become deficits. This chart shows, in green, the Social 
Security trust fund. The blue is the Medicare trust fund. The red are 
the tax cuts, both those already passed and those proposed by the 
President.
  What this chart shows is right now the surpluses in the Social 
Security and Medicare trust funds are offsetting the cost of the tax 
cuts. Look what happens when the trust funds go cash negative in 2016 
and 2017. At the very time the cost of the tax cuts explode, that 
combination drives us right over the fiscal cliff. This sets up a very 
difficult set of choices for the future.
  This is a joint statement by the Council on Economic Development, the 
Concord Coalition, and the Council on Budget and Policy Priorities. In 
the fall of last year, trying to help people understand what we will 
face in the future as a result of digging the hole so deep now, this is 
what they said:

       To get a sense of the magnitude of the deficits the nation 
     is likely to face without a change in policies, consider that 
     even with the full economic recovery that CBO forecasts and a 
     decade of economic growth, balancing the budget by the end of 
     the coming decade would entail such radical steps as:
       Raising individual and corporate income taxes by 27 
     percent; or eliminating Medicare entirely;

  We have had tough choices in the past. Wait and see what is to come. 
Three very serious groups are warning where we are heading.
  Continuing:

       Raising individual and corporate income taxes by 27 
     percent; or eliminating Medicare entirely; or cutting Social 
     Security benefits by 60 percent.

  We have just had the head of the Federal Reserve, Chairman Greenspan, 
say

[[Page 3530]]

we are overcommitted. He said we ought to consider cutting Social 
Security benefits. But he has not said cut Social Security benefits by 
60 percent. That is what these three organizations are saying would be 
the options facing a future President and a future Congress if we stay 
on this current course.

       Or shutting down three-fourths of the Defense Department; 
     or cutting all expenditures other than Social Security, 
     Medicare, defense, homeland security, and interest payments 
     on the debt including expenditure on the debt--including 
     expenditures for education, transportation, housing, the 
     environment, law enforcement, National Parks, research on 
     diseases, and the rest--by 40 percent.

  I hope our colleagues are listening. I hope they are paying 
attention. We are on a course that is a reckless course. It is not a 
conservative course. It is a radical course. It is a course that is 
utterly unsustainable and will lead us into very serious trouble.
  If we look at what has happened to spending, it is important to know, 
again, if we look at total Federal spending, a share of GDP, and we go 
from 1981, we reached a peak in 1983 of 23.5 percent of gross domestic 
product going to the Federal Government and then it zigzagged.
  In 1991, we put in place a 5-year budget plan that took spending down 
each and every year as a share of gross domestic production. Then, in 
1997, we passed a bipartisan plan that took us down even further, so 
that in 2001 we were down to 18.4 percent of gross domestic production.
  The Federal Government spending had come down very sharply in that 
20-year period. Now we have had this tick-up, and this tick-up 
primarily has been for defense, homeland security, and the response to 
the September 11 attack, rebuilding New York, and bailing out the 
airlines. Even with that tick-up, we see we are still well below the 
spending levels of the 1980s and 1990s in terms of what the Federal 
Government is spending.
  If we turn to the revenue side, we see quite a different picture. On 
the revenue side, we can see the revenue side of the equation has just 
collapsed. In 2004, we now expect revenue to be 15.8 percent of gross 
domestic production. The revenue has just collapsed. We will have the 
lowest revenue as a share of gross domestic production since 1950.
  Spending is down substantially from where it was in the eighties and 
nineties, however up from where it was in 2001 because of the increases 
for defense. Ninety-one percent of the increases have been for defense, 
homeland security, and the response to the attacks of September 11.
  Look what has happened on the revenue side of the equation. The 
revenue side of the equation has collapsed. About half this is due to 
the tax cuts. The other half is due to the economic slowdown. Again, we 
have a real problem on the revenue side of this equation.
  The President said last month in a speech in Louisville:

       We've got plenty of money in Washington, DC, by the way.

  We do not have plenty of money to pay the bills. There is a lot of 
money here, there is no question about that, but we cannot pay our 
bills and we cannot come anywhere close to paying our bills. So when 
the President says we have plenty of money here, he certainly is right, 
these are very big numbers with which we are dealing, but we do not 
have enough money to pay the bills.
  We are going to hear from the other side that the President has done 
a good job with his budgets getting the economy growing again. If we 
look at the economic record of this President, what we see is, in terms 
of creating private sector jobs, this administration is the first one 
in 70 years to lose private sector jobs. It is pretty stunning. If you 
look back, every single President--President Roosevelt, President 
Truman, President Eisenhower, President Kennedy, President Johnson, 
President Nixon, President Ford, President Carter, President Reagan, 
President Bush 41, and President Clinton all had positive job creation 
in the private sector. We have to go all the way back to Herbert Hoover 
to see a President who has lost private sector jobs. That does not tell 
the full story because as we look at what has happened and compare it 
to history, what we see should be of concern to all of us.
  I asked my staff to go back and look at what has happened in the 
previous times when we had an economic slowdown. I asked them to look 
at the last nine recessions we have had since World War II and compare 
job recovery out of those recessions to what is happening now because I 
think this should alert all of us. Something is wrong, and we have to 
diagnose what it is. I have some ideas. I am sure my colleagues will 
have some ideas, but there is something very wrong happening.
  This is a chart of a fit line looking at what happened in the last 
nine recessions. We have a dotted red line, the average of nine 
recessions since World War II coming out of recessions. The bottom of 
the chart is the months after the business cycle peak. What we see is 
about 17 months after the peak, there is typically a strong job 
recovery. That is about 17 months after the business peak.
  Look at what has happened this time. We are now 35 months or 36 
months past the business cycle peak, and still we see no substantial 
job recovery. In fact, we are now 5.4 million jobs short of the typical 
recovery.
  If we were comparing to just one time, I would be less concerned, but 
this is every recession since World War II, nine recessions, and if we 
compare what has happened in each of those to what is happening this 
time, something is wrong. Something is radically wrong. Typically in 
these other cases, 17 or 18 months past the business cycle peak, we 
started to see very strong job recovery. Here we are 37 months past the 
business cycle peak and we still do not see job recovery. As I 
indicated, we are 5.4 million jobs short of the typical recovery. In 
fact, it is not just of a typical recovery; it is of every other 
recovery since World War II. In the nine previous recessions, every 
other time, by this time, we would have been strongly recovering. It 
has not happened.
  Again, we are going to hear from the other side that things are 
pretty good. What we see here is the smallest share of the population 
is at work since 1994. Again, this is a warning signal to us. Madam 
President, 62.2 percent of the population is employed now. We see the 
percentage of the population employed down very sharply from 2000 to 
now--down very sharply. Only 62.2 percent of the population is 
employed. We have to go all the way back to 1994 to see a number that 
weak.
  It is not just that statistic which ought to concern us. We also see 
the longest average duration of unemployment in over 20 years--that is, 
if we look at how long people are unemployed, we find they are staying 
unemployed for a longer period than any time in the last 20 years. In 
other words, people are not finding jobs quickly when they become 
unemployed. When they are laid off, they are not finding jobs for 
extended periods of time.
  This side of the graph is over 20 weeks people have been waiting to 
find a new job. Again, that takes you all the way back to 1984 to see 
people having to wait so long to find other work.
  I also asked my staff to look at what has happened to real wages 
during the Bush administration and compare it to the previous 
administration. Here is what we found.
  If we go back to 1996, the average wages in the country were $485. By 
the end of the Clinton administration, it got up to $530. During the 
Bush administration, average wages have only gone up $8 a week. That is 
very weak in historical comparison. Again, it is another warning sign 
that the set of policies which are in place are not working 
appropriately.
  I know we will hear the other side talk about the stock market 
recovery that has taken place, and that certainly has been welcomed. It 
is much better than where we were. We need to remind ourselves where we 
are now compared to where we were.
  As this chart shows, the market recovery still leaves stock prices at 
1998 levels. We have to go back 6 years to find the stock market at 
this level.
  Another point we have heard from the other side--and I am sure we 
will

[[Page 3531]]

hear again--is don't worry, it is the surveys that are at fault; that 
is what is misleading us as to what is going on in terms of employment. 
They will say over and over that the household survey--we heard this in 
the Budget Committee debate--the household survey is the one to which 
we ought to be paying attention, but that contradicts their 
Commissioner of the Bureau of Labor Statistics in testimony before the 
Joint Economic Committee. The Commissioner said:

       The payroll survey is the best indicator of current job 
     trends.

  That is what we have used here in these statistics. I am sure we will 
hear the other side argue, as they have in the Budget Committee, that 
the household survey is better. But the person who is in charge of the 
Bureau of Labor Statistics contradicts that and says the payroll survey 
is the best indicator of current job trends.
  If we look at the President's economic report that was issued on 
February 9, just a month ago, they said in that report:

       [W]e expect sort of an average jobs in 2004 to be 2.6 
     million more than jobs in 2003.

  This is the President's economic report. This is his prediction of 
what is going to happen, that there are going to be 2.6 million more 
jobs this year than last year. From here going forward, that would 
require the creation of 520,000 jobs a month.
  Let's do a little reality test. Here is what happened in February: 
The increase in jobs was not 520,000 for that month. It was 21,000. In 
the private sector, there were no new jobs. Every one of these jobs was 
a Government job. Of the 21,000 jobs created in February, every single 
one of them was a Government job. There were no private sector jobs 
created.
  The President's report says there are going to be 520,000 jobs 
created if we are going to meet their claim that there are going to be 
2.6 million more jobs by the third quarter of 2004 compared to the 
third quarter of 2003. For that to come true, they would have to 
generate 520,000 jobs a month. In February, it was 21,000 jobs and not 
a single one of them was in the private sector. Every single one of 
these new jobs in February was in the Government.
  So the President's plan is not working. He told us in 2001 this plan 
would not create deficits. It has created the biggest deficits in our 
country's history. He told us it would create jobs. Here we are 3 years 
later. Where are the jobs?
  This is what consumers believe is happening. Consumers believe jobs 
are hard to get. Eighty-eight percent believe jobs are not plentiful or 
are hard to get. Only 12 percent believe jobs are plentiful. It is not 
just with respect to recovery. It is not just with respect to job 
creation. It is not just with respect to people having an opportunity 
to find a new place if they lose their old job. We are also seeing the 
wage growth of production workers starting to fall behind inflation.
  This green line shows the average hourly earnings of production of 
nonsupervisory workers. Let's look at this because it goes back to 
2001. This is the 12-month percentage change. Back in 2001, we saw an 
average hour of earning increasing at a rate of over 4 percent. Since 
that time, it has been almost a steady downward pattern. We see now 
average wages are going up between 1.5 percent and 2 percent. The red 
line shows consumer prices, and this year we have now seen the lines 
cross, so that hourly average earnings are not keeping up with 
inflation. We are not seeing them keep pace with the increases in 
consumer prices, another warning sign this is a policy that is not 
working.
  This is our initial take on the President's budget. We think it is 
taking us in the wrong direction. Let me be clear. When the President 
came into office in 2001, on our side we proposed a much larger tax 
reduction in the near term than did the President. I know many people 
will be surprised by that, but it is a fact. We proposed a budget that 
had much bigger tax cuts in the short term, to give lift to the 
economy, than did the President. But we had much less in tax cuts over 
the 10-year period, about half as many, to avoid going into this 
deficit swamp.
  In retrospect, we were right. It was right to have tax cuts on the 
front end to give lift to the economy. The economy clearly needed it. 
It was a mistake for the President to propose these massive tax cuts 
going out for years into the future when we had the baby boom 
generation about to begin retiring. It is the combination of policies 
the President has pursued that we believe is a mistake. We believe, 
yes, we should have had tax cuts in the short term to give lift to the 
economy, although we would have chosen a different mix of tax cuts than 
the President did.
  Interestingly enough, the President adopted some of our suggestions, 
the 10-percent rate, the child care credit, reducing the marriage 
penalty, and we salute him for that. Those are policies many of us on 
this side agreed with. But the President also adopted dramatic cuts in 
capital gains and dividend taxation. These are taxation policies the 
Congressional Budget Office told us would give us very little bang for 
the buck in terms of job creation and economic growth. I think the 
Congressional Budget Office was right. I think that particular mix of 
tax cuts the President chose was not the right mix to give maximal lift 
to the economy in the short term.
  As we see going forward, the President's tax cuts are so large they 
fundamentally threaten our long-term economic security. That is where 
we have the significant difference.
  I am pleased to see members of the Budget Committee in the Senate and 
the House have not adopted the President's full tax cut proposal going 
forward. Now maybe it will occur in later years, past the 5 years. None 
of us can know that now, but at least in this budget cycle they are not 
endorsing the President's plan to have another trillion and a half 
dollars of tax cuts when we already have the largest deficits in the 
history of our country and we are about to have the baby boomers begin 
to retire, which will dramatically increase the expenditures of the 
Federal Government, because that is one thing we know. The baby boomers 
are not a projection; they are out there. They have been born. They are 
alive. They are eligible for Social Security and Medicare, and we are 
faced with a circumstance in which we have to start making very tough 
decisions.
  My own belief is we have to be tough on the spending side of the 
equation and we have to be tough on the revenue side of the equation. 
We have to slow the growth of Federal spending. On the other side of 
the equation, we have to do something about the revenue mess because 
the revenue this year is the lowest as a percentage of gross domestic 
product since 1950. When the revenue was high as the share of gross 
domestic product, the President said we needed tax cuts. Now that it is 
the lowest it has been since 1950, the President's answer is, more tax 
cuts.
  It does not matter what the problem is, this President comes up with 
the same answer: Tax cuts, tax cuts, and tax cuts that primarily go to 
the wealthiest among us.
  I have a chart with me which I will use later on that shows 33 
percent of the tax cuts this President has proposed and those that have 
been enacted have gone to the wealthiest 1 percent, those earning over 
$337,000 a year. That is not a fair distribution of the tax cuts in 
this country. It is one reason we have a very weak job recovery, 
because the tax cuts that were selected were tax cuts that primarily 
went to the wealthiest among us rather than being targeted at middle-
income people who would spend the money. So much of this money has gone 
to high-end people who save it.
  As meritorious as it is to save money, and I try to remind my 
daughter of this from time to time, that saving is a good thing, but 
when talking about getting an economy moving we need that money to be 
spent, we need that money to be moving in the economy. If we look at 
this economic recovery that has occurred, to the extent it has 
occurred, there are many factors. One of the biggest factors is the 
monetary policy of this Nation.
  The Federal Reserve has the most accommodative monetary policy in 40 
years. It is a key reason this economy has recovered. We have combined 
debt in this country of over $20 trillion.

[[Page 3532]]

  So an accommodative monitoring policy, the lowering of short-term 
interest rates from 6.5 percent down to 1 percent, has been a key 
reason for the lift of this economy. The second key reason for the lift 
of this economy has been the stimulus both on the tax side and the 
spending side. The two of them are about equal over this 3-year period.
  If we look at the increased spending that has occurred--and it has 
been substantial since 2001--from 2001 to 2003, the Federal Government 
has increased expenditures by 20 percent. Of course, the tax cuts--
especially those geared to the middle class--have helped give lift to 
this economy.
  A third factor helping economic recovery has been the decline in the 
value of the dollar. That can have negative long-term consequences; but 
in the short term, a decline in the value of the dollar makes it easier 
for us to sell abroad, which helps our manufacturing industry and all 
those that export. It holds down imports because imports become more 
expensive. So that has helped give lift to the economy in the short 
term as well.
  Madam President, the bottom line is that I believe the fiscal course 
the President is taking us on--not so much in the short term, although 
that is of increasing concern, but the longer term proposals by the 
President are truly dangerous to the economic security of our country. 
The deficits are too large. They are too long lasting. They explode as 
the baby boomers retire and the full cost of the President's tax cuts 
become clear.
  I believe we have a responsibility to alter that course. I believe it 
will become more and more clear in the months ahead that the course we 
are on is utterly unsustainable and fundamentally reckless. That is why 
we simply must change course.
  I thank the Chair and yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. CONRAD. Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. NICKLES. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. NICKLES. Madam President, I ask unanimous consent that the time 
during quorum calls be equally divided.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. NICKLES. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. CONRAD. Madam President, I ask unanimous consent the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CONRAD. Madam President, the chairman has indicated to me he will 
return in a few minutes and begin his presentation at that time. Rather 
than have the time be lost, I will say a few words now.
  In addition to being concerned about the President's plan to explode 
the deficits and the debt, as I look at the President's plan I also see 
what I believe are misplaced priorities. Let me discuss just a few.
  As this chart shows, the Bush plan cuts No Child Left Behind, but 
that cut saves very little in comparison to the cost of the tax cuts 
for that same year going to the most wealthy 1 percent. Let me just be 
very clear. The President's plan shorts No Child Left Behind by $9.4 
billion in this fiscal year, 2005. We passed legislation here that gave 
increased responsibility to the States, increased the expenses of the 
States, and in exchange we said we would cover the costs. The 
President's budget fails to do that. It fails to do it by $9.4 billion 
for 2005.
  But in that same year the cost of the President's tax cuts for the 
most wealthy 1 percent, those who earn over $337,000 a year, are $45 
billion, five times as much as the money needed to keep the promise of 
No Child Left Behind.
  I must say I am in this category. My wife and I are in the top 1 
percent. I would be happy to give up part of my tax cut. I would be 
happy to have it reduced by 20 percent to keep the promise for No Child 
Left Behind.
  The same is true in other categories--veterans medical funding, for 
example. The President's budget is $521 million short of providing 
funding for veterans medical care in 2005 that should be in place to 
fund it at the same level as last year. It would take $521 million to 
bring it up to what we did last year for veterans medical care.
  In that same year, the President's tax cuts cost $45 billion for the 
wealthiest 1 percent, those earning over $337,000. That is 90 times as 
much as the money necessary to restore the funding for veterans medical 
care. I must say I don't understand these priorities. It doesn't stop 
there.
  This is President Bush's plan for cutting firefighting funds. It 
would cost $246 million to restore the money. Again, in 2005, in 
comparison, the President has $45 billion in tax cuts going to the 
wealthiest 1 percent, those earning over $337,000 a year. That is 
almost 200 times as much as the money necessary to restore the cuts to 
the firefighters.
  We talked a lot about homeland security. Firefighters who are the 
first responders, the police who are first responders, ought to be high 
up on the list of our priorities, and certainly veterans health care. 
We have just sent thousands of men and women half a world a way to 
defend this country. Then we cut their medical care. I don't think 
these are the priorities of the American people.
  It doesn't stop there. The President plans to cut COPS funding to put 
police on the streets. The COPS program has put 100,000 police on the 
streets in this country. The President proposes deeply cutting COPS 
funding. It would cost about $700 million to restore that funding for 
2005. Instead, the President says it is more important to have $45 
billion of tax cuts for the wealthiest 1 percent. I do not think that 
is the priority of the American people.
  When we look at these programs individually, we can see the Bush 
budget cuts the COPS program by 94 percent. This is the amount of money 
we provided in 2004. We provided $742 million to put these police on 
the streets. The President proposes cutting that down to $44 million. 
He is cutting it by almost $700 million at the same time, saying, No, 
it is more important to have $45 billion of tax cuts for the wealthiest 
1 percent, those earning over $337,000 a year.
  My own belief is the COPS program ought to be funded. I believe we 
are safer because there are 100,000 more police on the streets. The 
President, with these deep cuts--cutting the COPS program 94 percent--
is going to take police off the streets. When we have a terrorist 
threat in this country, as we do, why would you take police off the 
streets? Why would you take police off the beat? It makes no sense to 
me.
  As I say, it doesn't stop there. Here is the President's plan for 
firefighters. He cuts that program 33 percent. Again, firefighters are 
first responders.
  I can remember well September 11 when the Pentagon was attacked. I 
remember watching the television. I remember seeing all those first 
responders. Who was it we asked to respond to the disaster? 
Firefighters, police, and EMTs. Those are the people who were there to 
help those who had been hurt.
  The President's answer is cut the COPS program 94 percent, cut the 
firefighters 33 percent, and cut port security 63 percent. We provided 
$125 million last year for port security. The President wants to cut 
that by almost two-thirds, down to $46 million. We know we are only 
inspecting about 4 percent of the containers that come into our ports. 
We know we need to do more. We know we need to do more to secure the 
ports. In fact, those who are involved with the ports of the country 
say we ought to have $5 billion for port security. Obviously, we can't 
afford $5 billion. But on the other hand, does it make any sense to cut 
what we are doing now by 63 percent? I don't think that makes much 
sense in the light of what we face in terms of a terrorist threat to 
the country.
  Earlier I was talking about the tax cuts the President put in place 
and the

[[Page 3533]]

distribution of those tax cuts. Again, I want to make clear I proposed 
in 2001 much bigger tax cuts on the front end than the President 
proposed. You will recall the President's initial two proposals would 
have very small tax cuts in the initial years, and much more in the 
outyears. I thought he had it upside down and backwards. I thought we 
should have more tax cuts on the front end to give life to the economy 
and much less in the long term so we could prepare for the retirement 
of the baby boom generation and not undermine Social Security and 
Medicare and national defense. The President largely got his way, with 
some exceptions.
  Here is what we see as beneficiaries of those income tax cuts. Of the 
income tax cuts, 68.7 percent of the benefit goes to the top 20 
percent, and 33 percent of the benefits--almost a third--go to the top 
1 percent. Those are people earning over $337,000 a year.
  I believe one of the reasons we are not seeing the kind of job 
creation we might have otherwise seen is the President shows the wrong 
mix of tax cuts. He has it much too weighted to the top end and not 
enough to the middle class who are the ones who would spend the money 
and really fuel the economy.
  This next chart shows in a little different way who benefited from 
the 2003 tax cut. Net tax cuts under the tax act passed in 2003 for 
upper-income individuals was 67 percent of the benefit, according to 
the Joint Committee on Taxation. Low- and middle-income people got 29 
percent, and businesses 3 percent. Again, I think the President chose 
the wrong mix of tax cuts.
  There is no question that stimulus is what the economy needs when you 
have that kind of slowdown. Stimulus can be either spending or tax 
cuts. I believe we ought to do both. We have economic weakness and we 
spend more money--a 20-percent increase from 2001 to 2003 in Federal 
spending, most of it for defense and homeland security and responding 
to the effects of September 11, but we also cut taxes. That is a 
strategy that makes sense at a time of economic weakness. The problem 
with what was put in place is the taxes were so directed to tax 
reduction, so directed at the wealthiest among us, the highest income, 
that we didn't get the same bang for the buck in terms of economic 
growth and job creation we would have gotten had we targeted more to 
middle-income individuals and lower-middle-income individuals who would 
more likely have spent the money.
  This is a very interesting chart. I hope my colleagues will have a 
chance to see a lot of this chart in the coming days. This is how the 
tax benefits stack up--the average tax cut in 2006. Middle-income 
people got an average $566. This is the combined effect of the 2001 and 
2003 tax cuts. Middle-income people got an average of $566.
  But look at what happened. Those earning over $1 million a year got 
$140,000 on average in tax cuts. If these bars were proportionate, the 
bar showing what the people earning over $1 million get would have to 
go 35 feet higher. I don't know how high the Chamber is here, but 35 
feet would be a long way up in the air to show the comparable tax cuts 
going to those earning over $1 million compared to what the middle-
income people get. Middle-income people got $566. People earning over 
$1 million got $140,000 in tax cuts on average in 1 year.
  If we were going to have the comparison done in a proportional way, 
the bar showing what those earning over $1 million are receiving for 
the year would have to go 35 feet high compared to this little bit at 
the middle income.
  Again, I believe one of the reasons we are not seeing the job 
recovery all of us would like to see is the President simply has the 
wrong mix of tax cuts.
  This chart shows it a different way. A typical taxpayer, one right in 
the middle of the income distribution in the country, under this 
scenario got $685. This is from the Center on Tax Policy, the average 
tax cut in 2004. In 2004, those earning over $1 million got $127,000 in 
tax cuts. That is a stunning difference. The Bush income tax cuts give 
three times as much benefit to the top 1 percent as the middle 20 
percent.
  Looking at the middle 20 percent of the people in the income 
distribution in this country, they have 11 percent of the benefit of 
the President's tax cuts. The top 1 percent got almost three times as 
much. In fact, they did get three times as much for those earning over 
$337,000 a year.
  I asked my staff to go back and look at how the top 1 percent of our 
country has done compared to the rest of the American people. Here is 
what we found looking at increases in average aftertax income from 1979 
to 2000. Those in the top 1 percent improved their condition by 
$576,000, the middle 20 percent, $5,500. That is 100 to 1.
  The people who have benefited by the economic growth are the top 1 
percent. That is fine. I am all for that. We all want people to be able 
to succeed. That is what opportunity is about. That is what freedom is 
about, the ability to do better, do better for your family, do better 
for yourself. Great. But when we come along and make tax policy and we 
look at those people having been the greatest beneficiaries of what has 
occurred on a basis of 100 to 1 and we in this tax policy say that is 
not good enough of a difference, we want to turn around and give those 
earning over $1 million a year a $140,000 tax cut on top of it in 1 
year and the middle-class people get $500.
  How is that fair? It eludes me how that is fair. I don't think it is 
fair. Not only is it not fair, but it is not good economic policy. Why 
not? Because the middle-income people are the ones who spend the money. 
We need people to spend money to get the economy moving. People in the 
higher income categories are the least likely to spend it. They are 
much more likely to save and invest, which is good to do, but that is 
not what primes the pump. That is not what gets the economy moving.
  When I look at who got the biggest benefit, many times friends on the 
other side of the aisle say, Hey, wait a minute, the wealthiest folks 
pay most of the taxes. That is exactly right. That is true. The wealthy 
people do pay more of the taxes. We have a progressive tax system, so 
higher income people pay a greater proportion of taxes, but they do not 
pay the same share. They do not pay as much more as we gave in the tax 
cut side of the ledger. As I indicated, they got 33 percent of the 
President's tax cuts, but they paid 23 percent of the income and 
payroll taxes. This is the wealthiest 1 percent. They got 33 percent of 
the benefit, but they paid 23 percent of the taxes. I don't think it is 
fair on any basis what the President chose as the mix of tax cuts and I 
don't think it is good economic policy either.
  It is stark when we look at the top 1 percent, those earning over 
$337,000 a year. They got 33 percent of the benefit of the tax cuts. 
The bottom 60 percent in this country got 15 percent of the benefit.
  Our friends on the other side will say, Hey, wait a minute, the 
higher income people pay more. Yes, they do, but they do not pay 33 
percent of the taxes. Our friends on the other side want to talk about 
income taxes. They forget that people do not only pay income taxes; 
they pay income taxes; they pay payroll taxes. The fact is, three-
fourths of the American people pay more in payroll taxes than they pay 
in income taxes. Yet all of the relief has been to income tax payers 
and done in a way that gives an overwhelming benefit to the highest 
income tax payer, those earning over $337,000 a year.
  The disparity is even bigger when we look at those who earn over $1 
million a year. As I showed, those earning over $1 million a year got 
the cake. We talk about the crumbs and the cake. Here is the cake. 
Those earning over $1 million a year, for 2006, will get a $140,000 tax 
cut in that year alone. Here is what the middle-income folks in the 
country are going to get: $566. There is something wrong with this 
plan.
  Again, when we look at what has happened from 1979 to 2000, the 
change in share of pretax income, this chart is quite stunning. It is 
the reason there is a lot of anger in the country, I believe. There is 
much more anger in the country than I think is generally understood by 
people in Washington. The reason is middle-income people in this 20-
year period have actually lost ground. They are worse off in their

[[Page 3534]]

share than they were in their pretax income shares in that 20-year 
period. The middle-income people have actually lost share, 15 percent. 
Their pretax incomes have gone down. Look what has happened to the top 
1 percent. Their pretax income has gone up 91 percent.
  We heard Senator Edwards from North Carolina in his Presidential 
campaign talking about two Americas. The reason that got such a 
tremendous response is because there is a lot of truth in what he is 
saying. There are two Americas developing: those who are well-to-do, 
those who are secure, those who are fully competitive in this global 
environment; and then middle-income people, who all of a sudden are 
finding themselves in competition with people who are earning 25 cents 
an hour in some other part of the world. We are faced with a 
circumstance that is changing very dramatically.
  I met a man who is involved with one of the major industries in the 
country at a breakfast I attended several weeks ago. He said, Senator, 
something is changing structurally in this country. Something is 
happening that is very dramatic. In the business I am in--he is in the 
machine tool business--at this stage of an economic recovery, we should 
find our order books filled. We should see dramatic increases in 
orders. Senator, that is not what we are finding. Yes, economic growth 
has improved. We saw 4 percent the last quarter, 8 percent the quarter 
before that. But, he said, our order books are not filling up in the 
machine tool business. Something structurally is changing here.
  There are jobs being created, but not jobs in this country. There is 
business being created, but it is not business in this country. The 
jobs are being created in China. The jobs are being created in Mexico. 
Jobs are being created in India. Business is being created to some 
extent in this country because we see strong economic growth here, but 
it is not as it should be in this stage of recovery.
  I believe part of it is we have adopted a flawed policy. We have 
helped with tax policy the very people who have already done extremely 
well in the last 20 years. Those who are the most educated, the best 
trained, are doing extremely well. That is great. I am all for that. I 
hope very much everybody gets into that category. That is what 
opportunity is about. Through our policies, we are helping the very 
people who have already done the best, and we are not doing much for 
the people who are falling behind.
  Chairman Greenspan says we ought to focus on education because if we 
are going to compete in this global environment, we must have the best 
trained, best educated workforce. Yet in this budget, the President 
cuts No Child Left Behind $9 billion.
  Does that make sense for our country? Does it make sense to cut 
education for what was promised by $9 billion when in that same year we 
are giving the top 1 percent a $45 billion tax cut? Does that make 
sense? Is that good judgment to strengthen our country for the future? 
I do not think so.
  If we look at what has happened, again, from 1979 to 2000, to those 
in the middle 20 percent, their share of pretax income has dropped. 
Look at what has happened to the top 20 percent. Their share has almost 
tripled.
  If people are not paying attention, they are going to get swamped. 
There is anger in this country because when Senator Edwards talks about 
two Americas, he is exactly right. Those at the top are doing better 
and better. I am delighted they are doing better. But those in the 
middle, they are falling behind.
  Why? Because this global economy is great for the people who are the 
best educated and the best trained. That is why we, as a society, ought 
to make certain we are doing everything we can to make Americans the 
best educated and the best trained because if you are not, you are not 
going to be able to compete. You are not going to do well in this 
global competition, and your share of the national income pie is going 
to get cut. Those who are well educated and well trained are going to 
prosper. They are going to soar. We have to somehow fashion a policy 
that gives all Americans a chance to compete and to do well and to be 
winners.
  We hear a lot from the other side that the biggest beneficiaries of 
the top rate cut are the 23 million small businesses; that is where 
most of the jobs are generated. I agree, most of the new jobs are 
generated by small business. But I do not agree that the top rate cut 
benefits most businesses. In fact, only 2 percent of businesses qualify 
for that top rate. Ninety-eight percent got no benefit from the top 
rate cut.
  I hope very much as this debate goes forward that we think very 
carefully about what we are doing because it is abundantly clear, while 
there is economic recovery underway, it is an uneven economic recovery. 
It is a recovery that is not generating jobs in the same way we have 
seen in the nine previous recessions. We are 5.4 million jobs behind 
where we typically have been in other recoveries since World War II.
  Something is wrong. Something is not going right. I believe one part 
of that is the tax policies that have been put in place that have 
benefited primarily the top 1 percent. The top 1 percent got a third of 
the benefit--those earning over $337,000 a year. Those are the very 
people who have done the best in the last 20 years on every scale. They 
have increased their incomes by over half a million dollars. They have 
seen their pretax income go up 91 percent, while those in the middle 
have seen theirs shrink.
  I think that is right at the heart of why we see a jobless recovery 
underway. The people who are the very ones who would spend the money 
are not getting the money. The people who are getting the money, under 
the President's plan, are the wealthiest among us. They are the least 
likely to spend it. They are the most likely to put it in the bank. And 
while savings is a good thing, and I am delighted to always see people 
save because that helps investment for the future--and we need to have 
more savings in order to have more investment, to have more growth for 
the future--in the short term, to get people back to work and to fuel 
the economy, you need people spending money. The people most likely to 
spend money are the people in the middle class.
  Of course, we have also seen somebody else spend money. That is Uncle 
Sam. Uncle Sam has been spending a lot more money. From 2001 to 2003, 
Federal spending went up 20 percent. From 2001 to 2004, Federal 
spending has gone up almost 30 percent.
  Where is the increased spending going? Ninety-one percent of the 
increased spending is going in just three areas. Most of it is defense. 
The next biggest is homeland security. The third biggest was a response 
to the attacks of September 11--rebuilding New York, bailing out the 
airlines, and the international programs that have been adopted to deal 
with the crisis in Afghanistan and Iraq. That is where the increased 
spending has occurred.
  We will hear a lot from the other side that spending is out of 
control. It really is not. We have seen a big bump up in the 3 years of 
this President, but where has it been? The increases have been for 
defense, homeland security, and the response to the September 11 
attack.
  The place where the deficits have really opened is on the revenue 
side. It is the revenue side of the equation that has collapsed. We are 
going to have the least revenues as a share of gross domestic product 
since 1950. So if we are going to be honest and straight with the 
American people about diagnosing the problems we have, we have to 
address the circumstances as we know them, as we face them.
  Let me just quickly say, on the revenue side of the equation, I know 
a lot of people's impulse is, well, if you are talking more revenue, 
you are talking tax increases. That would not be the first place I 
would look for more revenue. The first place I would look for more 
revenue would be the tax gap, the difference between what is owed and 
what is being paid.
  I met with the head of the Revenue Service in the last 2 weeks, and 
he told me the tax gap, as of 2001--the difference between what is owed 
and what

[[Page 3535]]

is paid--was $255 billion in that year alone. We ought to have a 
concerted effort to go after those who are not paying what they 
legitimately owe under this Tax Code--those companies, those 
individuals who are dodging what they legitimately owe, to the tune of 
$255 billion in 2001 alone. It is totally unfair to the rest of us who 
pay what we legitimately owe to let others--a small percentage--escape 
what they owe.
  A previous Revenue Commissioner did an analysis and said the rest of 
us paid 15 percent more because of that small group of companies and 
individuals who are not paying what they legitimately owe.
  I hope we shine a bright light on this tax gap because I believe it 
is the first place we ought to look to start to fill in this revenue 
hole that has been created. Instead of going to a tax increase, the 
first thing we ought to do is close the tax gap so everybody can be 
assured everyone else is paying what they fairly owe under the law.
  I thank the Chair and yield the floor.
  I ask the Senator, are you ready to proceed or should I put in a 
quorum call?
  The PRESIDING OFFICER (Mr. Enzi). The Senator from Oklahoma.
  Mr. NICKLES. Mr. President, I thank my friend and colleague, Senator 
Conrad, for his remarks. I agree with some of them, not necessarily all 
of them. Let me make a few comments on the budget. And I, again, 
appreciate his patience in waiting for me so I could have a bite to eat 
and also get prepared for this presentation.
  The budget is a difficult challenge. To write a budget for the United 
States of America, the largest government in the world, the largest 
economy in the world, is not easy.
   President Bush has written a budget. We produced a budget out of the 
Budget Committee. I hear a lot of complaints about how bad the 
President's budget is or how bad the resolution on which we will be 
voting on the floor is, but I have not seen alternatives. I would urge 
people, show me your alternative. Show me how much money you would 
spend, how much money you would tax. That is basically what a budget 
outline is: how much money we are going to spend and how much money we 
are going to tax. What is our objective? How are we going to achieve 
it?
  We use assumptions. A lot of times the assumptions are wrong. I have 
heard a lot of complaints: Well, President Bush missed the assumptions 
big time. In 2001, we projected enormous surpluses, and now we have 
enormous deficits--trillions of dollars of difference. What happened? 
We don't understand.
  Well, a lot of things happened. Let me just say there have been a lot 
of inaccurate assessments made. And I go back to the year 2001. In 
January 2001, everybody missed--everybody missed--big time, not just 
President Bush. President Clinton, the Congressional Budget Office, the 
Office of Management and Budget all missed more than you can imagine.
  I will just make a couple comments on a little history.
  The NASDAQ collapsed in the year 2001, and it continued to decline a 
little bit in 2002. But a big collapse was really in the year 2000.
  I might mention that President Clinton was still President. Yet I 
will show you the next thing. His forecast for 2001--this was given in 
January of 2001--estimated about an additional employment of almost 2 
million jobs.
  Frankly, the economy was already falling into recession, which was 
shown by the fact that NASDAQ went down by almost 50 percent in 2000. 
Yet the budget experts, Democrats and Republicans, CBO and OMB--CBO is 
the Congressional Budget Office and OMB is the Office of Management and 
Budget--projected that revenues would continue to climb, employment 
would continue to climb, as President Clinton did. They all missed it. 
They missed it by an enormous amount. They were forecasting trillions 
of dollars in surpluses. They were way wrong. Of course, they also 
didn't know, and could not have expected, the hit we had in September 
of 2001. But there were enormous mistakes that were made.
  The market collapse, or the crash of the market and NASDAQ declining 
by that much was missed. They didn't estimate what the impact would be 
on revenues and to the economy.
  We had trillions of dollars in market value that was lost in the 
collapse. If you look at the NASDAQ chart again, in March, that 
collapse started in March of 2000. Individuals, investors know that. 
They remember that is when the bubble popped. NASDAQ was almost 5,000. 
Then all of a sudden it was going down to 4,000, 3,000, and it ended up 
that year at 2,500. So there was an enormous decline of market value. A 
lot of it was inflated. Chairman Greenspan called it ``irrational 
exuberance,'' and he was probably right. It flowed through as a real 
loss and decline of revenue coming into the Federal Government.
  In the year 2000, we had over $2 trillion of revenue. That declined 
to last year's $1.78 trillion in revenues. Part of that was tax cuts, 
but the bigger part of it was the recession.
  Look at this chart. Where did the deficits come from? Most of the 
deficits came from economic and technical changes. That is 40 percent, 
from the assumptions made in 2001. New spending comprised 37 percent. 
So you had economic and technical changes of 40 percent; new spending, 
37 percent; tax cuts, 23 percent.
  Again, this is comparing 2001 to the forecast of today. My point is, 
I want to give people a perspective of what happened. The new 
spending--we had big supplemental changes--changes were made as a 
result of the war. We had two very large supplementals to fight the 
wars in Afghanistan and Iraq, and a big supplemental to help New York 
City and Virginia. That totaled almost $250 billion in new spending 
just to take care of those who were injured and to rebuild New York 
City and fight the war on terrorism.
  That is kind of what we inherited last year. Last year, the previous 
year, we didn't have a budget. Last year we had to pass a budget, and 
the economy was still rather flat. Besides, Democrats and Republicans 
said we needed a stimulus package, we needed to grow the economy. We 
had different ideas of how to do it. I think some of what we did last 
year helped a lot.
  I have heard criticism. I will make a couple of comments. I think the 
changes we made last year did grow the economy, did make a difference. 
If you look at the GDP, gross domestic product, you can see what we 
were looking at last year. It was rather stagnant. The economy started 
dropping in 2000, a negative quarter in 2000, and in 2001 it was still 
pretty negative.
  Then we started to have a growing economy. When we passed the tax 
bill last year--when we started talking about it, we started to notice 
the GDP started rising dramatically.
  The last three quarters were very positive. The third quarter of last 
year is the largest economic growth period we have had in any quarter 
in decades--not in years but decades. So the tax bill changes we made 
were positive.
  Some people say I think we want to make changes to grow the economy. 
We did. We basically accelerated the tax cuts that were already in 
progress and moved the rates to the rates they are today. That was 
positive, in my opinion, and very beneficial. We cut in half the tax on 
dividends. Chairman Greenspan and others said we should go to zero.
  The Senate passed a bill that would take the tax on dividends to 
zero, i.e., they should only be taxed once. We found out then in 
comparing it that we taxed the contribution distributions from 
corporations higher in the U.S. than in any other country in the world. 
We tied with Japan for the highest tax rate on taxing proceeds from 
corporations, higher than anybody else in the world. We cut that tax in 
half, to 15 percent.
  We cut the capital gains rate from 20 percent to 15 percent. It has 
made a big difference. You see these economic growth figures--GDP going 
up by 4, 5, 8 percent. Those are very positive and good numbers.
  If you look at what was done in the stock market, there was over a 
$4.5 trillion increase, almost on a straight line basis, since the tax 
bill we passed

[[Page 3536]]

last year. That is astronomical--great, good news. That is good news 
for all Americans.
  Some people say, well, that only benefits the Warren Buffetts or the 
wealthy people who invest. That is not correct. It benefits the entire 
economy. That means the wealth of these companies is growing. These 
companies are owned by, frankly, almost all Americans. I think over 50 
percent of the households have direct ownership, if you looked at the 
investments they have, such as the teachers public employee trust 
funds, all kinds of retirement plans, 401(k)s, almost all of which have 
investments in the stock market. That means instead of having declining 
market value in their retirement accounts, they have increasing ones, 
escalating amounts. That is all good news. We want to continue that 
good news.
  The point is, very seldom can you say--we passed a budget last year 
and, if we had not done that, we would not have had a growth package, 
we would not have cut the tax on dividends to 15 percent, or reduced 
the tax rate on capital gains 25 percent, from 20 to 15 percent. That 
would not have happened. But we passed a budget and it made it possible 
for that to happen. As a result, I think we have good news to share.
  When people think about whether budgets make a difference, they make 
a world of difference. Can you impact the economy? Yes. We proved that 
and we did.
  If you look at the unemployment rate, for example--and we have heard 
a lot of discussion on it--it is now 5.6 percent. It was up to 6.3 
percent. It has been declining ever since we passed the bill. We made 
some good progress. We have not had the increase in employment 
certainly that I would like to see, but it is moving in the right 
direction.
  As far as the employment rates or the number of people employed, we 
are making progress. I think one of the reasons it has not been as good 
as we would like in many cases is because productivity has escalated 
rather dramatically. That is good for consumers, certainly good for our 
economy. That keeps us competitive. That means we produce more goods 
per hour and that is all positive. We will see a rise, hopefully, in 
the employment rates as we continue.
  The unemployment rate is down and employment rates are up. If you 
look at the number of people employed, it is an all-time high. It all 
happened because we passed a budget last year. So I encourage people 
who are very critical of this budget to come up with their own. This is 
not an easy job. So I welcome the discussion.
  I also wish to talk a little bit about tax rates. I have heard a lot 
of complaints about the wealthy benefitting so much from these tax 
cuts, and how terrible it is that they were disproportionately 
benefiting from this proposal--either the tax cut of 2001--and there is 
a lot of discussion and confusion about the 2001 tax cut and the 2003 
tax cut. I was one of the principal authors of both. Primarily, I was 
very involved with it. Let me defend it.
  One, for those people who say it didn't benefit the low-income 
people, that is not correct. In the 2001 tax cut, we accelerated the 
tax reduction for low-income people and made it effectively 
retroactive. Maybe some people forgot that, but we did that.
  Again, we passed the tax cut in 2001, and we reduced every tax 
bracket--every tax bracket, not just the tax brackets for the higher 
brackets. We reduced every tax bracket, and we reduced the lower tax 
bracket more than any other bracket.
  The lowest tax bracket at that time, other than zero, was 15 percent. 
We made it 10 percent, and we did it retroactive to January. So we took 
the lowest bracket, cut that tax rate by 50 percent, and we made it 
retroactive.
  We took the maximum rate, which was 39.6 percent, and we reduced it 
by 1 point to 38.6 percent for 2 years. Last year we finally got it 
down to 35 percent. It took us from 2001 to the middle of 2003 before 
we got it down to the 35-percent tax bracket. It was 39.6 percent under 
President Clinton. We took it to 35 percent. It is still much higher 
than it was under President Bush 1 at 31 percent. Thirty-five percent 
over 31 percent, it is almost 20 percent higher than it was under 
President Bush 1. But we made the lower income tax bracket reduction 
effective immediately and we did it all in 1 year. We did not phase it 
in over 3 years.
  We also did some other things. We made the tax cut more refundable. I 
don't happen to agree with that, but we did, so we write a check to 
people who do not even pay taxes. In many cases, we write them a check 
much greater than their payroll taxes.
  I hear some people say: You need to include payroll taxes. I 
understand there are income taxes and payroll taxes combined, but for 
low-income people, in many cases we would write a check to them that 
greatly exceeded their 2001 tax bill. Maybe some people forgot that 
point.
  Then we also increased the $500 per child tax credit to $1,000. Last 
year, we took it from $700 to $1,000. That is a $1,000 tax credit per 
child. If we do not extend it this year, it will go back to $700. We 
assume in our budget that we are going to extend it.
  When people say we did not do anything for low-income people, if you 
have 4 kids, that is $4,000--4 times the $1,000 tax credit on which you 
do not have to pay taxes.
  The net impact of that is a lot of people do not pay income taxes 
because if you look at the child tax credit and you look at the earned 
income tax credit and so on, we have a lot of programs for low-income 
people, so maybe they do not pay taxes.
  Then we hear the argument of distribution, the class argument: The 
wealthier are the ones who are benefiting. Frankly, people in the upper 
5 percent of income pay half the income tax. Think of that. The upper 5 
percent of the American people pay half the income tax. Sure, if you 
are going to cut income taxes, they are going to benefit. The point 
being, how much should the rate be? What is the right level? I happen 
to think when we talk about a 35-percent rate--that is over a third, if 
my math is somewhat accurate--that is a lot. Why should the Federal 
Government take over a third of anybody's income for any reason? Why is 
the Government entitled to take half?
  When I was first elected, the rate was all the way up to 70 percent. 
The Government could take 70 percent of any additional dollar you 
earned. I think that is wrong. We have gradually reduced it to 28 
percent, and it went up to 39.6 percent. Frankly, it is even higher 
than 39.6 percent because there is a tax on all income of 2.9 percent 
to pay Medicare. So you actually add 2.9 percent for these income tax 
figures. Add 2.9 percent, so the maximum percent is 37.9 percent today. 
Maybe people don't realize that. How much money should the Federal 
Government take? The power to tax is the power to destroy. Where do you 
destroy an individual's or company's incentive to produce more? At some 
point, I can tell you from my experience in the private sector--I used 
to be in the private sector; I will be returning before too long--at 
some point, when you work more for the Government than you work for 
yourself, you lose a lot of your incentive to grow, build, and expand, 
and when I say expand, I am talking about hiring more people.
  I found out earlier when I had a janitor service that I was almost in 
a 40-percent tax bracket. Why in the world should I get up early every 
morning or work late at night if Uncle Sam and the State--combined 
between the two--are going to take about half? It is a real 
disincentive to grow. I had several employees and could have had 
several more. I had the same situation when I ran a manufacturing 
company in Oklahoma. Marginal tax makes a difference.
  I mentioned the top rate today is 35 percent. If you add the 2.9 
percent because of Medicare, that is 37.9 percent, and you have not yet 
paid any State income tax. A lot of States have 6 or 7 percent, so you 
add that. Now you are at 45 percent. Some cities have an income tax. 
You add that and you are at the 50-percent rate.
  Why does someone want to continue building and growing and expanding? 
Expanding is where jobs are created.
  Mr. SARBANES. Will the Senator yield for a question?

[[Page 3537]]


  Mr. NICKLES. No, I will not yield. I am going to make a fairly 
significant statement.
  Mr. SARBANES. I want to clarify one point.
  Mr. NICKLES. Not at this point.
  Some people say that is a big benefit for the wealthy. I say why in 
the world should the Government take half? I don't think they should. 
Maybe some people believe they should. I disagree.
  What we have assumed in the budget is we are going to continue 
present law; that we are not going to have a tax increase. Some people 
don't want that to be in there. We assume we are going to continue 
present law, where we have several provisions that are due to expire at 
the end of this year. Some of those, frankly, are targeted toward low- 
or middle-income people. They would expand the child tax credit. As I 
mentioned, if we do not extend it, the child tax credit will go from 
$1,000 to $700. There is a $1,000 tax credit today. If we do not extend 
it, as assumed in the budget, it goes to $700. So they will lose. If 
they have 4 kids, they are going to have to pay $1,200 more in taxes 
next year than they pay this year.
  What about the marriage tax penalty? We assume we are going to extend 
the marriage penalty relief we put in last year's bill. That is very 
significant for middle-income tax relief.
  I heard my good friend Senator Conrad talk about the middle-income 
class does not get anything. That is not accurate, in my opinion. The 
middle-income class people do very well. If you have a taxable income 
of $58,000, your tax bracket is 15 percent. We want to keep it at 15 
percent. If we do not pass the extension, it is going to revert down 
and people will be paying 25 percent if they make $58,000. As a matter 
of fact, the savings on that income category is about $900. So if a 
married couple and their combined, joint taxable income is $58,000, the 
marriage penalty relief we passed last year which we want to extend is 
$900. So you have $900 there. If they have 4 kids, that is another 
$1,200 difference. That is $2,100 of tax relief for a couple with 4 
kids. That is a rather typical American family. I happen to have four 
kids. I don't qualify for this, but most American families have taxable 
incomes of $58,000 and would qualify for it. My kids are too old. My 
point being, this is real tax relief for American families.
  We also expand the 10-percent bracket, and we continue that 
expansion, or we assume that will be continued under our resolution. 
That is another $100.
  If you look at the savings, we have $900 on marriage penalty relief 
we would extend; we have $1,200 for the child tax credit we would 
extend; another $100 for the 10-percent expansion. We expand the amount 
of income that would be taxed at 10 percent. By continuing those 
provisions, we save the American family which has $58,000 in taxable 
income and 4 kids about $2,200. That is real relief. Percentage-wise, 
on the amount of taxes they pay, it is probably a greater percentage 
relief than anyone. It is very significant. So I want to put some of 
the tax equity arguments in perspective.
  I will make just a couple of other comments about the budget. I 
mentioned what we assume on the tax side. I tell my colleagues if they 
are bent out of shape, we have a reconciliation package instruction 
that would make all of those things I just mentioned be extended 
throughout the 5-year window of this bill.
  This is a 5-year budget. I am assuming all those things would be made 
permanent, or at least be extended through this resolution. Things 
cannot be made permanent in budget resolutions. A lot of people say we 
want to make those tax cuts permanent. I said fine. We just have to do 
a tax bill outside of reconciliation.
  I am happy to do the tax bill, I tell my friend and colleague. I 
think he knows that. I have the pleasure of serving with him on the 
Finance Committee. This Senate has done many tax bills, many inside 
reconciliation and many outside. By definition, if they are inside a 
reconciliation they are terminated. I do not like that. Frankly, I want 
to do something this year on the death tax or the estate tax. If we are 
going to do something on the death tax, it ought to be done outside of 
reconciliation so it is not temporary, so it is permanent, so tax 
planners and others can figure out what they want to do and they can 
count on it. So maybe we will have the opportunity to do that if we do 
bills outside of reconciliation.
  I have looked at it more or less as a fallback, and I told Senator 
Grassley, who is the very able chairman of the Finance Committee, that 
we might have this as a fallback but hopefully we could do these things 
outside of reconciliation. That would be a couple of options.
  That is $81 billion that we are assuming in reconciliation. We assume 
about $12 trillion in the next 5 years in revenues. So the amount of 
money we are trying to direct through the reconciliation process is 
very small in proportion to the total amount of money that is expected 
to be raised under current law. So I just mention those things on the 
revenue side.
  What about on the spending side? I showed the chart where spending 
has gone up and revenues have gone down, mostly because of the economy, 
somewhat because of the tax cut. Expenditures have gone up rather 
dramatically.
  We believe it is time to be responsible. We think it is time to make 
some reductions, to at least cap the growth on spending. So the 
resolution we have makes some tough choices. In many cases we have not 
made tough choices in the past.
  I am sure I am going to hear from my colleagues: Well, too much is 
cut, too much is assumed. Basically, we still assume spending will 
grow, but it is going to grow by less. In some cases, for the 
assumptions we have that defense would grow about 5 percent, I have 
already heard--very strongly I might add from Chairman Stevens and 
Chairman Warner--that they want 7 percent. The President requested a 7-
percent growth in defense. We have assumed 5.1 percent, and I expect 
there will be efforts to--I might even say I know there will be efforts 
that will be coming to increase that level.
  We assume the President's number in homeland defense. I have heard 
people say that is not enough; he did not do enough on first 
responders; he did not do enough for port security, and so on. But we 
assumed a 15-percent increase in homeland security, according to CBO. 
If we take out the bioshield, which was actually funded last year, it 
is about a 10-percent growth. Again, 10 percent when looking at the 
rest of the budget, nondefense, nonhomeland security grows by basically 
a freeze. We could say .5 percent or a freeze. The President's budget 
said it would grow by about .5 percent. Our budget is very close to a 
freeze.
  These programs are not used to a freeze. I can show program after 
program, going all the way back since 1990, that has been growing in 
annual expenditures in double digits continually. They are addicted to 
that kind of spending growth.
  If we try to say, I am sorry, you may have to live with a freeze, 
that is not going to be easy. I know a lot of the appropriators are 
looking at it and saying: Whoa, we are used to having a lot more money 
than that. I know this will not be easy. I tell my friend and colleague 
from North Dakota, it will not be easy because I know there is a lot of 
demand to spend somebody else's money. Frankly, I do not think $500 
billion deficits are acceptable.
  The administration estimated the deficit for this year at $521 
billion. I hope they are incorrect. We use the Congressional Budget 
Office. There are differences and they are legitimate. There are 
professionals both at the Congressional Budget Office and OMB, and I 
respect them all. They have different estimates, for different reasons. 
We can spend a lot of time on that, but the Congressional Budget Office 
estimates that this year the deficit will be about $477 billion.
  The President said he wanted to get the deficit down by half over 5 
years. That is very significant. The President is estimating $521 
billion. To try and get that in half over 5 years is a very significant 
deficit reduction, not easily obtained.
  Since we use the Congressional Budget Office, we start at $477 
billion. Under our budget resolution, next year the

[[Page 3538]]

total deficit will be $338 billion. That is a reduction of about $140 
billion--actually $139 billion in 1 year. That is a very significant 
decline. The next year goes down again about $80 billion, a very 
significant deficit reduction, not easily done.
  If we are successful in doing that, we will be very close to the 
halfway mark in 2006. We will be there in 2007. So we are bringing it 
down.
  Looking at it as a percentage of gross domestic product, the estimate 
today of the deficit is 4.6 percent of GDP. In past years, even in the 
early 1980s or 1990s, we had deficit figures of as much as 6 percent of 
GDP. We are bringing it down in a couple of years to 2 percent, which 
is much more sustainable. In the year 2007, it will be 1.7 percent of 
GDP. So we are making significant progress in deficit reduction. We 
would meet this target either nominally through dollars or through a 
percentage of GDP in 3 years.
  I know there are going to be a lot of amendments that say we are 
cutting too much too fast. Frankly, we are not cutting. We are saying 
we should allow defense spending to grow as much as necessary, but 
other than that we need to tighten our belts. We have not done that in 
the past. As a result, I know people are going to say we need more 
money, and we will be happy to look at the requests. In many cases we 
can fund more money, but we may have to cut other places to do it.
  I have heard some people say, well, we need money for veterans, for 
education, for first responders, for defense, or the COPS Program, or 
whatever. Fine. They can have more money, but between us on the Budget 
Committee and the appropriators, we are going to have to reduce some 
money or spending in other areas to pay for it. That is making tough 
choices. We have not done that.
  I remind our colleagues, and I think Senator Conrad would join me, in 
this budget we do not micromanage where the money is going to be spent. 
We can assume that money will be spent in education or it might be 
spent for the COPS Program, but, frankly, we give a number to the 
appropriating committees and they have to live with that number.
  They can change the number. So we might assume one thing for 
education--actually, we have assumptions in this bill for significant 
increases in several areas in education. We assume fairly significant 
increases in veterans programs. Somebody else could assume it 
differently, or they could say well, we want more money for veterans. 
Fine. They may have to make some reductions in housing or make 
reductions elsewhere in the budget to make it equal that total number.
  I mention this for our colleagues' information. Doing this budget 
will not be easy. I am sure we will have lots of amendments. I concur 
with Senator Conrad, I would prefer to manage it in a way that we would 
be more direct in handling the amendments, trying to have more 
amendments throughout the course of the budget debate and not have so 
many stacked up at the end. I do not think that speaks well for the 
Senate and our management of this challenge.
  This is a challenge. This is not easy.
  I yield the floor, and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. CONRAD. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CONRAD. Mr. President, the very able chairman of the Budget 
Committee has just given his review of his proposal on both the revenue 
and the spending side. Let me put up this chart which shows a bit of a 
different perspective.
  The chairman put up a chart which shows the deficit being cut in half 
over the next several years. This is the problem I have with that 
chart. I think it fundamentally misleads the American people about the 
fiscal condition of the country.
  The chairman's chart is entirely accurate about the unified deficit. 
What does that mean? That is when you put all the money in the same 
pot, all the income tax collections and all the payroll tax collections 
to support Social Security, Medicare, and then you take all the 
spending out of that same pot. That is how we have done the budget here 
for years.
  The problem now is we are in a different situation. The different 
situation is Social Security, in the 1980s, was changed to run large 
surpluses during this period in preparation for the retirement of the 
baby boom generation. So when you put all the money in the same pot, it 
gives a misleading result. It misleads you as to your true fiscal 
condition.
  Let me take this chart from the chairman's own budget. It shows, for 
2004, that the overall debt is going to increase by $612 billion 
between 2004 and 2005. It is going to increase by $612 billion.
  Let's go out. Under the chairman's mark, I think he is saying that 
the deficit will be cut in half in--Mr. Chairman, 4 years or 3 years? 
The deficit will be cut in half in 3 years.
  But look at this. When you look at the total picture, you see a 
different result. You see, between 2004 and 2005, the debt being 
increased by $612 billion; in the next year, $569 billion; in the next 
year, $553 billion; and in what was supposed to be the third year, 
where it is supposed to be cut in half, the debt is increasing by $563 
billion. There is almost no difference here in how much the debt is 
increasing. In fact, in the 5 years the debt is increasing $2.86 
trillion under the chairman's mark.
  The chairman is putting the most positive complexion on this budget 
he can, and I understand that. But when you look at what he is 
proposing, he is talking about the unified deficit, he is talking about 
jackpoting all the money, he is talking about the so-called unified 
deficit being cut in half. To me, that does not give an accurate 
picture of the fiscal condition of the country.
  Mr. SARBANES. Will the Senator yield for a question?
  Mr. CONRAD. I will be happy to yield.
  Mr. SARBANES. I understand this point the Senator is making is 
compounded by the fact that what we are looking at with this budget is 
just a 5-year projection.
  Mr. CONRAD. That is correct.
  Mr. SARBANES. It is my understanding it includes within it the idea 
of making these tax cuts that were passed permanent instead of 
temporary. Of course, the people who put the tax cuts in place were the 
ones who made them temporary. Now they are coming back, seeking a 
change in the law to make them permanent. They, in effect, are changing 
the tax structure. Otherwise, they would expire.
  But they are only projecting a 5-year period. As I understand it, if 
you do the 5-year period, this is the increase in the deficit here, 
just this amount. But the full brunt of this doesn't hit home until the 
subsequent period. So if you take a 10-year period, which we have done 
in the past--we have used 10-year projections rather than 5--if you 
take the 10-year period, look what happens to the cost. There is a 
deficit explosion. It is just staggering.
  Of course, we are only being shown this part of the picture instead 
of being shown all of the picture, which shows a $1.6 trillion 10-year 
cost. There is a $1.6 trillion 10-year cost to extending the tax cuts 
over this next 10-year period.
  So the Senator is making one point about the understatement of the 
situation we are moving in, but this also dramatizes another very 
important point. We are being set on a fiscal course that spells 
disaster for the country, and we need to recognize that. It is one of 
the reasons I joined with the Senator in the Budget Committee in voting 
against this budget. This is not a sound, solid, steady course to be 
on, in terms of the Nation's fiscal policy.
  Mr. CONRAD. The Senator makes a very powerful point. As you can see 
just on the tax side of the ledger, the President's tax cut proposal 
explodes right beyond the 5-year window.
  Mr. SARBANES. That is right. Exactly.
  Mr. CONRAD. If the Senator will put the chart up again, what that 
shows----

[[Page 3539]]


  Mr. SARBANES. You see it runs along here like this. This is as far as 
the chairman's budget projects it, right to there. Then it stays on 
that line a little bit and then look what happens to it--it is 
incredible. It is the shooting star deficit, the way this thing is 
going.
  Mr. CONRAD. It is truly stunning. It is not just the tax cuts that 
have that same pattern. Fixing the alternative minimum tax, which was 
the original millionaire's tax, is rapidly becoming a middle-class tax 
increase that has that same pattern.
  In addition, they are hiding the cost of the war. The war, they say, 
has no additional cost. The war in Iraq, the war in Afghanistan, and 
the war on terrorism has no additional cost past September 30. Who 
believes that? We know right now they are preparing a request for 
additional funding, a vote to be held after the election in which they 
are going to ask for another $50 billion.
  Mr. SARBANES. At least.
  Mr. CONRAD. At least. The Congressional Budget Office tells us the 
true ongoing cost of the war over the 10-year period will be $280 
billion. There is not a dime of it in the President's budget.
  The Senator is quite right. It is this pattern of hiding from the 
American people the full cost of these budget proposals that is a great 
concern.
  Mr. SARBANES. Will the Senator yield further?
  Mr. CONRAD. I am happy to yield.
  Mr. SARBANES. I would like to pick up on the Senator's point about 
the cost of adjusting the alternative minimum tax. Of course, the 
alternative minimum tax was put in place in order to tax wealthy people 
who are using various deductions and exemptions, and so forth, not to 
pay taxes. The idea was, at a minimum you ought to pay a certain amount 
of tax. There was a huge public outcry about that--justifiably so in my 
opinion. So we put it into place. Of course, as the economy evolves, 
you have inflation and so forth and so on, and you have to keep 
adjusting it; otherwise, it is going to work its way down further into 
the middle class. It was never intended to do that. So it has been 
adjusted from time to time.
  In fact, the President is proposing in his budget, as I understand 
it, a 1-year adjustment--not projecting it out. Of course, that raises 
the question immediately in your mind: Why a 1-year adjustment? I think 
it is obvious why, if you do this, because it shows if you really 
adjust it as it ought to be adjusted, you are projecting out $658 
billion in a 10-year cost to reform the alternative minimum tax. There 
is a $658 billion 10-year cost to reform the alternative minimum tax. 
Here you have $1.6 trillion to extend and make permanent the existing 
tax cuts, the sum total of which is $2.2 trillion.
  Mr. CONRAD. Real money.
  Mr. SARBANES. You are telling me it is real money. Absolutely. The 
Senator is absolutely right. This budget is kind of you see this, but 
you do not see what is behind the scenes, what is coming. We cut off 
the picture and look at a certain point. It works pretty good. You cut 
it off here before this line takes off. You see what we are showing--
this part. It is an exercise in prudence to come along and say: Wait a 
second; let us see how that works in the outyears. All of a sudden, you 
see it just takes off like that.
  The Senator is absolutely right.
  Mr. CONRAD. You have the same pattern on the alternative minimum tax, 
as the Senator showed. Interestingly enough, that costs $658 billion 
over the 10 years. The President only provides for 1 year in his 
budget--$23 billion. He shows the $23 billion necessary to keep this 
thing from cutting more and more into the middle class. In fact, we 
have 2 million or 3 million people affected by the alternative minimum 
tax. By the end of that 10-year period, 40 million people are going to 
be caught up in the alternative minimum tax. Boy, are they in for a big 
surprise. They thought they were getting tax cuts. They are going to 
get a whooping tax increase. What the President's budget does, and the 
budget from the Republican side in the Budget Committee, is just deal 
with this problem for 1 year.
  Mr. SARBANES. Will the Senator yield?
  Mr. CONRAD. Yes.
  Mr. SARBANES. It is interesting. If you deal with the first year of 
the 10-year period, it is $23 billion, as I understand it. But you 
can't assume, well, we will just project that out at $23 billion a 
year, each year. So the cost over 10 years would be $230 billion, which 
is what someone just coming to it at first blush might assume. The fact 
is that the cost escalates rapidly. So over the 10-year period, it is 
not 10 times $23 billion, or $230 billion; it is $658 billion, almost 
triple what you might suppose it would be.
  Mr. CONRAD. The reason for that is, as the Senator knows, more and 
more people are getting sucked into this alternative minimum tax 
designed to catch millionaires. Now it is going to be catching middle-
class people. In fact, there was an excellent article in the Washington 
Post this weekend by a young journalist whose family just got sucked 
into the alternative minimum tax. It cost his family over $2,000 in 
this year alone to get sucked into this alternative minimum tax 
problem.
  Our friends on the other side are saying they have tax cuts for the 
middle class which they want to continue. I support continuing those 
middle-class tax cuts. But they are not dealing with the alternative 
minimum tax that used to be the millionaires' tax and rapidly becoming 
a middle-class tax trap. They only deal with that for 1 year.
  They have tax increases, as well, built into this budget that are 
very disguised. It is going to affect millions and millions and 
millions of people.
  Mr. SARBANES. Will the Senator yield for a further question?
  Mr. CONRAD. Yes.
  Mr. SARBANES. The Senator enumerated the three concerns: a 10-year 
projection of the cost of the tax cut, the alternative minimum tax; the 
Senator mentioned the failure to reflect in the budget any cost for our 
involvement in Iraq or Afghanistan. I want to be clear on this point. 
Am I correct in understanding that the budget which the President sent 
to the Congress for the next fiscal year beginning on October 1 of this 
year, 2004--the budget he submitted to the Congress, the spending 
blueprint--has zero for the cost of Iraq and Afghanistan? Is that 
correct?
  Mr. CONRAD. Yes. It is hard to believe, but it is true. The President 
is telling us he has put nothing in the budget because he says it is 
hard to estimate how much it will be. I have said to these 
representatives, the thing we know is the right answer is not zero. 
That is the thing we know for sure. Zero is not the right answer.
  Mr. SARBANES. Absolutely. Yes.
  Mr. CONRAD. The Congressional Budget Office tells us that the 10-year 
effect of the war in Iraq, the war in Afghanistan, the war on terror is 
$280 billion. But the President's budget has nothing for it.
  That is part of the reason I have said this budget doesn't reveal to 
the American people our true financial condition. You have the 
exploding cost of the tax cuts beyond a 5-year window, you have the 
cost of fixing the alternative minimum tax to prevent it from sucking 
in more and more middle-class taxpayers, you have the cost of the war 
that is not in the President's budget, then the biggest one of all, the 
President is going to take over the next 10 years $2.4 trillion from 
Social Security. He is borrowing it from Social Security with no plan 
to pay it back. If you were running any other enterprise, if you were 
running a private company, you could not take the retirement funds of 
your employees and use it to pay the other expenses of the enterprise. 
You would be in violation of Federal law if you did that.
  That is what this chart shows under the President's budget and under 
the chairman's mark. Here is a chart that shows it very well. This is 
what is entirely hidden from people's view with respect to what is 
happening to our fiscal condition. This shows the Social Security 
surpluses by year. You can see the surpluses are exploding. The reason 
for that is to get ready for the retirement of the baby boom 
generation. But what our friends on the other side of the aisle are 
doing with their

[[Page 3540]]

plans is taking all of this money and using it to pay for tax cuts and 
other expenditures now, leaving the cupboard bare for the future. How 
are they going to pay back this money?
  Mr. SARBANES. They are already talking about that around town. The 
other day, the Chairman of the Federal Reserve himself talked about 
cutting back on the benefits under Social Security.
  Here is what has happened. It needs to be understood. There is a 
direct connection.
  These large tax cuts that primarily benefit very wealthy people--
there is some benefit for others, no question. The chairman talked 
about that today, but in the total picture of where the benefits are 
going, that is a relatively small portion. Most of the benefits go 
right up to the top group in society by income and wealth. They say we 
are running deficits, so to cover the deficits they have to use up the 
Social Security surplus. Then they say to correct the using up of the 
Social Security surplus, we have to cut Social Security benefits.
  It must be understood, these things are linked. The reason they have 
the deficit which now says they must cut Social Security benefits is 
because they gave the very large tax cuts to the elite, producing the 
deficit, which resulted in drawing down the Social Security surplus 
which then leads them to say, we have to cut the Social Security 
benefits.
  These are choices. This administration has made a choice. The choice 
the administration has made is to put tax cuts for the elite ahead of 
sustaining Social Security benefits. That is the choice they have made. 
It needs to be understood.
  Does the Senator agree there is a direct connection in this regard?
  Mr. CONRAD. Yes. I knew we were going to get into this debate at some 
point so I asked my staff to see if we could put together some charts 
and try to explain what is happening. It is the part of this discussion 
that has received almost no attention, and the Senator is exactly 
right. Here is what is happening.
  We have a dramatic increase in people eligible for Social Security. 
This chart shows the number of Social Security beneficiaries exploding 
with retirement of the baby boom generation. This is the increase in 
people eligible. We will see in short order a doubling of the people 
eligible for Social Security.
  The President told us repeatedly:

       None of the Social Security surplus will be used to fund 
     other spending initiatives or tax relief.

  He broke that promise.
  He said:

       Every dollar of Social Security and Medicare tax revenue 
     will be reserved for Social Security and Medicare.

  He broke that promise.
  Then he said:

       We're going to keep the promise of Social Security and keep 
     the government from raiding the Social Security surplus.

  He said that in a radio address in March of 2001.
  Then he said in 2002:

       None of the Social Security surplus will be used to fund 
     other spending initiatives or tax relief.

  I went back and I said, let's add up how much money the President in 
his budget is taking from the Social Security trust fund. He is 
borrowing $2.4 trillion. Compare that to the income tax cuts of the 
same period, $2.5 trillion. Amazing how close these things are.
  In effect, what he is doing is taking money from Social Security, 
raised by payroll taxes paid overwhelmingly by middle-income people. He 
is using it to fund tax cuts that are income tax cuts for 
overwhelmingly the wealthiest, and 33 percent of the benefit goes to 
the top 1 percent, those earning over $337,000.
  We have the spectacle of people, through their payroll taxes, funding 
an income tax reduction that goes primarily to the wealthiest among us 
and then creating a circumstance in which the Chairman of the Federal 
Reserve comes in and says, Oops, we are overcommitted; we now have to 
cut Social Security benefits.
  That is really kind of a stunning policy if one thinks about it, if 
you think about who is adversely affected when you talk about cutting 
Social Security benefits. Two-thirds of retirees rely on Social 
Security for more than half of their income; 31 percent get at least 90 
percent of their income from Social Security; 50 percent to 89 percent 
of their income is 33 percent.
  Mr. SARBANES. In other words, a third of the Nation's retirees get at 
least 90 percent of their income from Social Security, another third 
get from between 50 and 90 percent of their income from Social 
Security. It demonstrates how dependent retired people are on Social 
Security to keep them out of poverty so they can lead a reasonable 
life.
  Mr. CONRAD. Chairman Greenspan now says we have to cut these benefits 
because we are overcommitted, because we have, in part, taken the 
money, the President has taken the money under his plan from Social 
Security to finance income tax cuts that have gone overwhelmingly to 
the wealthiest of the people among us. That is the reality we confront.
  Interestingly enough, they say, you have the shortfall in Social 
Security which is $3.8 trillion over the next 75 years. That is 
absolutely true. We have a shortfall in Social Security of $3.8 
trillion over 75 years. Interestingly enough, the cost of the 
President's tax cuts over that same period is three times as much: 
$12.1 trillion.
  Mr. SARBANES. Will the Senator yield?
  Mr. CONRAD. I am happy to yield.
  Mr. SARBANES. Does that chart mean if one-third of the tax cuts that 
are being proposed to be made permanent, if only one-third of them 
remain not made permanent, that would more than cover the shortfall in 
Social Security?
  Mr. CONRAD. Yes. If you look at this chart, it goes back to the point 
the Senator was making about choices. This is all about choices. The 
choices the President has made are, yes, to have tax cuts in a time of 
economic weakness. That we could all understand and even support. We 
would choose a different package of tax relief than he chose. We would 
have targeted, clearly, more to the middle class because that would 
have given us more of an economic boost than diverting so much of it to 
the highest income in the country.
  However, the President is digging a very deep hole. More and more 
debt. More and more deficits. Deficits that explode right beyond the 
budget window, right at the time the baby boom generation retires.
  What happens? A future Congress and a future administration will have 
to make very tough choices, which I outlined earlier in my 
presentation. Very deep cuts in spending, very large tax increases, or 
some combination to fill in these holes. That is where I fault the 
President for taking us on a course that is reckless and fundamentally 
not conservative. This is a course that is reckless.
  The Senator is right, we are talking about choices. These are the 
choices that are made in the budget.
  The PRESIDING OFFICER. The Senator from Maryland.
  Mr. SARBANES. Mr. President, I appreciate my distinguished colleague 
from North Dakota joining with me in this exploration of the 
implications of this budget.
  I will talk about job creation for a moment, and to indicate any 
budget we deal with, which is the most important Government document we 
act upon, contains thousands of decisions that are critical to our 
national life. Those decisions reflect important choices in terms of 
the priorities for our country.
  We have just been engaged in a discussion about tax breaks for the 
wealthiest among us. Are we more concerned with strengthening Social 
Security to make sure that people in retirement are adequately covered 
or making the necessary investments in education, transportation, and 
the environment? All of those decisions are involved in crafting the 
budget.
  In its composite, the budget is a very important macroeconomic 
document because it sets the fiscal path for dealing with the overall 
economy.
  We ask the question, Will the budget fund the programs, create jobs, 
and strengthen our economy? Will the

[[Page 3541]]

budget have long-run structural deficits? What will be the impact of 
those deficits on our future economic performance? Will it move us 
toward full employment or away from it?
  We talked about the credibility of the President's budget and the 
fact that it fails to account fully for what the projections should be. 
We talked about the budget's failure to project for 10 years to show 
the full cost of making these tax cuts permanent, the failure to adjust 
for the alternative minimum tax, and the fact that the budget has zero 
in it for our involvement in Iraq and Afghanistan.
  Who are they kidding? Everyone knows that our involvement in Iraq and 
Afghanistan is going to cost something. Then they say: Well, we cannot 
really estimate. They should make a good-faith estimate for inclusion 
in the budget. We are confronted with these facts, and again and again 
we are not getting the full picture. It is a little bit like things are 
under shells. If you lift off the cover, all of a sudden you discover 
another problem.
  When the President proposed his first massive tax cut, he told us, 
``We can proceed with tax relief without fear of budget deficits.'' 
That is what President Bush said when he came into office.
  In the first budget he submitted, he predicted, for fiscal year 
2004--the year we are now in--that we would have a $262 billion 
surplus. This was the President's prediction.
  The following year, with a budget already in deficit, the President 
advocated another tax cut. At that time, he said, ``Our budget will run 
a deficit that will be small and short term.'' And the President's 
budget at that time--that is, the next year--stated the deficit would 
be so short term that by fiscal year 2004--the year we are now in--the 
Government would be back in surplus by $14 billion.
  Last year, on the brink of war with Iraq, the President proposed yet 
another tax cut. He also submitted a budget that did not include the 
cost of the war. He predicted that the deficit for fiscal year 2004 
would be $307 billion.
  Now, in 3 years, the President had shifted from predicting a surplus 
of $262 billion for 2004 to the next year when he predicted a surplus 
of $14 billion for 2004. Then, when he submitted the 2004 budget, he 
predicted a deficit of $307 billion. So over the 3-year period, we went 
from a $262 billion surplus, predicted for the year we are in, to a 
$307 billion deficit. That is a change of $569 billion.
  It is pretty clear that although the President said, when he 
submitted the 2004 budget, he was predicting a deficit of $307 billion, 
it looks now as if the 2004 deficit will be about $520 billion. That is 
$780 billion more than the President predicted in 2001, $535 billion 
more than he predicted in 2002, and $214 billion more than he predicted 
when he sent this year's budget--the budget we are in--to the Congress.
  So we are told we can do these big tax cuts and that it will not 
matter because we are not going to have a deficit. And here we are 
deeply in the hole.
  What is the consequence of this? Some might say: Well, he is 
producing jobs. We had an economic slowdown, and now we are producing 
jobs. We are putting the country back to work.
  Let's look at those predictions and what has actually happened.
  In the 2002 Economic Report of the President, the administration 
forecasted that in 2004 the economy would have 138.3 million jobs. Last 
year, the President lowered that estimate to 135.2 million jobs. And in 
his most recent economic report, he lowered it again to 132.7 million 
jobs. In other words, in just 2 years, the forecast for jobs in the 
country has been lowered by 6 million.
  When the President passed the 2003 tax cut, the administration 
predicted that by January 2004, the economy would create over 2 million 
jobs. In the fall of 2003, Secretary Snow predicted the U.S. economy 
would create 2 million new jobs from the third quarter of 2003 until 
the third quarter of 2004--an average of over 200,000 jobs a month.
  What has happened? We just got the figures on Friday for the month of 
February. For the month of February, it was reported that the economy 
created 21,000 new jobs in February--21,000--none of them in the 
private sector, incidentally; zero private sector jobs were created.
  When Secretary Snow made this prediction of just over 2 million new 
jobs last fall, we would have needed an average of about 200,000 new 
jobs a month in order to meet his prediction. The performance has been 
so dismal, we have only averaged 59,000 new jobs per month over the 
last 2 months. We have to produce jobs 444,000 a month from now until 
the third quarter of this year for Secretary Snow's prediction to be 
borne out.
  The economy is not creating these jobs. We face a real difficult jobs 
situation.
  Mr. CONRAD. Will the Senator yield on that point?
  Mr. SARBANES. Certainly.
  Mr. CONRAD. I was looking at this same data, looking at the 
President's claim that they are going to create 2.6 million new jobs, 
and looking at where we are since they made that prediction. It is 
quite stunning.
  In February, of these new jobs that were created, some 20,000, as the 
Senator indicated, not a single one was in the private sector, not one. 
The whole assertion by the President, on his tax cut plans, has been, 
if you cut these taxes, you will get more jobs. He was not saying more 
jobs in Government; he was saying more jobs in the private sector. Yet 
the only new jobs we got in February were in Government. They were 
Government jobs. There was not a single new job in the private sector.
  So if the President's plan is working, I do not see the evidence for 
it. The evidence is, it is failing, and it is failing by a big margin.
  I believe one of the reasons maybe it is failing is that the tax cuts 
he chose were tax cuts that were geared to the highest income people, 
overwhelmingly.
  The Senator might be interested to know, I put up a chart that 
showed, for 2006, the average tax cut going to somebody earning over $1 
million a year is $140,000.
  Mr. SARBANES. The tax cut alone.
  Mr. CONRAD. The tax cut for that year alone, 2006. Under the 
President's plan, the tax cut for those earning over $1 million a year 
is $140,000.
  The average middle-class individuals, those who are in the middle 20 
percent of the income spectrum--you break it down into five 20-percent 
groupings--the middle 20 percent, they get about $560 of tax benefit in 
that year. The person earning over $1 million gets $140,000.
  If you were going to put it on a graph and have the two related--the 
tax cut for those in the middle 20 percent and those earning over $1 
million a year--the chart would have to be 35 feet tall to make a 
comparison between what the wealthiest get and what the middle class 
get.
  Maybe that is part of the reason this JOBS program is not working, 
because it has been so tilted to the highest end that we are not 
getting money into the hands of middle-income people who would be more 
likely to spend it, thereby spurring the economy.
  Mr. SARBANES. Well, I say to my colleagues it is classic trickle-down 
theory. It has been discredited before. Yet here it is back before us 
again, classic trickle-down economics. Every administration since 
Herbert Hoover, which was, of course, classic trickle-down economics, 
Democratic and Republican, has had a net creation of jobs over the 
course of its administration. In other words, over that 4-year period, 
every administration were able to have a net gain in jobs.
  This administration is about 2.3 million jobs below where the Nation 
was when they came into office--down about 2.3 million jobs. It is the 
first administration since Herbert Hoover that will not show a net gain 
in jobs over the course of its 4-year tenure. That fact needs to be 
laid out before the American people.
  This recession we experienced began 35 months ago, the first few 
months into the Bush administration. The economy today has fewer jobs 
than it did then. This is the first recession

[[Page 3542]]

since the Great Depression in which the economy failed, over a 35-month 
period, to recreate all the jobs that were lost in that recession. In a 
typical business cycle, we long ago would have recouped those jobs and 
gone on from there. That has been the case--and this is a long time 
period--in every recession we have experienced since the Great 
Depression.
  But here we have a situation in which jobs are not being created to 
close the gap, and there is no real prospect, in the few months 
remaining, of meeting Treasury Secretary Snow's prediction. To do so, 
we would have to average about 444,000 jobs per month out into the fall 
of this year. Over the last 3 months, we averaged only 42,000 new jobs 
per month, as opposed to 440,000.
  This, of course, raises a number of difficult problems. We have seen 
manufacturing jobs continue to fall and they have now fallen for 43 
consecutive months. We see temporary jobs increasing. We see people 
dropping out of the labor force. Last month, 392,000 people left the 
labor force. People come in and say, you know the unemployment rate 
didn't go up. But if people drop out of the labor force and are not 
looking for work, they are not counted as unemployed. One of the 
reasons is they become so discouraged they drop out. That helps to keep 
the unemployment rate flat, but the exodus from the labor market is 
reflected in the job figures.
  Mr. CONRAD. Will the Senator yield on that point?
  Mr. SARBANES. Yes.
  Mr. CONRAD. I was reading the New Yorker magazine last night and they 
had two guys talking. One said:

       I have quit looking for work; I understand that will help 
     the economy.

  Well, it will help the economy because they quit counting him. That 
is the point the Senator is making. The Senator wasn't on the floor 
when I showed this chart. I would like the Senator to see this because 
it really makes a point he is making. This looks at the last nine 
recessions since World War II, what happened in terms of job 
production. The Senator was making the point we are now 35 months into 
this recession, and that is right here, this line, which shows the job 
recovery this time compared to the last 9 recessions. You can see, in 
every recession since World War II, 17 months after the peak of the 
business cycle, job recovery started in a very healthy way. This time, 
it has not happened. We are 35, 36 months past the peak of the business 
cycle. Now we see we are 5.4 million jobs short of the typical 
recovery.
  If that isn't a warning sign to all of us that something is wrong 
here, something is not working here--after every recession since World 
War II we saw a healthy job recovery beginning 17 months after the 
business cycle peak. Now we are at 36, 37 months past the business 
cycle peak and we still are not seeing job recovery.
  Mr. SARBANES. If the Senator will yield, it is not only that we have 
not been able to get up to here, we have not been able to even get back 
to the jobs we had at the beginning of the recession. We are still well 
below, about 2.3 million jobs, where we were when the recession began 
in the early months of 2001, absolutely.
  Mr. CONRAD. The chart says ``smallest share of the population at work 
since 1994.'' That is really stunning. My colleague, the chairman of 
the committee, talked about having more people at work than ever 
before. That is one way of looking at it. Another way of looking at it 
is, what is the share of our population at work. Of course, more people 
are at work; we have a much larger population than we have had before 
but jobs have not grown. If you look at the percentage of the people 
who are at work, we are at the lowest we have been in 10 years--the 
smallest share of the population at work since 1994.
  I have another chart that shows the duration of unemployment, which 
is the highest in over 20 years. That is, when people become 
unemployed, they are taking the longest they have taken in 20 years to 
find a new job. Something is not right here. Anybody who comes out on 
the floor and asserts everything is fine, the economy is growing, jobs 
are being produced--no, no, no, things are not fine. There is something 
very seriously wrong in this recovery. I just had a gentleman, I said 
on the floor earlier, in business who told me, ``Senator, there is 
something very different from what we have seen in different 
recoveries.'' He is in the machine tool business. He said, ``We should 
see our order books filling up, and they are not.'' He said, ``I 
suspect that the jobs being created are in China, Mexico, and India, 
and not here.''
  That goes right to the heart of the point the Senator was making.
  Mr. SARBANES. The last chart my colleague presented is an extremely 
important one because it shows the percent of long-term unemployed 
among the unemployed is at record levels, higher than it has been since 
1984. In fact, close to 23 percent of the unemployed workers have been 
unemployed for more than 26 weeks. It has been above 20 percent now for 
17 consecutive months. For a year and a half, the percent of unemployed 
who are long-term unemployed is above 20 percent, which is an important 
benchmark. The last time we had a period that ran that long was 20 
years ago. The Senator's chart showed exactly that. That was back in 
1984.
  That is why this effort that has been repeatedly made on the floor of 
the Senate and in the committee just last week to address extending 
unemployment insurance benefits is so important. That effort has been 
turned back. I plead with my colleagues on the other side to move ahead 
on extending unemployment insurance benefits.
  We still have a serious labor market weakness. We have not recovered 
the jobs. It is not as though you could say a lot of job opportunities 
have opened up and people can go back to work. That has not happened in 
this instance.
  Long-term unemployment is at record levels. Nearly 2 million people 
have been unemployed for more than 26 weeks. Twenty-six weeks is the 
period that the traditional unemployment benefits cover. In the past, 
we have always extended unemployment insurance benefits so people can 
meet the problem of providing for their families. We have actually 
provided more benefits in the past than we have in this recession.
  In the previous Bush administration, the program was extended and 
then extended again. We built up the unemployment insurance trust fund 
for this purpose: to fund these benefits when we encounter an economic 
downturn. There is over $15 billion in the unemployment insurance trust 
fund specifically collected for the purpose of paying unemployment 
insurance benefits in an economic downturn.
  I joined with my colleague in the committee the other day to offer an 
amendment to make a provision within the budget for extending 
unemployment insurance benefits. Regrettably, it was turned down on a 
straight party-line vote. I anticipate that amendment will be offered 
again on the floor, and I hope my colleagues will reflect upon it 
before that occasion arises.
  We need to do something. These are people who were working. You 
cannot collect unemployment insurance benefits unless you have a work 
record that entitles you to collect them. These are not, if you want to 
say, malingerers or people who don't want to work. These are people who 
had jobs. They lost their jobs through no fault of their own. If it is 
their fault, they cannot get unemployment insurance benefits. If they 
are to blame, if they have not performed on the job, they do not get 
unemployment insurance benefits. These are people who were working, in 
many instances had a long working career. They are out of a job. They 
are in a labor market where jobs are not being created, as my colleague 
dramatically illustrated with the chart he showed. How are they going 
to provide for their families? What are these responsible, hard-working 
Americans to do in terms of meeting the needs of their families?
  Yet we have been turned back on the effort to extend unemployment 
insurance benefits, and I very much hope when the issue comes before us 
that Members will reflect and agree we need to do something about this 
pressing problem.

[[Page 3543]]

  I will make a couple more points before I close.
  This fiscal situation of the United States in which we find ourselves 
and the magnitude of it has drawn very sharp comment from objective 
observers. Listen to what the IMF said only recently:

       U.S. Government finances have experienced a remarkable 
     turnaround in recent years. Within only a few years, hard-won 
     gains of the previous decade have been lost, and instead of 
     budget surpluses, deficits are again projected as far as the 
     eye can see.

  Let me repeat that. This is the IMF commenting about U.S. Government 
finances:

       Within only a few years, hard-won gains of the previous 
     decade have been lost, and instead of budget surpluses, 
     deficits are again projected as far as the eye can see.

  The President says he is going to cut the deficit in half by 2009. My 
colleague pointed out, I think with great perception, that was not in 
the cards. It is not sustained by the numbers.
  If we are going to have a debate, we cannot just play around with the 
numbers as though they do not mean anything. We have to have some hard 
facts upon which to work. These structural deficits that are built in 
this budget are extremely harmful to the economy as we move ahead--a 
promise to raise interest rates, reduce economic growth, decrease the 
number of jobs, increase our vulnerability to a sudden economic crisis. 
A responsible budget would not encompass a structural deficit, and if 
there is a structural budget deficit, a responsible budget would seek 
to correct the imbalance.
  I could go on at some length about the choices made within the budget 
with respect to what our priorities ought to be, but I make this 
fundamental point: In every instance, there is a choice. You do not 
make one decision, for instance, to cut taxes for very wealthy people 
which then results in a larger deficit and then turn around and say to 
educators who say, We cannot carry through on the No Child Left Behind 
legislation, that there is no funding to address your complaint. That 
complaint is coming from all over the country. Out in the Rocky 
Mountain States, we have educational officials telling us they cannot 
carry through on that program. They are making that point very 
forcefully.
  I was reading about it only today or yesterday in the paper. They 
said: We can't carry through on it. They are told, We can't carry 
through on it because we have this deficit to worry about. Why do we 
have the deficit to worry about? We have this big deficit because we 
are doing these big tax cuts for wealthy people. So the choice that was 
made in the President's budget was to do the tax cuts for the elite 
rather than fund the No Child Left Behind program. That was the choice.
  I think that is a bad choice. I think the country thinks it is a bad 
choice. But there is a need to understand when you put this budget 
together, whatever you do on the one hand has an impact on the other 
hand. You cannot avoid that.
  If you did not do these extensive tax cuts--which the President wants 
to make permanent--with those huge costs, the deficit would not run up; 
you would be able to hold the deficit down and do something about 
education and health care. But the President has put the Nation in an 
absolute deficit box.
  Mr. CONRAD. Will the Senator yield?
  Mr. SARBANES. Certainly.
  Mr. CONRAD. As part of my presentation earlier, I showed this 
tradeoff very directly. If we look at 2005, the cost of the tax cuts 
for those who are in the top 1 percent, those who earn over $337,000 a 
year, for the 1 year it is $45 billion. The amount the President is 
shorting No Child Left Behind for that same year is $9 billion.
  In fact, this is the chart. Ask and ye shall receive. This kind of 
reveals the President's priorities. Mr. President, $45 billion is the 
cost of the Bush tax cut for those making over $337,000 in 2005.
  Mr. SARBANES. I think that is less than 1 percent of the American 
public; is it not?
  Mr. CONRAD. The top 1 percent earns over $337,000. That costs $45 
billion. But he does not have the money, he says, to fund No Child Left 
Behind.
  Mr. SARBANES. What that says is he could fund No Child Left Behind 
and he would still have $36 billion left of the tax cut; is that right?
  Mr. CONRAD. That is exactly what it shows. It shows he would only 
need to reduce the tax cut to the wealthiest 1 percent by 20 percent in 
order to fund No Child Left Behind.
  I said earlier I am in this category. We are very fortunate. My wife 
and I are in this category. I asked myself, would I be willing to give 
up 20 percent of my tax reduction to fund No Child Left Behind? I 
would, because it is the future.
  Chairman Greenspan has said if we are looking ahead to the 
competitive position of our country, the absolute key is education. Our 
people have to be the best educated and the best trained if they are 
going to succeed in this highly competitive global environment.
  This is about choices. The President is saying it is more important 
to have all of this $45 billion tax cut for those earning over $337,000 
than to take even one-fifth of it to provide for better education in 
the country. I do not think that is the right priority. I think the 
Senator is correct.
  Mr. SARBANES. There are other examples of this. I offered an 
amendment in the Budget Committee to fully fund the firefighter grant 
program. That amount is $900 million--not billions as we are talking 
here but just $900 million. Two years in a row, the Congress has 
appropriated $750 million. So we have not appropriated the fully 
authorized amount but we have gotten up fairly close to it at $750 
million.
  The President's budget submitted to the Congress had $500 million. In 
other words, it cut the program by one-third, $250 million, from the 
level it had been for 2 successive fiscal years. These are grants that 
go out to firefighters across the country to try to enhance their 
professionalism, upgrade their equipment, better prepare them to deal 
with the threats we confront.
  One of the things we are very anxious to deal with is that one-third 
of all the firefighters in the country do not have the equipment, the 
breathing equipment to protect them in a serious fire, from smoke 
inhalation. That is one of the things we would like to take care of. 
Yet the President's budget proposed to the Congress cut the funding for 
this program by one-third.
  The President is now running political ads showing firefighters on 9/
11 moving out of the wreckage, and there is a stretcher with a flag on 
it. We know what the firefighters did. We know the heroism they have 
shown.
  Every year, I go to the National Fallen Firefighters ceremony, which 
is held at the National Fallen Firefighters Memorial, which is in 
Emmitsburg, Maryland, the location of the U.S. Fire Academy. Families 
come from all over the country. There is a weekend of events and 
ceremonies to mark the memory and the heroism of fallen firefighters. 
The year after 9/11 we could not do it in Emmitsburg. There were too 
many people and so the ceremony was held at the MCI Center in 
Washington because the number jumped so tremendously as a consequence 
of those deaths in New York.
  In money terms, that is not a big item, but in its significance and 
in what it stands for, I think it is very substantial. We know our 
first responders place themselves at risk. They are the first called 
upon.
  There were firefighters going up the steps of the World Trade Center 
in an effort to rescue people when people in the building were coming 
down the steps in order to escape. In effect, they were placing 
themselves in further danger in order to save their fellow human 
beings. They did not know these people. They were all strangers to them 
but they were responding to their duty. It is extraordinary when we 
stop and think about it.
  The impact of it is obviously recognized by some of the President's 
people because they are putting it in this political ad. But I would 
like to see them take the program up to $900 million to do the 
firefighter grants so we could provide firefighters across the country 
with the protective equipment which they need as they carry out this 
very dangerous occupation. That would require only $400 million. The 
President's

[[Page 3544]]

tax cuts provide $45 billion for the top 1 percent. Will the top 1 
percent, those making over $337,000, who are getting an enormous--what 
is the tax return they are getting? Does the Senator have that figure 
in his mind, $120,000 or something?
  Mr. CONRAD. That is those earning over $1 million.
  Mr. SARBANES. Those earning over $1 million get $127,000 per year. As 
a category, they get $45 billion. Would they be willing to reduce that 
to $44,600,000,000 in order that we could fund these firefighter grants 
at the full authorization level of $900 million instead of the $500 
million that is in the President's budget, which itself represented a 
cut of $250 million from what Congress had appropriated in each of the 
other 2 years?
  Is it unfair, inequitable, unjust to say that in the order of 
priorities, funding those firefighter grants should come ahead of a 
small portion of these tax cuts for those making $337,000 a year? I 
defy anyone to argue the equities of that case.
  That is why this is not a good budget. That is why we voted against 
it in the committee and that is why over the coming days, under the 
leadership of our very able colleague from North Dakota, we will put 
before this body--I and others and certainly the Senator from North 
Dakota himself--amendments that will frame the choice in terms of 
priorities. Those are the choices we need to face. Let's put the 
choices out there.
  Do my colleagues think it is reasonable to take a small portion of 
this tax cut and use it for this purpose, or must every single penny of 
what the President is seeking for the very elite go to the very elite, 
despite these other pressing needs?
  As I understand it, in the coming days this week, opportunities will 
be presented to offer amendments which will frame those choices. The 
Senator has framed one. Everyone talks a good game about education, 
including the President. The question is, will you put the resources 
there to do the job?
  As the Senator points out, fully funding education is more costly 
than the example that I have been citing. But nevertheless, for just 
over $9 billion we could fully fund No Child Left Behind, which would 
address what we are hearing from the States, who are saying now, We 
can't do this job. You have saddled us with a job without the 
resources. The $9 billion is one-fifth of this tax cut that is going to 
those making over $337,000 each and every year.
  Those amendments framing those choices need to be put to this body. I 
look forward to the responses my colleagues will make to them.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Idaho.
  Mr. CRAPO. Mr. President, I would like to take a few moments to 
respond to some of the comments that have been made. I have been 
listening to the debate for the last 3 or 4 hours. It brought back a 
lot of memories to me.
  I ran for Congress about 12 years ago, to the House of 
Representatives. I got elected and spent 6 years there before I then 
ran for the Senate. In my first race for the Congress we had a giant 
deficit. We had deficits in the hundreds of billions of dollars range 
for years. I ran on a platform of balancing the Federal budget. This is 
the debate we had at that time.
  First, there were those who said you can't balance the Federal budget 
or, if you could, it would be bad for the management of the Federal 
budget and we couldn't run the Federal Government very well if we 
didn't use deficit spending. That argument was debunked when, after 
about 6 or 7 years of effort starting in about 1994, we did balance the 
Federal budget. Frankly, we did very well running the Federal 
Government, paying down the national debt, and making a lot of fiscal 
progress.
  The other argument that was made back then when I ran for Congress, 
and which is still being made and is the argument that is being made 
today, only in a different way, was we had to have higher taxes and 
higher spending in order to have a successful society in America. We 
could not stop the tax increasing, we could not stop the increased 
Federal spending, because it was best for all Americans that we have a 
large, powerful, centralized Federal Government that had increasingly 
more control over the economy; that we nationalize our health care 
system; that we increasingly find Federal solutions to problems as they 
exist throughout society; and that the private sector simply could not 
provide the solutions that were needed.
  It was the age-old battle of taxing and spending and a centralized, 
large, powerful Federal Government versus those who believed we should 
get the tax rates reduced, lower the tax take of this Federal 
Government from our economy, let the economy have the stimulus that 
would thereby be generated by letting people and businesses have more 
control of the individual decisions about the use of their resources, 
and try to control the deficit and the size of the Federal Government 
by controlling spending.
  Those were two objectives for which many of us fought. I was there in 
Congress when we fought for and got a balanced budget. The first 
objective was to balance the Federal budget, to stop spending more than 
we were raising in revenue. The second objective was to reduce the size 
of the Federal Government. Many of us felt it had grown too large, that 
its reach was too far, and that it impeded the ability of the American 
people to have the kind of choices in their own lives, in their own 
businesses, they needed in order to achieve the American dream. It was 
a classic, age-old battle in American politics, and we are hearing it 
on the floor today.
  As I have listened during the last number of hours, I have heard 
attacks primarily on the President. There has not been a lot of mention 
of the actual budget that is on the floor today. There has been some, 
but not a lot. Most of the attacks have been on the President, saying 
the economy is in bad shape, we don't have as many jobs as we want, we 
have a terrible circumstance facing us fiscally in this country, the 
deficit is high and we need to do something about it. It has been posed 
here that everybody should see we have a problem and, in fact, I think 
we all do see we have a problem. But as I have been listening to the 
solutions that have been proposed by those who attack the President, I 
have seen two solutions. One is they attack the tax cuts in the last 2 
or 3 years and apparently would like to see those taxes raised. In 
other words, increase taxes. That is one of the proposed solutions. The 
other solution is spend more money.
  There are a lot of very important programs that will be brought up. 
Some have been brought up today. Others will be brought up throughout 
this week.
  As we debate this budget, I think you will see it will come down to 
that age-old argument I debated when I first ran for Congress 12 years 
ago and that we have debated virtually every year in one guise or 
another since that time. There will be those who want to blame every 
problem we have in this country on the fact we cut taxes a few times in 
the last 3 years and that we are not spending enough money in the 
Federal budget, that we need higher taxes and more spending, and that 
will solve our social and fiscal ills.
  There are others of us who will argue that by cutting taxes we are 
able to stimulate the economy, stimulate investment in capital, give 
people the ability to consume, and thereby give greater confidence and 
strength to the economy, and certainly give people more control over 
what happens with the dollars they earn than they would have had if 
they were taxed on those dollars and sent those dollars to Washington.
  The budget we actually have before us today is one that does maintain 
our effort to stimulate our investment in capital. It does give and 
strengthen and protect the tax relief to all taxpayers so we can have 
stronger consumer spending and stronger consumer confidence. It builds 
up and focuses on strengthening the infrastructure, especially in our 
rural areas where we need so much to have a strong investment in the 
infrastructure so we can have stronger economic development potential. 
This budget focuses on controlling spending.

[[Page 3545]]

  Remember, I said there were two objectives we fought for early on. 
One was to balance the budget, the other was to control the immense 
growth of the Federal Government. You can actually balance this budget 
by simply raising taxes. It is a mathematical calculation. You figure 
out how far you are out of balance, how much spending you have done 
beyond your means and beyond your revenue, and raise taxes to meet it. 
You can balance the budget. But by doing so you have totally ignored 
one of the more important priorities we should have here, and that is 
to identify the right size of the Federal Government; to recognize the 
tenth amendment that said there was an important role for the Federal 
Government, but that those powers not specifically given to the Federal 
Government were reserved to the States and to the people respectively. 
That is the kind of debate you will see played out in one context or 
another throughout the remainder of this week.
  It has been said there is no provision for the war against terror in 
this budget. Actually, the budget we are debating on the floor today 
provides for a $30 billion threshold for a supplemental appropriation 
for our spending, if we need it, in the war against terror.
  It has been said the tax cuts that were passed by this Congress in 
the past few years are the problem we are dealing with today. I think 
that is interesting because I believe most Americans realize the tax 
cuts that were passed in the last few years all had expiration dates on 
them because, as a result of some of the procedures here in the Senate, 
we could not get permanent tax relief. So those tax cuts over the next 
10 years are going to start expiring. The first three of those tax cuts 
to expire, to go away, will happen this year. If this budget is not 
adopted, then the people who got that tax relief are going to lose it 
and their taxes are going to go back up.
  To listen to the debate you would think the tax relief that was 
passed by this Congress was solely focused on the wealthy.
  As a matter of fact, it has been pointed out that because the wealthy 
in this country pay so much of the taxes, when there is tax relief they 
get a large part of the tax relief that comes back to them. But the tax 
relief we passed was weighted percentagewise more for the lower and 
middle classes. You can either look at it in terms of dollars or in 
terms of percentages. But the percentage the wealthy pay of the income 
tax in this country went up after the last tax cut--not down--because 
the greater percentage of focus was on the middle and lower classes.
  It is three of the taxes that hit and support those middle and lower 
classes that are coming up for expiration this year. The first is the 
expansion of the 20-percent income tax bracket by expanding the amount 
of income tax at the 20-percent level. We gave a broad level of tax 
relief to those who pay the lowest level of tax in this country. That 
will expire this year if this budget is not adopted.
  The second is the marriage tax penalty. The elimination of the 
marriage tax penalty will expire this year if this budget is not 
adopted.
  Third, the $1,000 child tax credit.
  Those who stand on the floor here and say all the tax relief we 
passed in the last few years is devastating this economy are going to 
get a chance to vote this year on whether to let those tax cuts stay in 
place. I predict the support on both sides of the aisle for maintaining 
those tax cuts is going to be very broad. Those tax cuts were directed 
at those in the very middle and lower income classes which the tax 
relief bills focused on in an effort to reform the code.
  But then it is true there were other parts of that tax relief which 
did benefit those who are in upper income brackets. If you listen to 
the debate today, I guess you would assume if we went back and 
eliminated those tax cuts, the economy would be fine, employment would 
go back, the deficit would be eliminated, and probably all other ills 
we have heard about today would go away.
  What are these tax cuts we are talking about? There are a number of 
them. But one of the most important, in my mind, was cutting in half 
the tax rate on dividends, undoubtedly one of the strongest things we 
could do to encourage investment in the capital structure in our 
Nation.
  Another was the acceleration of depreciation for small businesses so 
they could get a little bit better handle on growing their small 
businesses rather than sending their small business revenues to the 
Government in Washington.
  Another was to give those sole proprietorships--those small 
businesses that were sole proprietorships--the opportunity to have 
their tax brackets reduced.
  I believe if you eliminate those tax relief measures, you are going 
to reduce the ability of our small businesses in this country to be 
resilient and you are going to reduce the investment in capital in this 
economy, and you will see the strength of the economy go down, not up.
  But that is the debate we are having over whether we should have more 
taxes and that is better for the economy or whether we should have 
reform of our Tax Code and reduce taxes in those areas that discourage 
proper tax policy.
  I would like to talk for a minute about what did happen.
  Again, to hear the debate in the last few hours you would think the 
entire economic difficulty we face today in our Nation is a result of 
that portion of the tax relief we gave previously which went to those 
who were not in the lower and middle-class tax categories. What in 
reality happened was we had a stock bubble growth in this country that 
popped. The confidence in the stock market dropped precipitously. 
Following that, there was an attack on 9/11 in which terrorists 
attacked us on our homeland soil in one of the rare times in the 
history of our country where that has happened. As a response to that, 
the economy dipped even further. Consumer confidence waned. Following 
that, we have had some scandals--some debacles with the WorldCom 
problem, the Enron problem, and consumer confidence in the marketplace 
went even further into the tank and the economy started dipping even 
further.
  Frankly, to blame all of the problems we have had on tax relief for 
the wealthy is a vast oversimplification. What happened as a result of 
all of these things is the economy went way into the tank, and revenue 
to the Federal Government went through the floor. As a result of that, 
we did not have the kind of revenue we had projected we would have.
  In addition, our spending went through the roof. We responded to the 
war against terrorism by rebuilding New York and Washington, DC, giving 
support to those who had been attacked here on our homeland soil by 
developing a new Department of Homeland Security, increasing the 
measures and the support we put into defending our homeland, and we 
have prosecuted a war against terror across the globe which has 
involved two wars, not to mention the overall extent of the cost of 
fighting terrorists on many fronts. As a result, spending has gone 
through the roof.
  There is one other thing, by the way, that made spending go through 
the roof. About two-thirds of the Federal budget is on autopilot, 
mandatory spending this budget can't control with much success, and 
that simply goes on growing regardless of the state of the economy. The 
entitlement programs of this country have an autopilot status that 
causes increased growth regardless of what is happening in the economy. 
That is another one of the big pressures on the spending in Washington.
  Those are the things that are really going on here which we ought to 
be debating. But instead, it is a Presidential election year and 
everything is the fault of the President because he cut taxes, because 
he won't support enough new spending. The President would love to 
support spending on all of the pet projects and all of the very 
important and valuable items in the budget which because of these 
deficits we face he has had to control. The President, I am sure, would 
love on a number of

[[Page 3546]]

these issues to support additional funding. But he has said that 
outside of our national defense and outside of our homeland security, 
he is going to try to hold the growth of the spending at the Federal 
level to less than one-half of 1 percent on the rest of the budget. He 
is going to do so because in addition to recognizing we have to deal 
with our deficit problems through good tax policy and through 
stimulation of the economy, because it is a strong economy that will 
help us get out of this, if anything will, he also recognizes the other 
side of the coin is we have to solve this problem through focusing on 
the spending side of this budget.
  Last year, when we had a similar budget before this Congress and 
before this Senate, we had something in the neighborhood of 80 
amendments to the budget. I would bet there are going to be dozens and 
dozens of amendments to this budget. Last year we defeated most of 
those amendments because we had budget points of order and a 
requirement of 60 votes in order to break this budget. Last year, we 
defeated almost every one of those 80 or 81 amendments. If my memory 
serves me correctly, there was something in the neighborhood of $800 
billion in new spending over a 10-year cycle in those 80 to 81 
amendments which we defeated. Certainly, every one of them had a 
constituency, every one of them had a valid reason why it was a good 
proposal for a good cause for some spending to be made. But we had to 
try to control this deficit. That is what we did. That is what we will 
do again.
  I am sure as these proposals are made and as efforts to attack this 
budget are made, almost all of them will be couched in the argument 
that it is the tax cut on the wealthy which has made this problem for 
us, and simply taxing the wealthy more will solve this problem for us. 
We can tax the wealthy and spend the money and we will be fine in this 
country.
  You can only pursue that line of thought to a certain point. I am 
sure it has already been said here on the floor by others, but that top 
1 percent and that top 5 percent already pay the vast majority of the 
income tax in this country. The last tax relief we gave made their 
percentage share of the taxes in this country grow, not go down. At a 
certain point, we have to realize we will have a strong economy, and we 
will have a strong Federal budget if we hold the line on tax increases 
and hold the line on spending and pay attention to both balancing the 
budget and trying to maintain the correct size of this Federal 
Government.
  There are many more things that need to be said. I unfortunately have 
an appointment in just a few minutes to which I have to go. But there 
will be a lot of debate that will go on during this week as we clash 
over the proper fiscal policies of this Government.
  I encourage everyone in this country who listens to the debate this 
week to listen to it with an understanding of what is really being 
debated. It is the age-old fight between those who want higher taxes 
and higher spending and a more powerful, centralized Federal Government 
with an increasing reach into the economy, and those who want to keep 
taxes lower, who believe that is a stimulus to the economy, and who 
want to downsize and rightsize the Federal Government. In one way or 
another, virtually all of the debate we will have this week will focus 
on that issue.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Thomas). The Senator from North Dakota.
  Mr. CONRAD. Mr. President, my colleague keeps referring to pet 
projects. We on our side do not believe it is a pet project to educate 
the children of this country. We on our side do not believe putting 
cops on the street is a pet project. We do not believe funding our 
firefighters is a pet project.
  But I am very glad the Senator has talked about the record on debt. 
Here is the Republican record on debt. When the President took office, 
the projection for the publicly held debt was $36 billion. In the 
President's 2002 budget, that increased to $1.2 trillion. After his tax 
cut passed, that increased to $1.6 trillion. In the President's 2003 
budget, the debt went up to $3.3 trillion. In the President's 2004 
budget, it went up to $5 trillion; with the Senate GOP budget for next 
year, $5.5 trillion.
  If our friends want to have a debate about who is responsible for the 
growth of the debt, it is squarely on their shoulders. Their budgets 
have passed. They have shredded this deficit and debt. They can say 
they are interested in fiscal responsibility. They have not walked the 
walk and they have not voted the votes.
  I wish our colleague had not had to leave because he has come back 
with this old canard that I heard again in the committee saying that we 
offered amendments that added to the debt last year, or would have if 
only the Republicans had not defeated them. The problem with that 
argument is it is not true.
  Here is what happened. Democratic amendments on the Budget Resolution 
were all paid for last year, and more than paid for, so that we would 
actually reduce the deficits, reduce the growth of debt. If you took 
all of the amendments we offered, they did not increase the deficit. 
No, no. Let's go to the record. What actually happened? Our amendments 
on the Budget Resolution would have reduced the deficit by $687 
billion.
  I am so glad the Senator brought this up because I have a list of 
every Democratic amendment to the Budget Resolution, that I will print 
in the Record, offered last year, what the cost was, and what the 
offset was. If any Member wants the opportunity to go back and check 
the record, here is their chance. What they will find is on every 
amendment, Democrats paid for their amendments, and Democrats also 
included deficit reduction. At the end of the day, if all of our 
amendments would have been adopted, we would have reduced the deficit 
by $687 billion.
  In addition, our friends on the other side are trying to rewrite 
history. They are trying to act as though our amendments last year were 
a package. They were not a package. They also want to act as though 
they were amendments for 10 years. Half of them were not. Half of them 
were 1-year amendments. In each and every case, we not only paid for 
our amendments on the Budget Resolution, we had additional deficit 
reduction.
  For example, Senator Biden offered an amendment to fund the COPS 
Program, $1 billion in cost, and he provided $2 billion of offset. He 
paid for the amendment, plus he provided $1 billion of deficit 
reduction.
  I ask unanimous consent to have this printed in the Record so 
hopefully our colleagues will not keep repeating these false claims 
they have made in the past.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

 DEMOCRATIC SPENDING AMENDMENTS TO 2004 SENATE GOP BUDGET PROVIDED FOR $687 BILLION IN DEFICIT REDUCTION OVER 10
                                                      YEARS
                                              [Dollars in billions]
----------------------------------------------------------------------------------------------------------------
                                                                                      10-year
     Amendment No.                 Sponsor                      Purpose              spending     10-year offset
----------------------------------------------------------------------------------------------------------------
278....................  Biden......................  COPS......................          $1.000         -$2.000
281....................  Kerry......................  HIV/Global Aids...........           0.797          -1.592
284....................  Murray.....................  Fully Fund NCLB Act.......           8.900         -14.664
294....................  Graham.....................  Prescription Drugs........         219.000        -395.832
299....................  Schumer....................  Homeland Security.........          79.320        -158.511
300....................  Lautenberg.................  Restore Defense Cuts......          88.030         -88.030
311....................  Kennedy....................  Pell Grants...............           1.800          -1.800
315....................  Kennedy....................  Unemployment Insurance....          16.300         -16.635
318....................  Leahy......................  First Responders..........           3.000          -6.000
324....................  Lincoln....................  TRICARE...................          20.279         -20.279

[[Page 3547]]

 
328....................  Wyden......................  Fire Management...........           0.500          -0.500
341....................  Reid.......................  Concurrent Receipt........          12.764         -12.764
343....................  Hollings...................  Port Security.............           2.003          -2.003
357....................  Kennedy....................  Expanded Health Coverage..          38.000         -38.000
361....................  Daschle....................  Indian Health Service.....           2.871          -2.871
372....................  Levin......................  Restore Education Cuts....           2.668          -4.685
376....................  Conrad.....................  IDEA......................          72.880          72.880
381....................  Clinton....................  First Responders..........           3.500          -7.000
382....................  Cantwell...................  Job Training..............           0.678          -0.678
385....................  Dorgan.....................  Veterans Affairs..........           1.014          -2.029
387....................  Byrd.......................  Amtrak....................           0.912          -0.912
395....................  Dorgan.....................  Homestead Venture Capital.           3.567          -3.567
396....................  Harkin.....................  Rural Health Care.........          25.000         -25.000
409....................  Dayton.....................  IDEA......................         193.246        -386.554
415....................  Dodd.......................  Head Start/After School...          37.871         -75.742
417....................  Bingaman...................  Child Care................           8.758          -8.758
418....................  Clinton....................  First Responders..........           4.500          -9.000
419....................  Dodd.......................  Firefighting Grants.......          11.866         -23.730
421....................  Murray.....................  Education.................            2.00          -2.000
423....................  Corzine....................  Environment...............          10.661         -10.661
424....................  Clinton....................  Vocational Education......           3.102          -3.103
425....................  Harkin.....................  Restore Education Cuts....          20.660         -20.660
429....................  Landrieu...................  Imminent Danger Pay for               3.00               0
                                                       National Guard.
----------------------------------------------------------------------------------------------------------------

  Mr. CONRAD. Every single time I have heard our friends on the other 
side claim the Democratic amendments to the Budget Resolution would 
have increased the deficit, it is absolutely false. Go back and read 
the amendments. The deficits would have been reduced under our 
amendments because we provided fully the offsets for each of those 
amendments.
  We can go down the list. In fact, I had an amendment to fund IDEA and 
completely paid for it. Senator Lautenberg had an amendment restoring 
the defense cuts. Members will recall, there were defense cuts last 
year. Senator Lautenberg fully funded defense and provided the money to 
do so. On homeland security, there were increases offered to better 
protect the country. It was fully paid for, plus an amount for deficit 
reduction. Every single amendment was fully paid for. Accumulate the 
totals, it is $687 billion of deficit reduction.
  Our friends on the other side talked about the record on deficit 
reduction. I am glad he did because here is what has happened to the 
deficits over time. We can see on this chart going back to 1969, the 
last time we had record deficits was in the administration of the 
previous President Bush. President Clinton came in 1992, and we can see 
the deficit went down each and every year until we were back in 
surplus. It was only when this new Republican President took office 
that we again went back into deficits and now have gone into record 
deficit territory, the biggest deficits in the history of the country.
  Here is what has happened to Federal spending. The Senator from Idaho 
wants to posture this as a question of spending, who is responsible for 
spending, and that spending is the reason we have deficits.
  No, we have deficits because we spend more than our income. Deficits 
are a function of spending and revenue, not just a factor of spending 
but a question of spending, the relationship between spending and 
revenue.
  This chart shows going back to 1981 spending as a share of our gross 
domestic product. Go to 1992 when a Democrat took control, and what 
happened to spending as a share of our gross domestic product? Spending 
went down each and every year from about 22 percent of gross domestic 
production to 18 percent of gross domestic production. Spending has now 
gone back up with our friends on the other side in charge of the White 
House. And I don't fault them for the increases; 91 percent of the 
increases in spending were for defense, homeland security, and 
responding to the attack on September 11. We all supported that 
increase in spending, as well we should have. We had to defend this 
country.
  However, I remind my colleagues, when Democrats were in charge in 
1993, we put in place a 5-year deficit reduction plan without a single 
Republican vote, and we reduced spending each and every year of that 5-
year plan. In 1997, we had a bipartisan plan. Thankfully, that was a 
nice moment in time. We had a bipartisan agreement. We continued to 
take spending down. Spending has now bumped up because of what has 
happened.
  Let's look on the revenue side. On the revenue side, again, President 
Clinton came in and revenue went up. It was that combination of 
spending going down under the Democratic plan, and revenue going up 
that got us back into balance, and stopping the use of Social Security 
for other purposes. That is the Democratic record on spending and 
revenue. We lowered spending. We raised revenue so that we balanced the 
budget, and stopped the raid on Social Security.
  Our friends on the other side have raised spending--and I don't fault 
them for that because it had to be done to respond to the attack on 
this country--but they also dramatically cut revenue. Here is what has 
happened to revenue. It has been shredded. We will have the lowest 
revenue this year as a percentage of GDP since 1950. It is that 
combination of increased spending and reduced revenue that has 
mushroomed the deficits.
  Let's be honest. I don't think the deficits we are facing at the 
moment are the basis for our strongest criticism of the President's 
proposals. Anyone who is honest would acknowledge once we had been 
attacked, once we had to increase defense spending, increase homeland 
security spending, the economy took a hit, we would expect budget 
deficits.
  Our criticism of the President and his preliminary is that he is 
suggesting deficits from now forward as far as the eye can see. He 
never wants to balance the spending and the revenue. Oh, he wants to 
keep the spending going. They say he is going to restrain spending.
  Please, the spending he is restraining in his budget is 17 percent of 
Federal spending. He is going to save about $7 or $8 billion when the 
operating deficit, this year, is $700 billion. That is a 1-percent 
solution the President has come with. He is solving 1 percent of the 
problem.
  Now, let's get serious. Let's be direct and honest with people. 
Talking about that restraining spending is going to solve the problem, 
and you come in here and save $7 billion, when you have a $700 billion 
problem, and suggesting you are solving the problem? That is not real. 
That is not serious. That is not credible. That does not stack up.
  What the President is proposing is increasing spending and cutting 
revenue, when we already have record budget deficits. And what does it 
do? It balloons the deficits and the debt at the worst possible time, 
right before the baby boomers retire. That is the President's plan: to 
put us deeper and deeper into the deficit ditch, to take every penny of 
Social Security surplus over the next 10 years--$2.4 trillion--every 
penny of which has to be paid back. The President has no plan to do it.
  The President says he is cutting the deficit in half over the next 5 
years? The only way he is cutting the deficit

[[Page 3548]]

in half is if he leaves out things, he leaves out that there is a war 
going on. He says there is no war cost past September 30. That is what 
his budget says: zero to fund this war past September 30; nothing for 
Iraq, nothing for Afghanistan, nothing for the war on terror.
  He says he is going to fully and aggressively prosecute the war on 
terror, but he has no money to do it. Zero is not the right answer. 
That is what is in the President's budget to fight the war in Iraq, to 
fight the war in Afghanistan, to fight the war on terror. The President 
has a big goose egg past September 30 of this year.
  And tax cuts? The President says: Do not worry. Do not worry, my 
budget will cut the deficit in half over the next 5 years. What he does 
not tell people is, beyond the 5-year window, the cost of his tax cuts 
explode.
  He also leaves out the alternative minimum tax. It affects 3 million 
people now, the old millionaire's tax that is now becoming a middle-
class tax trap. The President deals with that crisis for 1 year, does 
nothing for the next 4 years--a problem that is growing geometrically. 
It is going to affect 40 million people by the end of this budget 
period. The President does nothing past the first year.
  The President's budget adds $3 trillion to the national debt in the 
next 5 years. This is the President who told us he was going to have 
maximum paydown of the debt, and he is increasing the debt by $3 
trillion over just the next 5 years, and all of it at the worst 
possible time--right before the baby boomers retire.
  I have shown chart after chart today showing the long-term 
implications of the President's plan. The long-term implications are to 
dig this deficit hole deeper and deeper and deeper as you go out into 
future years. The cost of his tax cuts explode at the very time the 
trust funds of Social Security and Medicare go cash negative. He is 
putting us in a situation that will require the most agonizing of 
decisions in the future.
  No, our chief complaint against the President's budget is not the 
deficits being run now, although they are of record proportion. Our 
chief criticism of the President's budget is he has us on a course to 
balloon the deficits and the debt in future years, right before the 
baby boomers retire, compelling a future Congress and future President 
to make tough choices.
  On the question of the tax choices the President has made, when I 
hear it said, ``Oh, really, the wealthy in the country are paying 
more,'' please, the wealthy in the country are paying more? I do not 
know how anybody can stand on the floor of the Senate and seriously 
assert the wealthy are paying more. I have just shown that those 
earning over $1 million a year, under the President's proposal, in 
2006, are going to get a $140,000 tax cut, on average, in that year.
  The wealthy are paying more? Who are we kidding? In 2005, the top 1 
percent, those earning over $337,000, are going to get a $45 billion 
tax cut. That is the cost of the tax cut going to the wealthiest 1 
percent. The cost of the tax cut for those earning over $1 million a 
year, in 2005, is $27 billion. The President chose a set of tax 
policies that overwhelmingly go to the wealthiest among us.
  I put up a chart earlier that showed the top 1 percent--those earning 
over $337,000--get 33 percent of the benefit of the tax cut in 2005--33 
percent, the top 1 percent.
  The President said this is all to get the economy moving. Look, I 
believe it was important to have tax reductions to get the economy 
moving. Of course, it is not just the tax reductions, it is also the 
spending. About half the stimulus in the last 3 years has been 
spending; about half of it has been tax cuts. Both of those were 
warranted.
  The problem is, the tax cut mix the President chose did not give us 
the biggest bang for the buck at creating jobs or growing the economy. 
And that is not just my view, that is the Congressional Budget Office's 
view. They were asked to look at all of the tax cut proposals and tell 
us what kind of bang for the buck you would get. Interestingly enough, 
the tax cut on personal capital gains, they said, would give you a 
small bang for the buck--small--yet that was singled out as one of the 
important areas for tax reduction.
  The same is true on the dividend tax reduction that our colleague 
mentioned. He said that was a centerpiece. Well, it was a centerpiece 
in terms of what it cost. It was not a centerpiece in terms of what 
most economists would tell you is bang for the buck at getting economic 
growth and job creation. I believe that is a fundamental reason we are 
in the circumstance of today.
  Yes, we should have stimulated the economy. Yes, we should have had 
tax cuts. Yes, we should have had increased Government spending to give 
a lift to the economy. But the tax cuts should have been geared to 
primarily the middle class. They are the folks who spend the money. 
Instead, this tax cut proposal has gone primarily to the wealthiest 
among us, those who are the most likely to save the money rather than 
spend it. However laudatory it is to save money, the thing that 
stimulates the economy, at least in the short term, is to spend it. 
This is a bad set of choices.
  In addition to that, going forward, the President's proposal will dig 
us into a deeper and deeper deficit ditch, creating a circumstance, 
when the baby boomers start to retire, that will become more and more 
difficult and require tough choices.
  What is going to be needed is not just tax increases, no. We need 
more revenue. The first place we ought to look is not tax increases but 
closing the tax gap, the difference between what people owe and what 
they pay because we know the vast majority of people pay what they owe. 
But we have a small group of people and companies who do not. We now 
know that is costing us $255 billion a year. That is not a tax cut. 
That is somebody cheating on their taxes, cheating all the rest of us, 
cheating the ability of this country to meet its requirements of 
national defense and homeland security. That is the first place we 
ought to go to begin to close this gap.
  Yes, we are going to have to be tough on the spending side, too. It 
is going to take both. We are going to have to restrain the growth of 
spending, and we are going to have to get more revenue. It is as clear 
as it can be. Anybody who tells you something other than that is not 
being straight.
  I hope before we are done we will have a healthy debate on the 
priorities of the country. I believe one of our top priorities is to 
get our fiscal house in order. Now that we have economic recovery 
underway, we have to move back to fiscal balance. We have to reduce 
these deficits that are at record levels, and not just by make believe.
  The President says he is cutting the deficit in half in the next 5 
years. He says the deficit is only going to be $237 billion in that 
fifth year. But when we total up the things we know are going to be the 
costs, including the war and fixing the alternative minimum tax and the 
money that he is taking from Social Security and Medicare that has to 
be paid back, what we see in that fifth year is not $237 billion being 
added to the national debt; it is $600 billion. It is $600 billion the 
next year and $600 billion the next year and $600 billion the next 
year. What we see happening is, right before the baby boomers retire, 
an explosion of the national debt under this President's plan. That 
cannot be the answer.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. NICKLES. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. SESSIONS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Who yields time?
  Mr. NICKLES. Mr. President, I yield the Senator such time as he may 
consume.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. SESSIONS. Mr. President, I express my appreciation to the 
chairman

[[Page 3549]]

of the Budget Committee, Senator Nickles, for his leadership. We will 
miss him desperately in this Senate. He has chosen not to seek 
reelection, which he would have handled easily, and we are certainly 
going to miss him. His handling of this budget process this year was 
particularly skillful, principled, filled with integrity and good 
judgment.
  I also appreciate the ranking member, Senator Conrad. He is a skilled 
man with the numbers of this budget. He can find more bad numbers in 
this budget than most anybody I know, but a lot of those numbers need 
to be talked about. He is correct. We have some long-term problems with 
financial stability. It is great to debate and have people discuss our 
challenges and have the numbers put out there and not hide anything as 
we go forward.
  I believe we have produced a budget that is responsible, that the 
American people, if they understand it, could appreciate and would 
support in general. We will continue to debate it, and it will pass I 
believe, much as it has been written.
  What we had to do is confront the situation of declining revenue to 
our Government. It has come from a number of different reasons, 
primarily because the economy has not been as healthy as we would like 
it, although we have seen some positive rebound. We ought to talk about 
that and we should consider that as we evaluate how we are going to 
handle the country's financial situation.
  To sum up where we are, President Bush submitted a budget he believed 
funded the Government's discretionary accounts, including defense and 
homeland security and all other discretionary accounts, at $818 
billion.
  We were operating in the Senate under a budget of last year that 
called for us to stay at $814 billion, $4 billion less. So we decided 
the right thing for us to do was produce a budget at 814. Then, as we 
continued to score the proposals in the President's budget, that budget 
came in at $823 billion. So to go from $823 billion to $814 billion 
there was $9 billion we had to confront as we worked from the 
President's budget.
  Unfortunately, we had to take a sizable sum from the proposed 
increase in defense spending. The budget called for an increase of $26 
billion for defense, 7 percent, the largest aggregate increase in the 
budget. We were forced to come in at a $20 billion increase for 
defense. We made other decisions and reduction changes. Certainly, I 
hope this Congress will support the President's proposals to eliminate 
some 50 or 60 programs that need to be eliminated.
  Everybody knows that we too seldom confront spending programs that 
have a certain value on the surface but, if examined carefully and with 
an eye toward efficiency and productivity and wise use of the 
taxpayers' dollars, don't meet the test. But we seldom, if ever, 
eliminate one. The President said it is time to do that. I, too, 
believe it truly is.
  I spoke to the National Association of State Treasurers this morning 
and shared with them, a story of when I became attorney general of 
Alabama in 1994. My predecessor had left our office in a colossal, 
disastrous situation financially. We were forced, because we had a 
balanced budget constitutional amendment in the State of Alabama, to 
terminate the employment of one-third of the employees of the attorney 
general's office. It was a very difficult and painful decision for me. 
All those terminated were noncivil servants. They were hired under the 
political system that the attorney general could use at that time. But 
still many of them were good people, and I hated to terminate their 
employment.
  But we reorganized that office. We worked hard. I believe we 
thereafter produced as much or more good legal work, even though we 
lost one-third of the employees.
  I say that to illustrate there is a myth in this Senate, in this 
Congress, that somehow money only tells whether something is being 
productive, and if you don't give an agency more money, somehow they 
can't do as much work as they were doing before. That is wrong. It is 
not so. Every business in America understands they can do more for less 
work hard to do so. I think that is one reason why so many Americans 
today are cautious and concerned about how our Government spends their 
money.
  It is because they are at their workplaces every day, working with 
ingenuity and technology and training and new systems to produce 
widgets better and cheaper for the consumer so they can stay in 
business. They expect the same out of Government, and they have every 
right to.
  This budget comes in at 814. I believe we can make that work, but 
there will be, throughout this process, a host of amendments to spend 
more for every item you can imagine. Many of them have every resonance 
of good and worthwhile programs. In fact, some of them will be. But we 
simply don't have the money we want to spend on all these programs. We 
need to show discipline. If we show discipline, and we do this for 
several years, we can bring this budget back into balance again.
  Senator Nickles believes, if we stay at this constrained spending 
rate, we will cut the deficit in half within 3 years. That is a good 
goal. I would like to exceed that. Maybe we can exceed that. We will 
just see. I will share my personal view that economic growth will be a 
big part of accomplishing our goal.
  When President Bush was elected President, the economy was in 
trouble.
  In the third quarter of President Clinton's last year in office, 
negative growth occurred. The first quarter that President Bush was in 
office--had negative growth. Not good. But, that is what he inherited 
from his predecessor.
  I say that because people say this slowdown was President Bush's 
fault. The NASDAQ exchange had lost one-half of its value by the time 
President Bush took office. The bubble had already burst and that value 
out there, on paper at least, was gone, leaving companies strained and 
unable to borrow and hurting the economy in a number of different ways. 
The economy began to come back, and in September 2001 we had the attack 
on the Trade Towers and the Pentagon. That hurt us, too. So we are 
bouncing back from that.
  The President did not sit around and not do anything. He acted. He 
had a number of programs. One was to stimulate this economy through 
allowing the American citizens to keep more of the money they earn. I 
think that was a good idea. First of all, it is always good policy in 
this land of freedom and individual responsibility to allow the people 
who earn their wages to keep as much of it as they possibly can. That 
is who we are as a people. We are not part of the socialist ideal of 
Europe, other countries. We have a heritage of freedom and individual 
responsibility. First, I thought President Bush's actions were good 
philosophically.
  Secondly, it has helped our economy. We have seen continual growth 
since. The third quarter of this past year, the growth of GDP in 
America was at 8.2 percent. That is the highest growth in over 20 years 
in this country. The fourth quarter of last year was over 4 percent. 
The combined two quarters were higher than any two quarters President 
Clinton had when he was in office, I have been told. It was a good end 
to last year.
  I think we are going to have good growth this year. The stock market 
is coming back up. Mr. Greenspan said interest rates are expected to 
stay low. He expects growth to continue. Jobs have continued to 
increase for the last three or four quarters. Not as much as we would 
like; we need to see more growth in the job area. But the household 
survey numbers look a lot better than the numbers that are most often 
cited, the wage number. Regardless, we want to see continued growth in 
jobs. Economists tell us as the economy grows, it takes some time 
before employers start adding permanent employees. In other words, they 
will pay overtime and do other things before they hire a permanent 
employee. But if their business stays healthy and continues to grow, 
they will hire people over a period of time. Jobs lag behind growth. 
Despite the fact that we have people running for President who have 
been going around for months saying how terrible everything is, how 
unemployment is hurting us so badly, how

[[Page 3550]]

the economy has been damaged by President Bush, consumer confidence is 
up there pretty healthy and strong. So we have to be pleased with that.
  With regard to the unemployment numbers, in June of last year, the 
unemployment rate was 6.3 percent. The fourth quarter's unemployment 
was reported at 5.6 percent--which is a significant drop--is about the 
average over 20 years for unemployment in America. Do we want it to get 
better? Absolutely. Do we need to take steps to continue the growth and 
continue job enhancement in America? Yes. I am willing to consider any 
good proposals toward that idea.
  Mr. President, this economy seems to be coming back on solid footing 
and trusting the individual American citizens who work hard, manage 
their money carefully, and businesses to increase productivity. Oddly, 
increased productivity is not good for jobs. If businesses improve 
productivity, they can make more widgets with less employees. I think 
almost every economist who would be consulted on this subject would say 
that in the long run productivity increases are good because 
productivity is what will allow us to be competitive in the world 
marketplace. Without increases in productivity, we will not be able to 
compete with low-wage nations.
  So productivity is a good and bad thing. In the long run, it is going 
to be good. But I think it has delayed the surge of hiring we would 
like to see, but I think we will see hiring increase as time goes by. 
There are a lot of reasons our country had a decline in revenue. A 
small portion of the decline--maybe a quarter--was the tax cut. But the 
tax cuts, I am absolutely convinced, were key cause of that 8-percent 
growth we saw--4 percent in the last quarter--which is surging out 
there and which will lift us out of this slowdown.
  I believe the fundamental problem with the lack of income to America 
has come about because our taxes in this country are focused on the 
highest income wage earners. I know my colleague on the other side said 
we are reducing taxes on the rich. But after all the tax cuts, the 
highest 1 percent, highest 10 percent will still pay a larger 
percentage of the total taxes to America than the lower income people 
will pay--a higher percentage of total tax revenue will still come from 
the rich. But the deal is this: If you have money invested in the stock 
market and the market drops by one-half or more, as NASDAQ did, and you 
sell your stock, what can you do? You take a loss. You don't show a 
gain and pay a tax on the gain. You show a loss. The loss claim is 
limited to $3,000. But $3,000 for a lot of people who sell stock means 
loss of revenue to the Government. For those in the top brackets who 
are paying 38 percent, that is a large loss in tax revenue to America.
  Corporations that were making profits in good times and who are now 
showing losses are not paying taxes. People who were being paid bonuses 
because companies were doing fine, they don't get those now, and they 
are not paying more taxes. So it seems to me that by taxing heavily our 
highest income people and depending on them substantially for our base 
revenue from income taxes, we have created a pretty volatile situation 
in how the income comes in.
  If you have 6 months of growth like we are having now, I don't think 
you will see a lot of bonuses to executives. But if you have a year, 2 
years, of growth, and improvement and profits begin to come back in a 
company, you will see other things happening that will generate profits 
for the corporation. More people will be hired, more people will be 
working overtime making that extra money, and they get taxed at the 
higher bracket rate. All those things, to me, indicate the President is 
correct to decide to take strong action, to inject an infusion of 
American ingenuity into the economy by allowing them to keep their 
wealth, what they have earned.
  As a result of that, we will get growth and, as the growth stays out 
there, I hope our budget numbers are going to look better. Will growth 
solve all our problems quickly? I don't think so. I think we are going 
to have to sustain a long period of managing our spending habits, 
keeping spending growth down. Some areas need to be reduced. Some areas 
need to be increased modestly. We are going to have to resist starting 
a whole lot of new programs, and I am indeed troubled by the expansion 
already of the expected cost of the prescription drug program.
  If we do those kind of things, and this economy comes back and we 
hold the line, we will begin to see the deficit be reduced. That is 
what we desperately need to do. We simply cannot sustain the size of 
the deficits we have today, and it is not necessary that we have the 
kind of deficits we have today. I feel that strongly. I believe we will 
see progress happen.
  I offer as support for my belief the fact that as of June last year, 
the experts--CBO or OMB--predicted the deficit would be $450 billion 
for the fiscal year ending September 30 of last year. But when the 
numbers came in, it was not $450 billion, it was $375 billion, $75 
billion less than they were predicting a few months before, and that 
was because of some containment in spending and because of the economy 
coming back.
  We are not going to see huge, dramatic improvements, but we can 
believe and hope that if this economy remains strong and we remain 
firmly in control of spending, we will see some good things happen. 
This budget does that. It is less than a 4-percent increase overall, 
about a 3.5-percent increase in spending.
  Frankly, we would have done better coming in with lower spending, but 
most of our spending is entitlement spending that goes up on its own on 
a trajectory we have not figured out how to control. We are going to 
need to figure out how to control it as the years go by and bring 
sanity and wisdom to that process.
  I think our President has submitted a good budget that does not go 
hog wild. I believe our committee, after a long period of intense 
debate--Republicans and Democrats engaged in offering amendment after 
amendment and their philosophies and debates--has produced a frugal 
budget, even more frugal than the one the President submitted; that if 
we pass this budget and do not lose our discipline with the inevitable 
proposals for spending that are about to come, then we will be in good 
shape to chop away at this deficit.
  We must not do it, however, at the threat or expense of those 
marvelous tax cuts that are so important to our economy and to our 
American family. First, the child tax credit. Instead of $700, we 
raised it to $1,000 per child. I believe that is important.
  The marriage tax penalty. The very idea that this Congress would 
penalize people who get married by increasing their taxes is just an 
anathema to me. I cannot believe we would do that. This marriage 
penalty fix went a long way toward eliminating that problem. It is not 
a gift to married people; it is simply allowing them to get back on a 
level playing field. A tax is a penalty. We should not penalize 
marriage.
  The third provision up for renewal is expanding the lowest bracket, 
the 10-percent bracket, covering a lot of people who were paying 15 
percent on their income taxes, the lower income bracket. That bracket 
will be increased so more people will be paying at 10 percent rather 
than 15 percent.
  All of these provisions are critical. They will strengthen the 
family. In fact, we need more young couples to have children today. 
Somebody has to take care of us when we become aged. A lot of people 
are not having children. One reason is they do not think they have the 
money to raise children, and the child tax credit and the marriage 
penalty might well strengthen our families in ways we cannot measure in 
terms of economics but, in the long run, will be good for this country. 
I believe that very deeply. That is why I am particularly supportive of 
those two reductions in taxes.
  I thank Senator Nickles for his leadership. I appreciate this 
opportunity to share a few words at this time. I see Senator Nickles, 
the chairman of the Budget Committee, is back in the Chamber. I, again, 
congratulate him for the extraordinarily capable way in which he 
handled this process.

[[Page 3551]]

  I yield the floor.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. NICKLES. Mr. President, I thank our colleague, Senator Sessions 
from Alabama, not only for his statement but also for the outstanding 
work he has done on this committee. It is not easy reporting out a 
budget resolution. It is not easy defending a budget. I encourage our 
colleagues who want to throw rocks at it all the time to put one 
together.
  I compliment our colleague from Alabama. He has been an invaluable 
member of this committee. He has worked very hard. We touch every 
single dollar in the Federal budget in this committee. We review all 
those dollars. I compliment the Senator from Alabama for being an 
outstanding member of a challenging working committee.
  Mr. President, I yield to the Senator from Colorado such time as he 
desires.
  The PRESIDING OFFICER. The Senator from Colorado.
  Mr. ALLARD. Mr. President, I thank the Senator from Oklahoma for 
yielding. I wish to say how grateful and what an honor it has been to 
serve with the current budget chairman. He has done a great job. He has 
been a great leader in the Senate. This is the last budget with which 
he is going to be involved in the Senate. He is thorough, he is 
straightforward, meticulous and has put together some good budgets 
since working with him as chairman on the Budget Committee. We are 
going to miss him in the Senate. He has done a yeoman's job in putting 
together this budget.
  Like he said, putting together a budget is not simple. It is always 
easy to criticize a budget, and that is what I pointed out during the 
Budget Committee hearings. All we are hearing is criticism about this 
item and that item, but nobody is putting together a total budget, 
laying it before us and explaining what they are going to do to 
eliminate deficit spending.
  I think back to last year, for example, on the floor of the Senate 
when we were debating the budget. It was the same situation. The 
chairman and Budget Committee members had worked hard to put together a 
budget and bring it to the floor of the Senate. Colleagues were 
consistently complaining and criticizing the deficits, but the fact is, 
we had amendment after amendment presented calling for more spending. 
It totaled up to about $1.6 trillion in amendment after amendment 
calling for more spending.
  Where were they getting a lot of the money? They were getting the 
money by wanting to increase this tax and increase that tax to pay for 
it. The rebuttal is: Well, we pay for it by increasing taxes.
  I do not think the answer to this economy and the long-term solution 
to this budget is to increase taxes. I think the long-term solution is 
we need to hold down spending.
  One of the problems we have run into in recent years, since about 
2002, since many of the provisions which held spending in check are no 
longer before us, is we have seen spending increase, and we are 
continuing to see spending as a problem as we move forward and debate 
this budget.
  We cannot deny the role the recession has had in revenues coming into 
the Federal Government. Our deficits are a function in any 1 year of 
the amount of money that is coming in and the amount of money that is 
being spent. In any 1 year, when spending is greater than the revenue 
coming in, we end up with a deficit.
  Sometimes in our discussions, we interchange the terms ``debt'' and 
``deficit.'' There is a difference. Debt is the accumulation of the 
deficit spending over the years, so it reflects that. Deficit is when 
we spend more than what we bring in in revenue.
  I have some information. When we look at the economic downturn--and 
the President in his budget had come up with a figure in the economic 
downturn--he held 49 percent of the current deficit. I looked at a 
chart--this is from the President, the Executive--and it comes up with 
similar figures. This is put out by the Joint Economic Committee. 
Senator Bennett is chairman. It is equally balanced between Republicans 
and Democrats out of the Senate. They point out what has happened to 
the surplus.
  Using our CBO figures and using the figures we use in the legislative 
branch, we come up with the weak economy could be attributed to greater 
than 40 percent, and that increased spending was attributed to 36 
percent of the loss of the surplus. Then we have our tax cut in 2001, 
18 percent. The economic stimulus was 1 percent, and then the tax cut 
we put in place again was 5 percent. So the total is about 24 percent 
of the loss of surplus that would be attributed to tax cuts; 36 due to 
an increase in spending of the Federal Government, and the weak economy 
another 40 percent. This is by the Joint Economic Committee. This is 
not me. This is not the President putting that out. This is a 
bipartisan committee we have which looks at these kinds of figures.
  Then we look at what happens year after year with spending as 
compared to the tax cuts we have put in place. Let's take a look at 
that. We start in fiscal year 2005. Here is a good example. The tax 
cuts reduced revenues by $212 billion. Spending increases enacted since 
2002 will total $268 billion. We have $212 billion tax expense to the 
surplus, but spending is $268 billion.
  Let's see what happens in 2006 as we move out in time in this budget. 
The gap we see between spending and tax cuts and its impact on the 
surplus grows even more. The 2006 tax cut reduces revenues by $163 
billion and spending increases enacted since 2001 will total $314 
billion. That gap is growing with each year as we move out. Over the 
next 5 years, 2005 to 2009, revenue decrease due to tax cuts is going 
to run a total of $979 billion.
  What happens during the same time period with our spending as it 
moves out in time, $1.722 trillion. That is what happens to the growth 
in spending.
  The point I am making is when there is a tax cut and that money is 
returned to the American people, it does not escalate and grow as an 
expense against the surplus, but the spending grows considerably.
  I happen to believe our budget process is prejudicial against holding 
down taxes. The way the budget rules work, it is always easier to 
increase spending than it is to cut taxes. I think one of the most 
important ways to continue to stimulate this economy is to make sure we 
hold down our tax burden. I know the other side is advocating that we 
go ahead and increase taxes, but I think that is wrong. It is the wrong 
thing to do now, when the economy is starting to come back. We are 
starting to see very encouraging figures about the economy in response 
to the stimulus plan we passed in the two previous tax cuts we put in 
place. They were put there to stimulate the economy.
  When this President came into office, he inherited an economy that 
was starting to go down. Then we went through an unprecedented period 
of an economic downturn, which we had never seen during modern times, 
where revenues decreased at least for 3 consecutive years as we looked 
out. This had a profound impact on the amount of revenues coming into 
the Federal Government.
  If we had not made those tax cuts, my personal judgment is this 
economy would still be struggling. Those tax cuts stimulated the 
economy, and now I think once we start getting the revenues in from 
this year, we are going to see a growth and the budget reflects that. 
Our economy is going to be on the way. With the recovering economy, we 
are going to see a regrowth in revenues coming to the Federal 
Government. The best way to grow revenues to the Federal Government is 
to stimulate the economy, not to increase taxes. Increasing taxes has a 
depressing effect on people's willingness to produce because they do 
not see themselves keeping that money in their pocket. They see it 
coming back to Washington and being spent. If the citizens of this 
country can see the money they are earning staying in their own pocket 
and paying for their needs, meeting their family's needs, meeting the 
needs of their local economy, they see it as a much more beneficial 
process and something that would motivate

[[Page 3552]]

them to be more productive. When they are more productive, they are 
going to be paying more Federal taxes. Then that return comes back to 
the Federal Government and is reflected in increased revenues and helps 
us eliminate deficit spending.
  The last parameter to change in our economy is unemployment. 
Unemployment is going down and we are continuing to see job growth. 
This last report was not as much as was hoped, but we are continuing to 
see a growth in jobs. According to the payroll survey, jobs have 
increased 6 months in a row. The household survey remains higher than 
prior to the recession and more Americans have jobs than at any other 
time in our history. This is a result of those tax cuts.
  Where do we go from here? We have the economy beginning to grow, and 
we have a budget before us that begins to eliminate the deficit. I will 
talk a little bit about that because the President had planned to 
eliminate the deficit within 5 years of his budget. He said we can cut 
the deficit in half either as a percent of gross domestic product or in 
nominal terms--in other words, actual dollars.
  We have done better than that in the Budget Committee, thanks to the 
leadership of the chairman. We are getting out of deficit spending 
within 3 years, depending on how one wants to talk about it, or even as 
soon as 2 years. This is in real dollars, and we are doing better than 
the President. I think this is a phenomenal step in the right 
direction.
  We started taking this deficit seriously in the last budget. In fact, 
it was important to me, and I know a lot of other members on the Budget 
Committee, that we start taking an early step in eliminating the 
deficit, so we started putting this plan in place in the last budget. 
It is important to me that when I look at today's budget I want to make 
sure we are staying with that plan, or doing better.
  I am happy with what the President has proposed. I am especially 
happy with what has come out of the Budget Committee. We need to stay 
with that commitment and move forward. In order to continue to hold 
down spending, we are going to have to put in place some budget rules 
in order to have a disciplined approach to deliberating the budget so 
spending does not get out of hand.
  I know the chairman of the Budget Committee is looking at such a plan 
and giving it some serious thought. We have part of that plan currently 
in the budget proposal before us, and I think that is something we need 
to focus on. In fact, from a long-term strategy standpoint the most 
important thing might be to do something legislatively that would put 
in place, with the President's signature, some real rock-solid rules on 
how we can control spending.
  There need to be some provisions in case of an emergency, but we 
cannot be so flexible that we allow the emergency spending to be 
abused. I have observed in the short time I have been in the Senate 
that emergency spending bills get abused. Again, with some good, 
thoughtful provisions, and if we can get this budget passed, I think we 
will have in place some rules that will help us try to stay on board in 
order to eliminate the deficit.
  I am convinced with the economy starting to grow that we can get back 
to where we have surpluses. I would like to be back in a position where 
I was a number of years ago where I could propose amendments on the 
Senate floor on appropriations bills to pay down the surplus, to pay 
down the public debt. I am glad we did that, because if we had put some 
of that money aside toward paying down the public debt, then it gave us 
some money in reserve.
  We got to the point where we had an unprecedented time in our 
history, which we just experienced when this President came into 
office. We had an economic downturn that was getting well on its way, 
we had 9/11, and then we had some major conflicts we had to pay out of 
this budget.
  I would hate to think what our deficits would be like today if we had 
not made an effort to pay down part of the public debt when we had an 
opportunity to do that. At first, it was not very easy to get those 
amendments adopted on the floor, but after staying with them we were 
able to get those so we could make some significant steps toward paying 
down the public debt.
  I am hoping in the not too distant future we will be in a position 
again where we can pay down the public debt and eliminate deficit 
spending so we are back out of the red on an annual basis and then 
begin to work to pay down that public debt because that gives us sort 
of the reserve. I am glad we had that there. That is responsible 
management of the taxpayers' dollars, responsible management of our 
budget resources we have that come from hard-earned dollars that our 
taxpayers, American citizens, are earning for the Federal Government 
and sending back to Washington.
  Then, once we are in a position to get this budget passed, I think we 
also need to look at ways in which we can take care of emergency 
spending provisions. There are some dollars that are put in this budget 
to try to take care of some predictable emergency spending that we 
think we are going to have.
  We will have an emergency surplus bill. It will be either the end of 
this year or in the next fiscal year. It is right and proper and good 
accounting to begin to take that into consideration.
  I hope at some point in time we can begin to develop a pot of money 
over here for emergency expenses only. Then, once we have developed 
that, we will not have to come in for emergency supplementals where 
spending gets out of control and people get around our budget rules. We 
need to work and modify those, in my view, in order to have long-term 
responsible budgeting, at least out of the Senate and in the Congress.
  I think the solution is no tax increases. I think we could help our 
economy even more if we would take some of these--in fact I would take 
all these recent cuts we passed, which were the economic stimulus 
package and the 2001 tax cut as well as the 2003 tax cut--and make 
those all permanent. I think that would stimulate our economy to 
continue growing and we would go through another unprecedented period 
of economic growth, bringing revenues into the Federal Government, and 
that would be part of our solution as far as getting out of deficits.
  I think the fact that businesses and families, individual taxpayers, 
could plan ahead with the understanding that those tax cuts were going 
to stay in there for some time would build confidence in the economy. 
Then they would be willing to go out and make their investments and, as 
a result of that, create more revenue. When the tide rises, everything 
rises and everybody benefits.
  I hope at some point in time we can make all these permanent, 
especially the inheritance tax. The death tax is not part of those we 
have in here, although I think we extend that out for a year or two in 
this budget. But we need to permanently eliminate the death tax because 
it is silly to think people are going to plan for their death. They are 
not going to do that. The elimination expires toward the end of this 
decade and then it goes way back to previous levels, which are 
extremely high. That is not fair. If nothing else, just out of fairness 
we need to permanently eliminate the death tax.
  I see my time is running out. I thank the chairman, again. I see 
Senator Domenici on the floor. He was the chairman of the Budget 
Committee before Senator Nickles took over that responsibility. I think 
both of them have been very responsible and have worked very hard on 
the budget. I think we have a good piece of legislation. It is a 
resolution, an agreement between the House and Senate. It doesn't 
require the President's signature, but it is a commitment of both the 
House and Senate to eliminate deficit spending and hold down our tax 
burden and spending. I think we are heading in the right direction. If 
we can accomplish what is in this budget, I feel good about the future 
of this country and the future of our economy.
  I yield the remainder of my time.
  The PRESIDING OFFICER. The Senator from Oklahoma.

[[Page 3553]]


  Mr. NICKLES. I thank our colleague from Colorado for not only his 
statement but the outstanding job he does as a member of the Budget 
Committee. He works hard. He does his homework. He is one of the more 
knowledgeable persons on our committee about a lot of issues on the 
budget. I compliment him for his statement and his contribution in 
putting this budget resolution together.
  I note my predecessor as chairman of this committee, Senator 
Domenici, is seeking the floor. It is always a pleasure to work with 
him. I yield him such time as he desires.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Mr. President, I have to go to a chairmen's meeting 
now, so I cannot speak very long. I did not want to let the first day 
go by without saying a couple of things.
  Senator Don Nickles has done an outstanding job, as have the Members 
who serve with him, working for our country, joining him in doing the 
very best possible job they can do.
  I think the budget before us, under the circumstances, is as good as 
we are going to get. I only hope not only do we pass it but at the end 
of the year we look back and say, with the exception of things that 
were outside of our control, it truly was enforced; we carried it out. 
I hope that is the case.
  I will come back tomorrow to make a few more remarks. When you get a 
budget and it is deficit time, and the debts are as big as they are, 
people generally are too gloomy. There are too many people running 
around saying how bad things are. I have been there when the deficits 
were bigger than they are now. I have been there when they were less. I 
have been there when it was balanced, believe it or not. Frankly, I 
think what is good to know is that the American economy, the engine of 
wealth day by day, is in pretty good shape.
  We are in a world economy that makes it very tough for America 
because we are trying to let the whole world get rich right alongside 
us. America is not looking to try to keep the world poor. It is pretty 
obvious that whatever globalization means to others, they have it wrong 
if they think the United States wants everybody else's wealth.
  The truth is, we buy from everybody because we want them to grow and 
prosper. We want their workers to make money. We want their businesses 
to prosper. That is beginning to happen in a rather phenomenal way. In 
fact, I have never asked anybody to check carefully what has happened 
to China in a decade, but I imagine it would be phenomenal what is 
happening to their people, to their prosperity, and to their 
opportunity to make the world a better world for everyone.
  While all that is going on in poor countries, America has trouble 
because we have to compete. We have a lot of people thinking we ought 
to pull out of this world. Not only pull out of wars, a lot of people 
think we ought to quit negotiating treaties of trade and just come 
home.
  I think we are very lucky we have a cadre of leaders for the most 
part who do not believe that is the way. I would be very worried if we 
were going to move in that direction, all of a sudden say we are 
staying home, we are not selling our goods, and we are not buying 
theirs; it will just be fortress economic America. If that were the 
case, it would not take us along until we would have one broken down 
fortress.
  From my standpoint, I will join with those who are trying to help 
America do a better job of producing goods and wealth cheaply and more 
competitively, getting our universities, our laboratories, and great 
scientists to produce out of the research room, out of their 
laboratory, into the technology room, and then onto the manufacturing 
floor. What we need is to move those faster. The great research has to 
turn into production in America. If only we could dream up some way to 
sensitize that so it would happen better and more rapidly. Researchers 
like researching but they would like it more if they could produce a 
product.
  If we are not there yet, there are plenty of people who do not feel 
that way about research. But I submit that we are going to have more 
and more researchers in every sense of the word who believe they are 
not successful until they have solved the problem, produced the 
product, and let America take cutting edge advancement to work at 
making products.
  Having said that, tomorrow I will return and talk a little bit about 
this specific budget and the deficit we have and the debt we have.
  But I want to close by saying I sure hope the average American is not 
too worried about the future. When you go through a recession for a 
couple of years, have two wars going on, and terrorists who ripped the 
heart out of your major city, and you are still in as good a shape as 
you are today with our economy growing, productivity growing, and more 
people working than any comparable day in history, you have to feel 
proud. For those who want to lead our country, the best way to do it is 
to convince them they have something to be proud of and that the future 
is bright.
  I am down here on a tough budget with a tough chairman who worked 
hard to get us here, and probably with many people who won't agree with 
it. But I am here because I also want to let people know we are going 
to do the best we can. We have cut taxes not only because we like to 
cut taxes--that is true, we do--but because we think an economy in 
recession needs to have taxes cut if it is going to get out of 
recession. We think that happened. We are proud of that. We don't want 
to do away with the taxes that are about to occur right now because 
they are the right kinds of taxes. If we are going to do pay-as-you-go, 
let us at least let those taxes that we cut take effect.
  I want to repeat in closing that I am going to start working tomorrow 
with a bipartisan group of Senators to produce a pay-as-you-go plan. It 
will include taxes, but it won't include the taxes that we have already 
passed that are waiting to be enforced but look 4 or 5 years from now, 
no more free rides for anything--no free rides for taxes, no free rides 
for defense, no free rides for anything. We are going to increase 
things. If you cut something, you also pay for it. If we can do that 
for 4 or 5 years and start the process so that it is credible, what a 
change it will have. It will be a very positive day for America and for 
those who invest if we do.
  For today, I said about as much as I can. I yield the floor. I thank 
the chairman for yielding. I thank the Senate for listening. I yield 
the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. Mr. President, I thank Senator Domenici, former chairman 
and very distinguished member of the committee, and someone to whom we 
all look for wisdom on budget issues.
  Let me pick up on the last point he made, the pay-go provision. What 
the Senator is talking about are rules that we used to have that were 
allowed to lapse in 2002 which required if you wanted to add spending 
or cut taxes, that was fine, but you had to pay for it. You had to pay 
for it. I think that budget discipline that was lost is unfortunate. We 
ought to renew those budget disciplines as quickly as possible.
  I think it is fine to say there are certain taxes we should cut. In 
fact, I have indicated publicly that I will vote to extend the 10-
percent bracket. I will vote to extend the marriage penalty relief. I 
will vote to extend the expansion of the child care credit. I will vote 
to extend the small business expensing. I personally believe--and I 
think Senator Allard and I may agree--those are provisions that we 
ought to continue. There may be some more that Senator Allard wants to 
continue that I would not without paying for it.
  But I would say on any spending that is new and any tax cuts that are 
new, we ought to pay for them. This deficit ditch is so deep now that I 
think we ought to impose that discipline on ourselves. We did it 
before. It helped. I don't think it solved the problem, but it 
certainly made a contribution. It provided a discipline on both the 
spending side and the taxing side that was important. That doesn't mean 
you can't, on an emergency basis, spend more or tax less. It requires a 
supermajority vote. It requires 60 votes to

[[Page 3554]]

break that discipline. I think it helped us immeasurably. I think it 
saved hundreds of billions of dollars.
  I was on this floor last year with Senator Nickles siding with him in 
stopping some spending by raising budget points of order that apply on 
the spending side of the ledger.
  I think it is very important that we reintroduce those disciplines as 
soon as possible.
  Let me talk a little about this budget. I talked earlier about the 
President's budget. I also want to talk a little about this budget and 
why I think it is deficient.
  The first thing that concerns me is it adds $2.86 trillion to the 
debt over the next 5 years. I think one of the things that is being 
missed in these discussions is something that is flying right below the 
radar. It is the amount of money that is being taken out of Social 
Security to pay for other things, money that has to be paid back but 
that gets lost in this discussion of deficits. The reason for that is 
they are talking about what is called the unified deficit. That is when 
you put all the money in the pot and you treat it all the same. All the 
Social Security revenue goes into the pot along with the income tax 
revenue and every other kind of revenue. All the spending comes out of 
that pot. The problem with that approach is at this moment in time, 
Social Security funds are running big surpluses in preparation, 
supposedly, for the retirement of the baby boom generation. But we are 
not using that money to pay down the debt or prepay the liability. We 
are taking that money and using it to fund tax cuts and other 
expenditures of Government, and those Social Security surpluses are 
growing dramatically, by the end of this 5-year budget the Social 
Security fund surplus just for the fiscal year 2009, is going to be up 
over $235 billion. I think it is hiding, basically from all of us, and 
from the American people, our true fiscal condition.
  Let me make this point. If we take the chairman's mark--I have high 
regard for the chairman. I respect him. I have found that he is 
somebody I can trust. I also like him. This does not have anything to 
do with personalities. This has to do with the fiscal situation we face 
as a country. Under the chairman's mark, the total debt of our country 
at the end of this year is going to be $7.4 trillion. But this year, 
$612 billion will be added. Next year, we will have $8 trillion of 
debt. The next year, $569 billion is being added to the debt; the next 
year, $553 billion; the next year, $563 billion; the next year, $564 
billion. Do you notice a certain sameness as to how much is being added 
to the debt every year? Yet at the same time, the chairman and other 
Members have said it is cutting the deficits in half. And both 
statements are true. The deficit--which is calculated on a unified 
basis with all funds going into the pot, all revenue and all spending 
coming out of that same pot--is being reduced in half over 3 years by 
the chairman's mark. The problem is the increases in the debt are not 
being cut in half. The increases in the debt are virtually unchanged.
  The debt is increasing this year by $612 billion under the chairman's 
mark. By the third year it is going to increase by $563 billion.
  The debt increases are not being reduced by this plan in any 
significant way.
  As a result, for the 5 years, the debt is being increased by $2.860 
trillion.
  This is, in many ways, the good times because the baby boomers have 
not started to retire yet. They start to retire in 2008. When we couple 
the increased expenses which flow from the baby boomers retiring with 
the reduced revenue by making the tax cuts permanent--and, by the way, 
that cost explodes right outside this 5-year budget window--what we see 
is under any growth scenario, any reasonable growth scenario, this debt 
problem, this deficit problem, is going to get much more serious in 
this next 10-year period. It is not getting better.
  Those who say, gee, with some more growth this will all work out--no, 
it does not work out. That is what the Comptroller General of the 
United States is warning us about, that is what the International 
Monetary Fund is warning us about, that is what budget group after 
budget group is warning us about. We cannot grow our way out of the 
deficits that are coming because we are stacking up debt at the time 
that is most favorable. We are stacking up debt when we have the trust 
funds throwing off huge cash surpluses.
  What is going to happen when those trust funds go cash negative? 
Instead of $160 billion of Social Security surplus, which will happen 
this year, instead of $235 billion of Social Security surplus which 
will happen in the fifth year, when those trust funds go cash negative, 
then what happens, and the baby boomers have retired and the full cost 
of the President's tax cuts have been phased in? Then these deficits 
look like child's play. Then we have a real chasm which has to be dealt 
with.
  As I see it, the chairman's budget simply does not do the job. When 
we look at the chairman's mark and we put back in the war costs CBO 
says will be there, and we look at addressing the alternative minimum 
tax, here is what we see the operating deficits looking like over the 
next 5 years. They are enormous. The operating deficits are enormous. 
We see very little reduction in them under the chairman's mark. There 
is $638 billion going down in 2009 to $520 billion, and I don't believe 
that is an accurate reflection. I believe by the time we get to the 
fifth year we will add another $600 billion to the debt, based on my 
own analysis.
  Our colleagues on the other side have talked about this proposal 
reducing the deficit. Actually, this proposal does not reduce the 
deficit. The deficit is going down on a unified basis, not counting the 
money that is being taken from Social Security, if we do nothing. The 
deficit is going down if we do nothing. But if we adjust the baseline 
for the one-time expenditures that were made last year, when we had a 
supplemental appropriations bill for over $85 billion last year--that 
is in the so-called baseline going forward--if we take that out, which 
the chairman has done--and, by the way, I commend him for doing that 
because otherwise we build in spending that should not repeat itself. 
It is one-time spending that should not be added to the base. The 
chairman has taken it out of the base. He is absolutely right to do so.
  Once we have done that and then we look at what is happening with the 
deficits under the chairman's proposal, what we see is it increases the 
deficit by $177 billion over the next 5 years. He is adding $177 
billion to the deficit over the next 5 years. That is a mistake. We 
have record deficits now. We have the baby boomers coming. They will 
retire. We should not be adding to the deficit by the policy decisions 
we make here. We ought to be reducing it.
  The chairman says the deficit in the fifth year under his plan will 
be $202 billion. That is only true if we leave out certain things. 
Number one, he is leaving out additional war costs in that fifth year. 
The Congressional Budget Office says residual war costs in the fifth 
year will be $30 billion. He leaves out the alternative minimum tax 
fix, that costs $55 billion in the fifth year. He leaves out the $22 
billion he will borrow from the Medicare trust fund that year which he 
has to pay back. He is leaving out the $235 billion he is borrowing 
from the Social Security trust fund in that fifth year. In that year 
alone, he will borrow $235 billion from Social Security. He will borrow 
another $22 billion from Medicare trust funds so he is borrowing $257 
billion in that year and that is being stacked on the debt. So instead 
of adding $202 billion to the debt in that fifth year, he is adding at 
least $545 billion to the debt. That is my own conclusion.
  What is wrong with, for example, this budget in terms of revealing 
our full fiscal condition? One of the first problems we have is the war 
costs. The President has zero for war costs past September 30th. The 
chairman has put in a reserve fund of $30 billion which is certainly 
more forthcoming than the President's plan. But the chairman does not 
include it in his actual budget so he does not add to the deficit 
calculations by that $30 billion. He just says it is in a reserve fund. 
It may be spent, but we are not counting on it.
  That is not a budget. It is not a budget when you say we may spend 
this

[[Page 3555]]

money, and if we do, we will find someplace to get it. I guess we will 
have to borrow it because he is not providing the funding for it. He is 
not adding it to the deficit totals for that year. He is not budgeting 
for it.
  The Congressional Budget Office says for the 10 years from 2005 to 
2014, the residual war cost is $280 billion. We are not facing up to 
the real costs we all know are coming.
  Then we look at priorities. In 2005, the tax cuts going to the top 1 
percent cost $45 billion, those earning over $337,000. If we were to 
keep the promise of No Child Left Behind in that year according to the 
chairman's budgets--this is a different number compared to the Bush 
budget because this budget before the Senate, the chairman's mark, is 
somewhat more generous in dealing with No Child Left Behind than the 
President's budget--but looking at this budget, he is $8.6 billion 
short of meeting the amount committed to No Child Left Behind. That is 
less than 20 percent of the money that is going in the tax cut to the 
wealthiest 1 percent.
  The same is true as we look at other priorities. Veterans medical 
funding. If we were to increase veterans medical care funding to meet 
the 2004 service levels, it would cost $521 million. Instead, we are 
giving $45 billion of tax cuts to the wealthiest 1 percent.
  This is a question of priorities. What is more important? They are 
saying it is 90 times as important. We will spend 90 times as much 
providing a tax cut to the wealthiest 1 percent than to restore medical 
care funding to the 2004 service levels in 2005. If we took a poll of 
those who are the wealthiest 1 percent in this country and they were 
asked, Would you be willing to give up 1\1/3\ percent of your tax cut 
so we could match the medical care funding of our veterans in 2005 with 
what we did in 2004, there would be a resounding yes, I would give up 1 
percent of my tax cut in order to provide decent medical care for our 
Nation's veterans.
  The COPS program. It would take $700 million to restore the cuts 
being made in the COPS program. COPS program is the program that has 
put 100,000 police officers on the street. It costs $700 million to 
restore those cuts that are in this chairman's mark. Again, I compare 
it to the $45 billion being provided in tax cuts to the wealthiest 1 
percent.
  Does it make sense to cut the COPS program, reduce the number of 
police on the street, when we are threatened by terrorist activity in 
this country?
  I do not think that makes sense. I do not think those are the right 
priorities for the country.
  We look at the firefighters in the same way. It would cost $246 
million to restore the cuts to the firefighters that are included in 
this budget. Again, if one looks at a comparison of the tax cuts 
provided to the wealthiest 1 percent--those earning over $337,000--it 
costs $45 billion for that same year.
  If you asked the people who are in this category: Gee, would you be 
willing to give up one-half of 1 percent of your tax cut so we do not 
cut the firefighters, I think overwhelmingly people in that category 
would say, yes, that is a priority that we fund the firefighters at 
last year's levels and not cut them, not cut them dramatically.
  This is a debate about choices. It is about choices of what is the 
future course for our Nation. I believe the deficits and debt that are 
contained in these budgets are simply too large and we need to take 
aggressive action to deal with them, and this is all happening at the 
worst possible time, right before the baby boomers retire.
  But I am not focused on this year's deficit. That concerns me, but 
that is not the focus of my concern. I am much more worried about where 
this is all headed under the President's plan. I am much more worried 
about where this is all headed under the chairman's plan than the 
immediate deficits.
  One would expect deficits at a time we have been attacked. One would 
expect it at a time we have been recovering in the economy. The problem 
with the President's plan, the problem with the chairman's plan, is 
they never plan to get out of deficit. Instead, they keep adding to the 
debt, and by hundreds of billions of dollars a year, not just this 
year, but next year, and the next year, and the next year, and the next 
year--every year by over $500 billion of added debt, and every year 
thereafter, taking every penny of Social Security surplus, borrowing 
it, using it to fund tax cuts and other expenditures, with no plan to 
pay it back.
  No, this does not add up. This does not add up. This does not come 
close to adding up. It has enormous implications for our long-term 
economic strength.
  Now I understand this is an election year and things are unlikely to 
be changed very dramatically this year. I have had probably a dozen of 
my colleague say to me, what we need is a big plan for next year. I 
wish we could take more aggressive action this year, but I am realistic 
and know it is probably true that our best opportunity to deal with 
this problem in a fundamental way will come next year, and that is when 
we need to be prepared to act in a serious way and quit just hoping 
against hope that somehow this all goes away.
  It is not going away. It is not going away under the chairman's plan. 
He is adding $500 billion to the debt every year of this plan. It is 
not going away under the President's plan. He is adding even more. The 
President adds $3 trillion to the debt over the next 5 years--$3 
trillion. This plan is a little bit better. It adds $2.860 trillion to 
the debt. None of this is sustainable, especially in light of the 
retirement of the baby boom generation, which starts in 2008, and of 
the cost of the President's tax cuts that absolutely explode beyond the 
5 years of this budget plan.
  I thank the Chair and yield the floor.
  The PRESIDING OFFICER. The Senator from Michigan.
  Ms. STABENOW. Mr. President, I rise to speak about the budget. I 
first commend my ranking member, the Senator from North Dakota, for his 
incredible leadership and the way in which he has presented all of 
these issues and the challenges facing our country. There is no 
question that a huge hole has been dug with deficits as far as the eye 
can see.
  I remember coming onto the Budget Committee as a new Member of the 
Senate in 2001, when the debate was what to do with the largest surplus 
in the history of the country. I remember when the Senator from North 
Dakota was talking about the baby boomers retiring and the need to put 
money aside to meet our obligations under Social Security and Medicare, 
and the need to look to the future.
  Unfortunately, instead, what we saw were very short-term decisions 
that turned the largest budget surplus in the history of the country 
into the largest budget deficit in the history of the country, in only 
3 years. It is astounding to see what has happened in the last 3 years.
  But I thank him for his courage and his willingness to fight for what 
is important to my family and the people of Michigan and the people of 
North Dakota and people all across the country, for fighting for the 
right priorities for the future of our country.
  I also want to take a moment to thank our chairman, who convened his 
last budget hearing and budget resolution markup this year. I 
appreciate the fact that he conducted a fair markup, as he has done 
since being chairman. We came to the conclusion and voted on a budget 
resolution that now is in front of us. He did it in a very fair way.
  I also commend him for a couple of tough decisions he made that the 
administration was not willing to make. Chairman Nickles, unlike the 
administration, put funding in the budget for ongoing activities in 
Iraq. He put in a reserve fund of $30 billion. While I am concerned 
that is not enough to meet the request that will come back to us, I 
commend him for his leadership in understanding the number certainly is 
not zero, that there needs to be an amount that is put aside into a 
reserve fund.
  But this budget is so flawed in the end analysis, I am not sure where 
to begin in talking about it. It reminds me of Yogi Berra when he said: 
This is deja vu all over again. Because that is exactly where we are, 
given the direction we have gone in the last 3 years. Once again, we 
see a budget that is

[[Page 3556]]

skewed to a privileged few while leaving middle-income families behind. 
It fails the credibility test, and it does not reflect our Nation's 
values and priorities. I hope the Senate will decide to reject it and 
go back to the drawing board and get it right.
  Our Nation's budget is our chief economic tool. This is the fourth 
time President Bush has submitted a budget to Congress containing his 
economic plan for the Nation. Unfortunately, the President's last three 
budgets have led to major job loss, soaring deficits, rising debt, the 
looting of the Social Security and Medicare trust funds, and have 
failed to provide the necessary resources for our domestic priorities.
  It seems every day we hear more and more economic bad news. Certainly 
in the State of Michigan every day there are headlines of job loss.
  On Friday, the Labor Department said there were only 21,000 jobs 
created in February. This is anemic, according to many economists, and 
285,000 jobs short of what the President said would happen just a 
couple of months ago. At this rate, it will take 9 years to recover all 
of the jobs lost under President Bush.
  Unfortunately, the people of the State of Michigan can't wait that 
long. Our people need jobs now. Under the Bush Presidency, we have lost 
2.8 million manufacturing jobs, many of them in the State of Michigan. 
Our manufacturing sector is in crisis. Every day we hear about another 
company shipping its jobs overseas to China or India or Mexico. In 
fact, the State of Michigan had the highest number of jobs lost last 
year.
  Just last Friday, our Democratic Policy Committee held a hearing on 
the topic of shipping jobs overseas. At that hearing we heard testimony 
from Dave Doolittle who works at the Electrolux Refrigerator plant, 
Greenville, MI. They announced they were going to close and export 
2,700 jobs to Mexico.
  Despite major concessions offered by the workers and over $70 million 
in economic incentives from the State and the community--the community 
did everything right; the workers did everything right--Electrolux 
announced it will close next year, and 2,700 workers will be out of a 
job. That means 2,700 families will be without a breadwinner in a town 
of 9,000 people; 2,700 people losing their jobs out of 9,000. This type 
of job loss is devastating to these families.
  In addition to that, when we look at the ripple effect and the 
suppliers involved and others, this can reach as high as 8,000 good-
paying jobs with health care and pension plans throughout the entire 
region. This type of job loss is devastating for our families, and it 
is devastating to Dave Doolittle.
  Mr. Doolittle has worked at the plant for over 23 years. He has a 
pension. He has health benefits. He has one child in college and two in 
high school. The plant closing will devastate his family. He asked us, 
who will pay for his two high school children to go to college? What is 
he going to do about health care for his family? Will they be able to 
keep their home?
  To add insult to injury, Dave Doolittle and other employees will be 
working on an assembly line that has just received major investments of 
$100 million to improve it so the company can see what problems it has 
so they can then rebuild that and take it to Mexico. This highly 
productive, highly skilled workforce is working out all the kinks in 
the equipment that they will then pack up and send to Mexico.
  Unfortunately, the President's budget and the budget before us will 
do nothing for Dave Doolittle and his family. He is a one of a growing 
number of hard-working families making up a part of another America. 
The other America includes not only the unemployed but millions of 
workers who have simply given up trying to find a job. If you include 
them in the unemployment rate, these discouraged workers push the 
unemployment numbers up to 9.6 percent, almost 1 in 10 of our workers.
  People such as Dave Doolittle are not interested in a handout. This 
is a hard-working, skilled individual. What he is looking for is a good 
job and a chance to give his children and his grandchildren-to-be a 
better future. They want to provide their children with health care and 
an education so they can live the American dream. Isn't that what we 
all want for ourselves and for our children? They want the country to 
be strong and safe from terrorist attacks. They are counting on us to 
do what is right at home and abroad.
  Unfortunately, the Bush economic policies have failed Dave Doolittle 
and his family on all counts. The President's budget has no plan to 
create jobs. It does nothing to help the uninsured and make health care 
more affordable. It contains proposed cuts for our schools, our police 
officers, our firefighters who are trying to protect us on the front 
lines against terrorist attacks.
  On these priorities and more, Democrats tried to improve this budget 
in committee but were voted down on a party-line vote every time.
  This budget also lacks credibility. For the last 3 years we were told 
one thing; yet something very different has happened over and over. The 
first tax cut produced massive deficits and harmed our economy. Despite 
all that, the President continues to push the same trickle-down 
economics that have failed. If these tax cuts were done by trial and 
error, they were an error.
  Consider everything that was said and what actually has happened. We 
were told that the administration's tax cuts in 2001 and 2003 would 
create jobs, but we have lost jobs, almost 3 million. We were told we 
would have a surplus, but we now have the largest deficit in the 
history of the country. We were told we would pay off the national 
debt, but now our national debt is higher than when President Bush took 
office. We were told the President's budget would not use Social 
Security trust funds, but now we are using every penny of the Social 
Security surplus to pay for tax cuts for the privileged few. We were 
told we needed to modernize Medicare and add a prescription drug 
benefit, with which I agree, but now we have a law that will privatize 
Medicare, hurt one in four seniors on Medicare, and cause them to lose 
their private insurance. It does little to help seniors purchase 
prescription drugs and does nothing to lower prices for all Americans.
  We were told we would fund Leave No Child Behind and special 
education, but now we have failed to fully fund them. School districts 
are making cuts, shortening their school years, and laying off 
teachers. We were told we would have a new Department of Homeland 
Security that would help protect us, but in only the second budget 
cycle for this agency, we are already seeing budget cuts from last 
year, and we are falling far short of what is needed to protect our 
country.
  We tried to make some changes to this budget in committee to have it 
better reflect our Nation's values and priorities. Unfortunately, we 
were unsuccessful. We tried to add fiscal discipline and reduce the 
deficit, but we lost on a party-line vote. We tried to fully fund Leave 
No Child Behind, but we lost on a party-line vote. We tried to restore 
the cuts to our firefighters, but we lost on a party-line vote.
  Unfortunately, the Democrats were not the real losers, though. The 
American people were the losers by those votes.
  We are in this budget and economic mess because this administration 
has valued wealth over work and the privileged few over our children's 
future. For the privileged few, this administration has given so much: 
most of the tax breaks, subsidies for insurance companies and HMOs, and 
$139 billion in profit for the pharmaceutical industry. For working 
families there has been very little. In fact, working men and women and 
their families are worse off than they were 3 years ago.
  Three million workers have lost their jobs. As of the end of January, 
we have over 400,000 people who have lost their jobs who have been cut 
off of unemployment insurance. Eight million will see their pay cut 
because of new overtime regulations. Seven million people who work for 
the minimum wage have seen their pay eroded, and 12 million children 
were too poor to get the child tax credit.

[[Page 3557]]

  Three years ago, Federal Reserve Chairman Alan Greenspan gave the go-
ahead for massive tax cuts for the top 1 percent, and this Congress, in 
conjunction with the President, enacted them, and now we have the 
largest deficits in history.
  Unfortunately, now Chairman Greenspan is urging Congress and the 
President to make cuts in Social Security because we have these 
deficits. This means tax cuts for the privileged few are paving the way 
for cuts in Social Security for middle-income families. This is wrong.
  How can we ask people who have worked their entire lives to have 
their Social Security cut to pay for tax cuts for our privileged few?
  I mentioned earlier that budgets are all about values and priorities, 
and I truly believe that. We have to decide, do we want more tax cuts 
for the privileged few or do we want all Americans to be safe by 
providing full funding for firefighters, police officers, and other 
first responders?
  Do we want more tax cuts for the privileged few or do we want a real 
comprehensive Medicare prescription drug benefit and lower prescription 
drug prices for everyone?
  Do we want more tax cuts for the privileged few or quality schools 
with highly educated teachers and small class sizes and state-of-the-
art technology for all of our children?
  More tax cuts or quality education? More tax cuts or quality health 
care for our veterans who have served us and continue to serve us 
today? More tax cuts or hundreds of thousands of new jobs, rebuilding 
our Nation's highways?
  We need a new vision. We need new priorities for America. We need a 
positive budget that will help all Americans raise their families, get 
access to health care, and enjoy their lives and their retirement. We 
need to restore our fiscal discipline, make critical investments to 
create jobs, and strengthen Medicare and Social Security. In short, we 
need to make the needs of American families our top priority again.
  I will be supporting a number of amendments that will do that in this 
budget debate. I am hopeful we will be able to get bipartisan support 
to be able to do those things that American families are asking us to 
do, so at the end of the day we will have a budget that reflects what 
is important to the people we represent.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Colorado is recognized.
  Mr. ALLARD. Mr. President, I want to set the record straight. We have 
heard a lot of discussion from the other side about the burden or about 
how these tax cuts are somehow favoring the rich and somehow implying 
that the rich are getting some sort of an advantage.
  I share with my colleagues some facts. This factsheet was put out by 
the Tax Foundation. It talks about the Federal individual income tax. 
It takes us up to 2001. The top 1 percent of the earners in this 
country, the top 1 percent who pay the highest taxes, pay 40 percent of 
the individual income tax in this country. The top 5 percent pay 53.3 
percent. The top 10 percent pay 64.9 percent. The top 25 percent pay 
82.9 percent. The top 50 percent of the individual income taxpayers in 
this country pay 96.1 percent.
  That means the bottom 50 percent only pay 4 percent of the total 
individual income tax that comes in. That is the individual taxes that 
are filed.
  I was looking to see what happens when we look at all income classes 
and all returns. These are taxable returns, itemized tax liability, at 
the 2003 rate and the 2003 law and 2003 income levels. If we look at 
those returns that show $100,000 to $200,000 in taxes, they pay 25 
percent, a little over 25 percent. If we look at those who pay over 
$200,000 in taxes, they pay 49 percent. So if we total all the income 
classes and all returns--these figures are put out by the Joint 
Committee on Taxation--and we look at all these returns, and this is a 
current document--the previous document I referred to was up to 2001--
put out by the Tax Foundation--if you take those who are $100,000 or 
more, they pay over 75 percent of the taxes in this country.
  Now, it seems to me those individuals with those tax returns reflect 
hard work and productivity. They are doing their fair share in 
supporting the economy of this country. I think this needed to be made 
part of the record. That is why I wanted to take a little time to talk 
about the tax burden, because the story we keep hearing from colleagues 
on the other side is that somehow the rich are getting off easy.
  The lowest 50 percent of our individual taxpayers pay 4 percent and 
the top 50 percent are paying 96 percent of the taxes. That tells you 
who is paying the taxes.
  Then, if we look at all the returns filed in 2003, and then look at 
who is paying those, all those who paid $100,000 or more are paying 
over 75 percent of the taxes. That is phenomenal. The producers and 
earners are paying their fair share.
  I might add that a large percentage of these individuals, as well as 
others, are coming from small business. That is where our economic 
growth occurs, where our new ideas come from. If we can continue to 
promote and encourage the growth of small business, then that means our 
economy is going to do well. That is why I think the tax cut that we 
put in place was the right solution, and it has worked. I don't think 
anybody can deny that the tax cuts we put in place have worked. They 
have worked.
  If we increase taxes, which is being encouraged on the other side, 
supported by the other side, it is the wrong thing to do at the wrong 
time--particularly when our economy is beginning to show growth. I 
think it is important, again, that we ought to actually extend these 
taxes permanently. If we would do that, I think that sends a message to 
the producers of this country that we are open for business and they 
will get out and they will produce. When the economy grows, I think it 
will help work us out of where we are now in deficits. I think it will 
increase revenues to the Federal Government substantially, and it will 
be easier for us to work our way out of the deficits we now face.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Bennett). The Senator from Michigan is 
recognized.
  Ms. STABENOW. Mr. President, if I might respond to my colleague's 
comments, we certainly have heard similar comments before. There are a 
couple of concerns that I have. Like everything, it depends on how you 
look at the numbers and how you look at what is happening in terms of 
tax burden. The debate that has gone on relates to the income tax. It 
has nothing to do, first, with all of the taxes.
  In this debate, there is always a conscious desire not to look at the 
payroll tax, which everybody pays and, in fact, it is skewed more to 
lower and middle-income people, because above a certain income you 
don't pay the payroll tax anymore.
  So let's look at who is paying the payroll tax. Let's look at who 
pays sales tax, which is based on what you buy. It has no relationship 
to your income specifically, in terms of what the sales tax burden is. 
We know it falls more on low- and moderate-income individuals.
  We can also look at property taxes. We look at a wide array of taxes 
in this country and we see that low- and middle-income people have a 
huge burden. When taxes get cut, it is not on the things they are 
paying; it is on those taxes--in this case, the income tax--which is 
paid by those who make higher incomes, higher percentages.
  When we look at the total tax burden, we see that it is the middle-
income people in this country who get squeezed on all sides. We should 
not add to that by extending a tax cut that continues to do that.
  Let us look at the numbers, how the tax breaks stack up. The combined 
effect of the tax cuts of 2001 and 2003, if you make over $1 million a 
year--that is in a year and a half--if you make over $1 million a year, 
your combined tax cut is $140,369. The average middle-income-tax payer 
will get a tax cut of $566. Look at these numbers. This is more than 
the majority of people in the country earn working hard every single 
year for their family. They work hard, they play by the rules, they are

[[Page 3558]]

struggling with sending their kids to college and making sure they can 
buy their homes and pay the property taxes, and all of the other 
pressures on them. They are worried about losing their job now to 
overseas competition. Instead of selling products overseas, they are 
worried their jobs are going to go overseas.
  We have individuals who work hard every day, play by the rules, and 
the vast majority of them are earning less per year than what one 
person is going to get in an income tax cut who earns over $1 million a 
year. I do not begrudge in any way someone who earns over $1 million a 
year. That is not the point. The point is we are looking at this kind 
of a tax cut of $140,000 versus $566. There is a major issue of who is 
getting the tax benefit and who drives the economy, from where does the 
economic growth come. We know it is from middle-income-tax payers who 
are as consumers purchasing in the economy, but more broadly we look at 
this in terms of choices.
  We know if we were to give them two-thirds of their tax cut this year 
instead of all of it, we could fully fund what has been reported is 
needed to keep us safe with homeland security--every single penny. It 
is a large number. We are told by Warren Rudman and the members who 
came together to look at all of our homeland security needs--not only 
police and fire and bioterrorism, borders and ports and chemical 
plants, but all of it--it will cost $15 billion, which is one-third of 
what those at the top are going to get back this year in a tax cut.
  Would folks be willing to take a little bit less to know they are 
safe, that their family is safe, that the borders are safe, that the 
ports are safe, that they can call 9-1-1 and know they can get a first 
responder at their home if there is an emergency, or that the community 
can respond, that police and firefighters can talk to each other on the 
radio, have interoperability, which they do not have now?
  All across Michigan, we do not have one system where everybody can 
talk to each other in case of an emergency. I think most of the people 
who do very well in this country would say, yes, that is important for 
my family, and that is a tradeoff I am willing to make; that is a 
choice I am willing to make.
  This is about choices. It is not about class warfare. There are huge 
differences in what people will be getting back. It is not about 
penalizing or in any way demonizing people who make over $1 million a 
year. This is about choices. When we see red for as far as the eye can 
see, when we see that this year's projected deficit, just this year's 
deficit of $521 billion is more than the entire investments outside 
defense--take defense away--all of our domestic investments, all of our 
domestic budget: homeland security, education, health care, law 
enforcement, protecting the environment, parks--we could wipe out the 
entire domestic budget, except for defense, and not equal the deficit 
hole that the administration has put us in just this year.
  It is a matter of choices and saying to someone who is doing very 
well: We need you to help. We need you to be willing to make sacrifices 
just as every family is, just as our men and women in the armed 
services are making in Iraq and Afghanistan. It is about choices. If 
the choice is keeping every American safe, making sure we can protect 
ourselves from terrorist attacks across this country, and asking those 
doing very well, who have reaped the benefits of this country, to help 
share in paying for that, I think the majority of them would say yes. 
That is something we all are willing to do.
  This is always a question of choices. It is a question of priorities. 
It is a question of values.
  As the chart shows, it is also a question of fairness for people. If 
we look at the difference in the average middle-income-tax payer and 
the cut they will get in 2006, and those with incomes over $1 million 
and the cut they will get, we see that in addition to this disparity, 
this middle-income-tax payer is paying a payroll tax, sales taxes, 
property taxes, and contributing greatly to the payment of services in 
their community.
  This budget is about what is fair for everybody, what is the right 
thing to do to keep us strong fiscally, how do we put ourselves on a 
path of not asking our children to pay the burden of the debt that is 
being accumulated, how do we make sure we are smart in terms of our 
investments in the economy to grow jobs, put money in the pockets of 
middle-income people, small businesses that drive the economy--the 
majority of new jobs are coming from small business--how do we make 
sure that is a priority for us, and how do we make sure we are creating 
a set of priorities and a vision for the future that our families are 
asking us to do?
  Thank you, Mr. President.
  The PRESIDING OFFICER (Mr. Fitzgerald). The Senator from Utah.
  Mr. BENNETT. Mr. President, I listened to this particular debate for 
a while. I have a few observations. I am not prepared to make a 
significant economic statement. I will be doing that at some point 
during the debate. But I think I will respond to a few comments that 
have been made.
  If I may quote Paul Samuelson in a recent article in Newsweek and the 
Washington Post, he said most of the debate about jobs that is 
currently going on is bogus, and he makes the point that if a President 
could create jobs, the unemployment rate would be permanently at 3.2 
percent. If a President could create jobs, every President would. If a 
Congress could create jobs, every Congress would. No one wants to go 
home and address his constituents at a time when jobs are difficult.
  The fact remains, however, that the Congress or the President cannot, 
with a wave of the hand or the passage of legislation or the adoption 
of a political slogan, create jobs. Jobs are created in the economy. 
Jobs are created because of two things: There first must be accumulated 
wealth, accumulated capital of some kind, and then there must be 
someone who holds that capital who is willing to take a risk.
  All wealth is created by the combination of accumulated capital and 
risk taking. When we tax people, we tax their accumulated capital. We 
have to do that. We should do that. I am not suggesting in any sense 
that taxes are not appropriate, but if we tax capital too much, capital 
flees. It goes some place else. If we regulate risk taking too heavily, 
it goes some place else or it is killed altogether.
  As a consequence, if we are going to have jobs, we want an economic 
situation where accumulated capital is allowed to work and where risk 
takers are rewarded for their risk and where they receive the incentive 
necessary to compensate them for the risk they take.
  I do not mean to be overly personal, but I hear people talking about 
two things. One, they talk about small business and how wonderful small 
business is, and then they talk about millionaires and how millionaires 
should be willing to sacrifice a little of their money so everybody 
else can have a job.
  It is very interesting that those who talk about let's not make the 
tax cuts permanent then praise small business in the next breath. 
Perhaps they do not realize most of the tax returns that show income in 
excess of a million dollars are, in fact, the tax returns of owners of 
small business.
  Let me give my own personal example to illustrate the point. I have 
done it before, but I have discovered since I have come to the Senate, 
there is no such thing as repetition in the Senate. We always give 
every speech as if it is brand new.
  Before I came to the Senate, I was the president of a privately held 
corporation that filed its taxes under the S section of the Tax Code. 
Therefore, it was known as an S corporation. It used to be called a 
subchapter S corporation, but they changed the law a little and it is 
now just an S corporation.
  When that phrase is used, people's eyes glaze over and they say, what 
does that mean? Well, it is very simple. If the corporation earns $1 
million and it has 10 shareholders, instead of the corporation paying 
taxes on that $1 million, as an S corporation it pays no taxes, but 
each of its 10 shareholders, assuming their shareholdings are equal, 
pays taxes on $100,000. Why

[[Page 3559]]

would any shareholder want to do that? Very simple. It avoids double 
taxation.
  If the corporation made $1 million, had 10 shareholders and it paid 
taxes, it would pay taxes at 36 percent. The Federal Government would 
get 36 cents out of every dollar it earned.
  At the time I was doing this, the top tax rate was 28 percent. By 
saying, all right, we are going to register as an S corporation so the 
corporation does not pay any taxes on the $1 million, it comes to the 
10 shareholders and each one of us will pay taxes on our share of the 
earnings, which in my case was 28 cents, that is a very significant 
difference--the difference between paying 28 cents on every dollar you 
earn and 36 cents on every dollar you earn.
  During the period of time Bill Clinton was President, that number 
went up to 42. I had said before if we had started that company at a 
time when the effective tax rate was 42 percent, we probably would not 
have survived, but because we started it during the Reagan years when 
the top individual tax rate was 28 percent, we got to keep 72 cents out 
of every dollar we earned.
  What did we do with that? We put it back into the corporation and we 
created jobs, real jobs. The company had four full-time employees when 
I joined it as the chief executive--not a very big company, frankly, 
not a very big deal. It eventually grew to 4,000 jobs. The reason it 
had that kind of momentum as a small business is because we only paid 
28 cents back to the Federal Government out of every dollar we earned. 
We put the 72 cents into growing the business and from a base of 4 jobs 
we created 4,000 jobs. If we add up all of the income taxes that were 
paid by those 4,000 employees and the corporate taxes that were paid by 
the company when it finally went public and ceased to be an S 
corporation, it became a C corporation, and the taxes that were paid by 
the suppliers of our company and the taxes that were paid by their 
suppliers and all the rest of it, we come up with a very large number 
that came into the Federal Government because that company was started.
  As I said in the beginning, it was started because of two things: 
accumulated capital and risk taking. How much accumulated capital did 
we have? We borrowed $175,000 from the bank. It was the bank's capital. 
That was our accumulated capital. How big a risk did we take? Every one 
of us signed away everything we owned in the form of a personal 
guarantee to make that company go. After about 9 months of operation, I 
remember the principal shareholder of the company saying to me, Bob, 
are we going to make it? Are we going to survive?
  I said to him, well, it depends on whether we get repeat business. We 
sold a product that had a year's life and the question was would the 
people at the end of the year come back and buy the product at the end 
of the year. I said, if we get 55-percent repeat business, we are going 
to survive. If we get less than that, your next phone call has to be to 
a real estate broker because you are going to have to sell your house. 
The bank is going to show up and take everything you own.
  On that pleasant note, we went ahead with the business. It turned out 
we got more than a 55-percent renewal rate. We got a 95-percent renewal 
rate and the business doubled. It continued to grow and we funded it 
with internally generated funds because we were able to keep 72 cents 
out of every dollar we earned and put every dime of that 72 cents back 
into the business.
  Because we were an S corporation and the profits we were earning 
showed up on our individual tax returns, I filed tax returns that 
showed I was earning over $1 million a year. Now, in fact, my salary as 
the CEO of that company was $140,000, but there was the other million 
that was added to it as my share of the company's earnings reported on 
my personal income tax return.
  If we go to the chart that was shown by the Senator from Michigan, I 
would be one of those who would be earning $1 million a year. In fact, 
my take-home stayed exactly the same at the $140,000 figure. The rest 
of it was all a bookkeeping entry. We did it because we wanted to avoid 
double taxation and because we wanted to take advantage of the fact 
that the effective rate for individuals was lower than the effective 
rate for corporations. We built the business and we created the jobs 
because the tax situation was as I have described it.
  We hear all of these comments about how wonderful small business is 
and how small business is the engine that is driving the economy, and 
they are right. We hear all of these comments about how small business 
is where the new jobs are, and they are right. It is interesting that 
almost unanimously those who represent small business are saying to us, 
keep the President's tax cuts in place. If you do not, you will stifle 
small business.
  On this floor we are seeing our colleagues say, let's let the 
millionaires pay for the things we want to do, let's take a little off 
the top from the millionaires and then we can afford all of these 
wonderful Federal programs we want to fund, all of the time while we 
are saying, gee, we are spending too much money, but we should spend 
more money here and we should spend more money there and we should 
spend more money in the other place. And where are we going to get it? 
Well, we will let the millionaires pay it.
  Then they say, all of this will help small business. The small 
businesspeople are saying, we are the millionaires and it is not coming 
to us in personal income, it is showing up on our tax returns in K-1 
forms filed to deal with an S corporation, and you are stifling job 
growth, you are stifling small business if you do it this way.
  We do not hear from the real small business man and woman. We hear 
from those who say, I am speaking for small business while I am saying 
small business is wonderful, and at the same time I am saying increase 
the taxes on those small business men and women who have sole 
proprietorships or S corporations or limited liability corporations.
  The other point I want to make in this debate has to do with jobs. We 
are hearing over and over, where are the jobs? Once again, it is the 
President's fault. President Bush has presided over the loss of more 
jobs than anybody since Herbert Hoover. He must have done it 
deliberately is the implication. As I said at the outset, Paul 
Samuelson said if a President knew how to create jobs, we would never 
see the unemployment rate go above 3.2 percent.
  What is the basis of the creation of jobs? Let me give a statistic. 
When economic activity goes up, obviously there is a need for more 
jobs. There is a need for more people to work at businesses, at firms 
that are involved in the economic activity growing. So the economic 
activity has gone up.
  We had a great year in 2003. The gross domestic product grew by 4.3 
percent, which in historic terms is terrific. The President said we 
will get good growth if we have these tax cuts, and we have gotten good 
growth. We have added something like $3 trillion to $4 trillion worth 
of wealth on the stock market--and that involves over 50 percent of our 
population.
  The stock market is not just for the privileged few at the top now. 
Teachers' pensions, labor union pensions, veterans' pensions, people 
who have invested for their children's college funds--over half of 
Americans are now invested in the stock market. They have seen, since 
the President's program went into place, an increase in the overall 
value of the stock market in the multiple trillions of dollars. This is 
not a small accomplishment.
  But where are the jobs if GDP is at 4.3 percent, historically a high 
position? The stock market has come back, creating a tremendous amount 
of accumulated wealth, and where are the jobs?
  There is another statistic that answers the question we need to pay 
attention to. In 2003, once again GDP increased by 4.3 percent. 
Normally that is a time when you would see the creation of many jobs. 
However, in that same year productivity increased by 4.4 percent: a 
staggering number in historic terms. But the net effect is that it was 
higher than GDP.
  Whenever productivity grows faster than the economy grows, something 
we don't like happens and that is we lose

[[Page 3560]]

jobs. For all of the efforts on this floor and in the White House and 
in the Federal Reserve to get the economy growing, to get the traction 
in the recovery growing--and we produced a year of 4.3 percent growth 
in 2003--with that strong growth, we lost 60,000 jobs. The reason was 
productivity grew at 4.4 percent while GDP was growing at 4.3 percent.
  Some will say the solution to the problem is to get productivity 
down, to have GDP growing and productivity falling. That, of course, is 
a prescription for long-term economic disaster. The most significant 
thing we want to do in our economy is keep it as productive as 
possible, to have productivity growing rapidly here so we can outgrow 
the rest of the world. That is what America has done for 100 years or 
more.
  Go back to the middle 1800s and look at the productivity figures for 
the then leading economy in the world, which was Great Britain, and the 
productivity figures for the young upcoming country in the world, which 
was the United States. You see that over the years the United States 
had a higher productivity than Great Britain by about a half a percent. 
That was enough, over the decades, and then the century, to see America 
eclipse Great Britain and see Great Britain ultimately disappear as a 
major world economic factor. America now stands as the strongest 
economy in the world. We do not want our productivity to go down.
  The thing that has happened in this recession and recovery, something 
that has not happened before, is that through the quarters of recession 
and recovery productivity remained strong. Productivity simply means 
you are getting more value out what the workforce is producing. You are 
getting more goods; you are getting more services; you are getting more 
to sell. If you can get more out of the workforce in this fashion, it 
means ultimately your society has a higher standard of living and your 
consumers pay less for the goods they use. But if productivity is 
growing faster than the economy is growing, that means you are getting 
that result, higher standard of living and lower cost, with fewer 
people.
  This is the real dilemma we are facing that is not being discussed 
when we talk about economics. The real dilemma we are facing is how do 
we get the GDP to grow faster than productivity
  I believe productivity will come down from the high of 4.4 percent 
that we saw in 2003. I don't think that is sustainable. I think the GDP 
will eventually cross over the line so the GDP is growing more rapidly 
than productivity does, and when that happens the jobs will 
automatically come into play. They will appear. It will not be because 
of anything we do or not because of anything President Bush does or of 
anything that a potential President Kerry might do. It will happen 
because the economy is strong enough that the GDP will grow faster, 
that productivity will be passed by the GDP number. Whoever holds 
office at that time, be he or she, Republican or Democrat, will take 
full credit for it. They will say, since it happened on my watch, I did 
it.
  But let us, at least for a moment, in the rhetoric of this election 
year, pause and recognize what is happening. We are in the midst of the 
information revolution. It is as fundamental to changing the economy as 
the industrial revolution was in the late 1800s. We have not yet 
learned quite how to cope with it and deal with it. But the potential 
for good for our citizens, and for the world, is enormous.
  I don't want to peddle fear and pessimism because, in fact, we should 
be optimistic and excited about the future that this represents to us. 
It will be filled with challenges, just as the industrial revolution 
brought enormous challenges. But it will be filled with opportunity and 
it should be filled with optimism.
  I close with this observation. If we had been having this debate 100 
years ago, in 1904 instead of 2004, and some economist with a great, 
clear crystal ball had come before us and told us the following we 
would all have panicked, but it would have been true if he had said 
this 100 years ago. He would have said: Sixty-nine percent of America's 
labor force works on the farm; 69 percent of America's labor force is 
involved in agriculture, which is civilization's oldest economic 
activity. One hundred years from now, in 2004, that number will be two. 
Yes, you heard me, it is now 69 percent; 100 years from now it will be 
2 percent.
  If that were all he had said, the sense of panic would be enormous. 
Of course, he would have been accurate because agricultural jobs now 
have gone from 69 percent of the labor force to 2 percent.
  What in the world have we done with all of those people who are out 
of work? The industrial revolution took hold and their productivity 
became greater and greater and greater, and today the 2 percent of 
Americans who are involved in agriculture produce more food and fiber 
than Americans can possibly eat or wear, even though obesity is our 
largest health problem. We have to export food to keep the farmers busy 
and only 2 percent of our working force is in agriculture.
  We have enormous productivity.
  Here is another statistic and cautionary tale in that same situation. 
The percentage of workers involved in manufacturing has been going 
down, just like the percentage of workers involved in agriculture for 
50 years--not just in this country but all over the world. As we now 
see the percentage of workers going down in manufacturing and we get 
all excited because it is going down in one President's term, or in the 
8 years of Bill Clinton, or in the first President Bush's term, or in 
Jimmy Carter's term, or wherever it might have been going down, it has 
been going down on a steady basis for over 50 years here and in Europe 
and in every other industrialized country in the world.
  What have we done with those workers? How have we been able to find 
jobs for them? The son of the steelworker who no longer has a job 
because about 10 percent of the number of steelworkers is necessary to 
run a steel mill now compared to the number that was necessary when we 
had open hearth furnace steel mills, the sons and grandsons of those 
steelworkers who worked in the open hearth furnaces are now working for 
Microsoft, or Verizon, or in a startup that will become the next e-Bay, 
or whatever company you want to speculate. They are earning more money 
than their grandfather and their father earned, and they are providing 
for their families better. We are in the midst of the information 
revolution, as I said, that is transforming the economy as 
fundamentally as the industrial revolution did.
  As we deal with this recession and this recovery and talk about what 
we need to do, let us understand the environment in which we are 
operating.
  There are many things we don't know about the information revolution. 
There is much to understand before we can make sound policy. But we 
come back to a fundamental truth which was true during the agricultural 
age, which was true during the industrial age, and which is true now 
during the information age; that is, in order to get economic activity, 
growth, and wealth creation, you need two things--accumulated capital 
and the willingness to take a risk.
  If we can always remember those two fundamentals--that all growth and 
all wealth comes from the combination of accumulated capital and taking 
a risk--we will make wise decisions.
  If we fall for the siren song that says the way to deal with our 
problem is to share the wealth and take the accumulated capital and 
spread it all around in a way that nobody then has any risk--Karl Marx 
suggested that and we have seen what has happened to the economies that 
followed his economic advice--we will kill the goose that has been 
laying golden eggs in this country for over 240 years.
  That is a dramatic condemnation of some of what I have heard on the 
floor, and it is over the top. But, frankly, much of what I have heard 
here on the floor is over the top.
  Let us stay with the basics. Let us do our tax policy in a way that 
encourages accumulation of wealth. Let us do

[[Page 3561]]

our regulatory policy in a way that encourages the taking of risks. 
Then as the wealth is created by the combination of accumulated capital 
and risk taking, let us devise a tax system that does not kill the 
golden goose but that does take out of the economy the money we need to 
deal with the proper role of government. I am not one who says we 
shouldn't have taxes. I am not one who says people shouldn't pay their 
fair share. I am not one who says just because you are successful you 
should be left alone. But my fundamental goal is a tax system that 
functions to raise enough money to pay for the legitimate needs of 
government, not one that picks winners and losers, not one that tries 
to set social policy by tax incentives. Let social policy be set by 
Congress. Let the taxes be drawn in a way that produces the greatest 
efficiency in the economy. Then the gross domestic product will grow 
more rapidly than productivity, even though the information age will 
keep productivity high. At that point the jobs will start to come and 
we will have done our jobs.
  We cannot create jobs. The President cannot create jobs. But what we 
can do is create an economic circumstance where jobs are discouraged 
and economic activity is dampened. When that happens, we will all pay 
the price.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. Mr. President, I agree with much of what the Senator from 
Utah has indicated. There are basic fundamentals to the functioning of 
our economy. Right at the heart of the determination of how successful 
we are as an economy and the role the Federal Government plays is first 
on the monetary side with the Federal Reserve Board and on the fiscal 
policy side what we do with our spending and taxing decisions.
  The problem I have with the President's budget and the budget offered 
by the majority is it contemplates deep additions to the debt even at a 
time of economic strength leading into the retirement of the baby boom 
generation which will explode the cost of the Federal Government. When 
we overlay that with the President's tax proposals, it explodes the 
cost of revenue lost to the Federal Government at the very time the 
baby boomers retire, taking us right over a fiscal cliff.
  Those are not just my views. Those are the views of many who have 
studied the President's plan. That is why we have the Comptroller 
General of the United States warning us we are heading in a direction 
that is unsustainable. That is why we have the head of the Federal 
Reserve Board saying to us we are overcommitted and tough choices are 
going to have to be made. That is why responsible budget group after 
budget group has said to us you are overcommitted. You have massive 
deficits--the biggest we have ever had in dollar terms--and you are 
headed for even more trouble in the future.
  Mr. BENNETT. Mr. President, will the Senator yield for a question?
  Mr. CONRAD. I would be happy to.
  Mr. BENNETT. Mr. President, I agree with the Senator about the size 
and terrifying nature of what we are facing with retirement of the baby 
boomers. But I disagree with him about the connection between this 
budget and that kind of disaster. I feel even as we are running 
surpluses right now, the disaster that is facing us is exactly the same 
size regardless of where we are right now.
  My question to the Senator is when he references the Chairman of the 
Federal Reserve Board, with whom he and I both have had this 
discussion--we know how strongly Chairman Greenspan feels--is the 
Senator not aware Chairman Greenspan is of the opinion that the 
President's tax proposals did indeed help produce the recovery in which 
we now find ourselves, and indeed Chairman Greenspan has endorsed 
making the President's tax proposals permanent? Is the Senator aware of 
the fact Chairman Greenspan, even as he warns about the same things the 
Senator and I agree upon in terms of the problems of the future, says 
in the present context making the President's tax proposition permanent 
is a good idea?
  Mr. CONRAD. I am fully aware of that. I say to the Senator the 
Chairman of the Federal Reserve Board has also told the Congress to 
consider cutting Social Security benefits. That is part of the logic of 
where it all leads. The 75-year shortfall in Social Security is one-
third the 75-year cost of the President's tax cuts. To suggest these 
two things are not related is to avoid reality--an unpleasant reality, 
but, nonetheless, a hard fact we have to cope with.
  The fundamental problem we have here is our appetite for spending is 
greater than our appetite to tax ourselves to pay for it. I believe it 
is going to take an approach on both sides of the equation. I believe 
we are going to have to restrain our impulse to spend, and I believe we 
are going to have to be more disciplined on the revenue side of the 
equation.
  The revenue side of the equation is what has really fallen out. We 
now look at this year and we see revenue will be at the lowest 
percentage of gross domestic production since 1950. While it is true we 
have seen an up-tick in spending largely because of the needs for 
additional money for defense and homeland security and responding to 
the September 11 attacks, it is still true even with that increase in 
spending that we are well below the levels of Federal spending in the 
1980s and the 1990s as a share of our national income.
  As I diagnose this problem, I come to a different conclusion than the 
Senator from Utah. I share with the Senator the conclusion we have to 
discipline spending. I also believe we have to work on the revenue side 
of this equation. I say the first place we ought to look is not to a 
tax increase but to the tax gap, the difference between what is owed 
and what is being paid that the revenue commissioner now tells me for 
2001 was $255 billion for the 1 year alone. We have not had any serious 
aggressive effort to go after this tax gap.
  I was also told by the former revenue commissioner that he 
anticipates those in the vast majority who pay what they legitimately 
owe are paying 15 percent more because we have some--both companies and 
individuals--who are failing to pay what they legitimately owe. I am 
confident the Senator from Utah pays what he legitimately owes. I know 
I do.
  Mr. BENNETT. Mr. President, if I could respond, I have no idea if 
what I pay is what I legitimately owe or not because the Tax Code is so 
impenetrable I did not get an answer out of two different people as to 
what the amount is. I pay the amount my tax preparer tells me I owe and 
so far the IRS has accepted that as legitimate.
  Mr. CONRAD. I would be happy to review the Senator's returns and 
render another judgment.
  Mr. BENNETT. Give me a third opinion.
  If I could make a quick comment without the Senator losing his right 
to the floor.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BENNETT. I recognize fully the level of revenue currently coming 
into the Federal Treasury is at a distressingly low historic point. But 
I go back again to a comment that Chairman Greenspan once made to a 
group of us. I am not sure whether the Senator from North Dakota was 
present. It fits in with the area of agreement that we have. He said to 
us: You can set the level of spending just about wherever you want. You 
can pass a law and be pretty sure spending will be where the law says 
it will be. You cannot set the level of income where you want. That is 
a function of the economy.
  If we look at the period which we all look back on with such great 
satisfaction--that is, the years in which we were in surplus--one of 
the major reasons we were in surplus was that the economy unexpectedly, 
according to the computers at CBO, produced far more revenue than CBO 
scored. This came as a result of the balanced budget agreement, the 
agreement entered into with the Republican Congress and the Democratic 
President after the 1996 election, an agreement that the Speaker of the 
House in 1995 tried to enforce with heavyhanded political methods and 
got himself in trouble in 1995. But

[[Page 3562]]

after the election, the leadership of the Senate and the House and the 
leadership in the White House with President Clinton sat down and we 
got the balanced budget agreement, the balanced budget proposals, and 
in that process the Congress insisted, the President resisted but 
finally agreed to cut the capital gains tax rate.
  The CBO scored the amount of revenue we would get from that tax cut. 
The actual revenue, I believe, was five times as great as CBO scored 
it. No one had anticipated the rivers of cash that would come in.
  Now, rivers of cash came in, in my view, because there was capital 
tied up in mature investments that wanted to find more entrepreneurial 
kinds of investment but believed that it could not move it--that is, 
the owners of capital believed they could not move it with the capital 
gains rate of 28 percent. When the capital gains rate came down to 20 
percent, they figured that was enough to allow moving the capital out 
of mature investments and into entrepreneurial investments and we saw 
Federal revenue go above 22 percent of gross domestic production, which 
I don't think has ever happened before.
  Now we are in a recession. There are no capital gains. The revenue 
has gone down into the teens in percentages of gross domestic 
production. The recovery, historically, can be depended upon to take 
care of that and the more the recovery persists, the more Federal 
revenue as a percentage of gross domestic production will rise.
  I thank the Senator for his courtesy and will not continue this 
dialog because I am intruding on the good will of others, but I 
appreciate the opportunity to have engaged in this exchange.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. I might say for my part I always enjoy visiting with the 
Senator from Utah and his questions. He thinks about these subjects in 
a very careful and disciplined way. I always enjoy these chances to 
have a serious discussion and a serious debate that is all too lacking 
in the Senate.
  Just momentarily, because I know the Senator from Nevada has a 
presentation he would like to make, and I know the Senator from 
Washington also has something, for the record I will provide the other 
side of the story with respect to something Senator Allard presented.
  Senator Allard was making the argument that those at the highest 
income levels are actually going to bear a greater proportion of the 
total tax bill going forward than they did before the tax cuts. The 
analysis we have seen by others reaches a different conclusion. Let me 
share that with my colleagues.
  This is done by the Tax Policy Center which is run jointly by the 
Urban Institute and the Brookings Institution. Their conclusion is 
those with very high incomes will be paying a smaller share of total 
taxes as a result of the Bush tax cuts.
  Let me give three examples. Those with taxable incomes above $1 
million who constitute 0.2 of a percent of taxpayers would pay 12 
percent of total taxes in 2006 without the Bush tax cuts. With the tax 
cuts, these same pairs will pay 11.2 percent of total taxes in that 
year. This includes not only income taxes but payroll taxes.
  Second example. Those with taxable incomes above $500,000, who 
constitute one half of 1 percent of taxpayers, would pay 17.4 percent 
of total taxes in 2006 without the Bush tax cuts. With the tax cuts, 
these same taxpayers will pay 16.4 percent of total taxes in that year.
  Finally, those with taxable incomes above $200,000, who constitute 
2.4 percent of taxpayers, would pay 30.7 percent of total taxes in 2006 
without the Bush tax cuts. However, with the tax cuts, these same 
taxpayers will pay 30.1 percent of total taxes in that year.
  The Senator from Colorado was arguing that those who are at the high 
incomes will pay more of total taxes as a result of the Bush tax cuts. 
This independent analysis by the Tax Policy Center reaches just the 
opposite conclusion. When you look at income taxes and payroll taxes, 
higher income people, those at $1 million, those at $500,000, those at 
$200,000, all will pay less than they would have paid without the tax 
cuts.
  Finally, looking at it in a different way, under the Bush income tax 
cuts, the top 20 percent of income earners got 68.7 percent of the 
benefit. More striking, the top 1 percent of income earners, those 
earning more than $337,000, got 33 percent of the benefit of the Bush 
tax cut. That is much more than any other income class.
  Finally, looking at 2006, how the tax benefits stack up, in that 
year, middle-income taxpayers, those who are right in the middle of the 
income stream, the 20 percent right in the middle, will receive an 
average tax cut of $566. Those with incomes over $1 million in 2006 
will get an average tax cut of $140,369. If these bars were actually 
proportionate, the bar representing the tax cuts received by those with 
over $1 million of income would have to be 35 feet tall. It would have 
to be 35 feet tall in order to compare proportionately with what the 
middle-income taxpayers will receive in that year.
  I thank my colleagues and yield the floor so the Senator from Nevada 
can speak.
  I ask the Senator, will you give us an idea how long you intend to 
speak?
  Mr. ENSIGN. Maybe 10 or 15 minutes.
  Mr. CONRAD. Ten or 15 minutes. And then for the information of our 
colleagues, I ask the Senator from Washington, how much time would she 
like?
  Mrs. MURRAY. Ten minutes.
  Mr. CONRAD. After that, we will then probably close down the shop. We 
do not have any other speakers on our side, I say to my colleague.
  The PRESIDING OFFICER (Mr. Crapo). The Senator from Nevada.
  Mr. ENSIGN. Mr. President, I want to make a couple of comments about 
the budget we have before us today.
  It was an interesting process, once again, in the Budget Committee 
last week. We had a lot of amendments that went pretty much down party 
lines. But one comment I will make about the Budget Committee that is 
maybe a little more encouraging this year is the rhetoric was not 
nearly as harsh. And that, in an election year, I think is something 
positive to take out of the whole discussion in the Budget Committee. 
While there were differences, I thought it was at a little higher level 
this year--my second year on the Budget Committee--than my first year. 
I thought there was a little less rancor and a little more agreeing to 
disagree type of attitude on the Budget Committee.
  There are differences between the two sides, and sometimes even 
within our own parties, as we look at making policy. The ranking member 
on the Budget Committee has made a lot of issues about deficits. I echo 
that. I think it is very important we get the looming deficits in the 
outyears under control because they are a huge threat to the long-term 
health of our economy.
  Having said that, there are reasons for deficits, and there are 
acceptable reasons for short periods of time to run deficits. The two 
biggest reasons would be being in a recession and having a war. 
Unfortunately for our country, those both hit at the same time.
  We had, obviously, the recession which started at the end of the 
Clinton administration and continued on into the early parts of the 
Bush administration. Then we had September 11 and the global war on 
terrorism. We had the huge costs for New York City, the huge cost to 
our economy 9/11 has had, as well as the cost in increased spending the 
global war on terrorism has had. Given all of that, it is 
understandable why we have a $500 billion deficit.
  Where I would disagree with my colleague, though, is what are we 
going to do with it now. How are we going to go into the future to get 
our hands around this deficit, to bring it down to an acceptable level? 
I think an acceptable level is to do what we were doing; and that is, 
to start paying down some of the long-term debt. With the baby boomers 
out there, we have to have a growing economy. We have to get some of 
this debt under control so we will be able to afford some of the things 
people want to be able to afford, as far as our Government spending is 
concerned.
  But we have to look at how do we go forward. What are our priorities? 
That

[[Page 3563]]

is what the budget we have before us attempts to set. We have more 
money for education. We have more money for veterans benefits. We have 
more money for the defense of our country. We wish we did not have to 
be spending all this extra money on the defense of our country, but 
that is the primary role for the Federal Government, according to the 
Constitution, to defend the United States of America. This budget 
reflects that primary role of the Federal Government.
  Having said that, I want to look at how we have gotten to the present 
deficit so we can have a document that takes us forward.
  This pie chart we have shows the various reasons why we have the 
deficit we have today. About 40 percent of it, shown on the yellow 
portion of the chart, the largest chunk, is because of the poor 
economy. Some of that can be blamed on September 11. Some of it is 
because of a downturn in the business cycle, and we are coming out of 
it. But the fact is, that is a big part of the reason we are in this 
deficit.
  Almost 40 percent--37 percent--comes in the red area on this graph, 
and that is because of new spending. That is everything from the war, 
education programs, veterans benefits, environmental programs, roads, 
everything you can think of. That is new spending. That is almost 37 
percent.
  The tax cuts have reduced revenues--out of a total of 100 percent of 
the reason for the deficit, it accounts for about 23 percent of the 
deficit.
  You can also make the argument, though, that the economy would be 
worse without the tax cuts. Therefore, the yellow-shaded portion, which 
is the 40 percent, would be even higher without the tax cuts. Because 
what the tax cuts did--and Alan Greenspan has testified to this--is 
they stimulated the economy so fewer people were on the unemployment 
rolls and more were working. That is the reason we have a lower 
unemployment rate today. That includes self-employed people. That is a 
big part of what people are doing. They are starting their own 
businesses.
  One of the big things we heard from a lot of States is their State 
budgets are in trouble. We saw a dramatic decline in the value of the 
stock market. The NASDAQ, toward the end of the Clinton administration, 
was tanking. Then we had September 11. All of that, with the bad 
economy, kind of combined and we saw huge losses in the stock market.
  Since the tax cuts we passed last year, we have had an increase 
between the New York Stock Exchange and the NASDAQ of $4.5 trillion in 
value. We would see an increase in tax revenues at this point except 
there are so many people who had losses from before when the stock 
market tanked that we do not have a huge amount of increased revenues. 
But the fact is, as the stock market continues to go up, we are now 
poised to start reaping the benefits in new revenues to the Federal 
Government from the stock markets and capital gains taxes.
  By the way, in the State of California, one of their biggest budget 
problems was the lack of capital gains taxes. The more the stock market 
goes up and the value of property goes up and the value of a lot of 
things goes up, the more State budgets are going to be helped, 
especially States that rely on revenue sources such as that, such as 
the State of California does.
  I wish we could get more of a handle on Federal spending. I believe 
it is out of control.
  I want to run through a few charts to show that when we were in 
surpluses, people got a pretty strong appetite. The ranking member on 
the Budget Committee talked about how we all have big appetites around 
here for spending. It is an easy way to get reelected, to keep giving 
that money out. It is hard for people to say no. When we were in those 
surpluses, the appetite increased. Federal spending went up fairly 
dramatically. You can argue for every one of these programs, it was 
justifiable. But we have to realize we got to this point.
  A couple of examples. These are simple examples. The Low Income Home 
Energy Assistance Program. You can see in the last several years how it 
had gone up. Then it went down for a few years. Now it has gone back 
up.
  For the Centers for Disease Control, there have been dramatic 
increases in the last several years. The increases started in about 
2000, and went forward pretty rapidly.
  The child nutrition programs, you can see, continued, but with a 
fairly good uptick in the last few years.
  The child care funding in around 2000 had a huge jump compared to 
what it was during the 1990s. It was fine when the economy was 
producing a lot of tax revenues.
  This is the National Institutes of Health. Their spending, as you can 
see, has had a very rapid rise.
  There are a lot of great programs, but the fact is, we have built a 
lot of spending into our budget now.
  As Ronald Reagan said--and I am paraphrasing him--he discovered, when 
trying to eliminate Federal programs or Federal spending: The closest 
thing to eternal life in Washington, DC, is a Federal program.
  That was a true statement back then and remains so today.
  Both sides of the aisle are going to have to come together and 
address the problem of Federal spending. The ranking member of the 
Budget Committee has argued that we need to start looking on the 
revenue side.
  I have a philosophical difference of opinion because I believe 
increasing tax rates takes away the incentive for businesses to invest. 
I remember when I was in business as a small busi-
nessperson, and I maybe wanted to do an expansion on my animal 
hospital. As a practicing veterinarian, if the Government was taking 
more money, I would have less money to be able to make that decision. 
Maybe I couldn't add that extra employee or I couldn't do the expansion 
to add on to my building. The more money I had in my pocket because the 
Government was taking less, the more money I could pump back into the 
economy by doing an expansion of the building or by hiring another 
employee. Even if I didn't hire an internal employee, doing an 
expansion obviously puts other people to work.
  That is why there is a philosophical difference between the two sides 
of the aisle on taxes and tax cuts. I want to put it in the hands of 
investors and entrepreneurs to stimulate the economy. It can be that 
low-income tax cuts, child tax credits, things such as that, help the 
economy because then those folks go out and spend money.
  The bottom line is, we have to have a strong economy and have tax 
revenues going up. We are not going to cut spending around here--we all 
know that--but at least slow the rate of growth down to the point where 
the tax revenues start outpacing what we are doing spending-wise so 
that we can start taking care of these deficits and eliminate them 
within a few short years.
  I am not a person who thinks that 7, 10, 12 years out is acceptable 
to have deficits where they take a dip down and then they start going 
back up. I believe we have to take it down as we did in the 1990s, take 
it all the way down to where we start actually paying off some of the 
long-term debt so that we leave our children and grandchildren with a 
smaller Federal debt than we currently have. If we don't, with the 
retirement of the baby boomers, our children and grandchildren will 
have to pay higher taxes.
  It is important we join together across party lines and work out the 
differences we can, understanding there are philosophical differences. 
The one place we both agree is that we need to hold the line on 
spending. We will have different priorities of where that spending is, 
but we need to hold the line on Federal spending, especially over the 
next couple of years until the economy starts becoming robust.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. Mr. President, I thank my colleague from Nevada. He is 
also a valuable member of the Budget Committee. I enjoy these 
discussions with him. He is thoughtful. We disagree, but we will have a 
chance to talk about some of those disagreements as we go through the 
debate.
  I am going to take a moment to talk about some of these issues now, 
but I

[[Page 3564]]

believe he does share a fundamental commitment to the notion that we 
have to get these deficits down. We may have some differences about how 
to do that. I believe we have to both restrain spending and work the 
revenue side of this equation. I don't think it is going to work 
without that.
  Let me start with a little different take on what has caused this 
dramatic flip in where we are with respect to deficits and what we 
earlier projected to be surpluses. We have had, for the period from 
2002 to 2011, a $9 trillion reversal. As we look at the causes, here is 
what we see. The tax cuts are 33 percent of the difference.
  The Senator from Nevada had a chart. I think it showed 23 percent. I 
don't quite know what the difference is, although I will bet in his 
chart he did not include the additional debt service as a result of the 
tax cuts. My recollection is it was 23 percent in his chart. We may 
also have a different timeframe.
  Our analysis from 2002 to 2011 is that 33 percent of the 
disappearance of the surplus was from tax cuts. The second biggest 
reason was technical changes, primarily lower revenues--lower revenues 
that were not caused by the tax cuts; lower revenues that were because 
the projections were overly optimistic.
  The third biggest reason was other legislation. It is spending. Most 
of the spending went to increased defense spending, increased homeland 
security spending, and the response to the 9/11 attack, rebuilding New 
York, the airline bailout, and the rest. Only 8 percent of the 
disappearance of the surplus for the years 2002 to 2011 is the result 
of the economic downturn. In our analysis, the biggest reason for the 
disappearance, the biggest single reason, is the tax cuts.
  I am much less concerned about the tax cuts in the short term. I 
think all of us know you have to run deficits in the short term with an 
economic downturn, with the attack. It is the longer term policy of 
continuing to run these deficits that is truly dangerous and reckless.
  When we look at where the increase in spending occurred, we can see 
that 91 percent of it is in these three areas: The increase in defense 
spending, which is by far the biggest, the increase in homeland 
security, and the response to the attack.
  Here is what has happened to the debt under the President's plan. The 
debt is taking off like a scalded cat; again, right before the baby 
boomers retire. The problem I see with the budget the President has put 
before us is there is no real progress on reducing the increases in the 
debt. The President says he is going to cut the deficit in half, but 
that is only because he leaves out whole areas of expenditures. But if 
you look at increases in the debt, what you see is quite a different 
picture. The debt keeps getting increased under the President's plan by 
$600 billion a year, each and every year, for as far as the eye can 
see. At the end of the budget period it is increasing by $700 billion.
  The Senator from Nevada says we have to get back to reducing the 
deficit so we stop accumulating debt and so we are in a position to 
start paying down debt. That isn't where the President's plan takes us.
  This is from the President's own budget document.
  What it shows is record deficits, the biggest deficits in dollar 
terms we have ever had, a slight improvement in terms of the so-called 
unified deficit where all the funds are jackpotted, Social Security 
money is used to pay for tax cuts and other expenditures. But then look 
what happens. As the baby boomers retire and the President's tax cuts 
explode in cost, we are taken right over the cliff. That is the problem 
with the President's plan. It doesn't add up in the long term. It does 
not add up in the short term, and it takes us in a very reckless 
direction, one in which we will not be able to meet the long-term 
obligations of the country.
  With that, I yield the floor and thank the Senator from Washington 
for being here this evening and for her invaluable contributions to the 
deliberations of the Budget Committee.
  The PRESIDING OFFICER. The Senator from Washington is recognized.
  Mrs. MURRAY. Mr. President, I thank my colleague for his tremendous 
leadership on the Budget Committee over the years and for his 
leadership in making sure we do the right thing in terms of deficits 
and also investments for this country.
  I have served on the Budget Committee for the past 11 years, through 
recessions and economic expansions and during periods of surplus and 
periods of deficit. I know what responsible budgets look like because I 
have worked with chairmen from both parties.
  I believe this Republican budget doesn't do what we must do to create 
jobs, improve our security, and to meet our country's needs. I think we 
can do better. That is why I am speaking out on the floor this evening. 
It is why I offered amendments in committee last week, and it is why I 
will be offering amendments on the floor this week.
  Mr. President, this is a critical time for our country, and we need a 
Federal budget that meets our needs. We are facing many challenges 
today, from supporting our soldiers in Iraq and Afghanistan, to 
improving our security at home, to recovering all the jobs that we have 
lost, and addressing the growing deficit.
  This budget resolution should help us meet those challenges, but 
instead it offers the wrong priorities. It favors tax cuts over our 
Nation's security. It favors boardrooms over classrooms. It favors 
deficits over job creation. Frankly, this budget offers too little help 
for families in my State of Washington. My State still has the fourth 
highest unemployment in the Nation. This budget does not give families 
in my State the support they deserve as they work to turn our economy 
around and build for the future.
  The people of Washington deserve a real Federal commitment because 
they work to create jobs and provide health care and improve our 
security and transportation. On the issues important in my State, this 
budget comes up short. I am particularly disappointed that the 
President's budget doesn't fulfill the Federal commitment to secure our 
ports, care for our veterans, to invest in education, to improve health 
care, or to provide the infrastructure we need to move our communities 
forward.
  Not only is this budget bad for Washington State, but it is also bad 
for our country's economic future, lining up massive deficits for years 
to come. I hear many in the majority speak of the need for ``fiscal 
discipline,'' but the rhetoric in this budget doesn't meet the reality. 
This budget continues the fiscal policies that have put our Nation's 
priorities in jeopardy.
  Two weeks ago, Americans learned that the majority's policies are 
threatening America's retirement security in order to pay for their own 
irresponsible fiscal policies. Rather than backing away from a 
misguided economic policy that has cost us millions of jobs, the 
administration now appears ready to cut Social Security benefits for 
millions of hard-working Americans. I am not willing to tell the people 
of my State that they must suffer because of the fiscal mistakes of 
this administration or this majority in the Congress.
  I want to turn to a few of my top concerns with this budget: port 
security, veterans, education, health care, and transportation.
  In Washington State, we depend on our ports. One in 4 Washington jobs 
rely on international trade, and our ports are critical economic 
engines. Unfortunately, as we all know, in today's world, America's 
ports are vulnerable. A terrorist attack launched on or through our 
ports could bring our commerce to a standstill, threatening lives and 
jobs and really our economic future. We have an obligation to improve 
the security of our ports.
  Unfortunately, this budget tells our communities that the Federal 
Government will not be a full partner in port security. This budget 
literally sticks our local ports and communities with unfunded mandates 
at a time when local and State budgets are already stretched incredibly 
thin.
  The President's budget undermines port security in 4 ways:
  First of all, it eliminates Operation Safe Commerce.

[[Page 3565]]

  Second, it underfunds the Maritime Transportation Security Act by 93 
percent.
  Third, it doesn't provide the Coast Guard with the funding it needs 
to meet its growing missions.
  Finally, the President's budget cuts port security grants by 63 
percent.
  Last week in the Budget Committee markup, I offered an amendment to 
stop the President's cut to port security grants. My amendment failed 
on a party-line vote. This fight is not over. I will continue to push 
this White House to pay its share of port security instead of passing 
those bills on to our local communities.
  Mr. President, this budget also shortchanges our veterans. Washington 
State is home to more than 670,000 veterans today. They rely on 
services they were promised when they signed up for service to our 
country. But the President's budget is $2.6 billion below the 
independent budget recommendation for the VA.
  The VFW, in fact, called the President's budget ``harmful to 
veterans.'' The Disabled American Veterans called it ``utterly 
disgraceful.''
  This is the wrong message to send at a time when the next generation 
of combat veterans is today risking their lives in Iraq and 
Afghanistan.
  Last week, I offered an amendment in the Budget Committee to increase 
the VA construction account by $400 million. Last year, Congress 
authorized the VA to take money out of its health care budget for these 
construction projects that will begin in this fiscal year. Unless we 
can increase that construction account, our veterans are going to face 
a $400 million cut in their health care services.
  The amendment I offered in committee would have protected our 
veterans from that cut. Unfortunately, the veterans amendment was 
defeated in the committee on a party-line vote.
  Our American veterans deserve better, and I will keep fighting for 
them.
  Let me talk about education. I really believe this budget fails, as 
we all know, to provide the funding that was promised in the No Child 
Left Behind Act. This Republican budget comes up $8.6 billion short of 
what our local schools need to fully fund No Child Left Behind. I 
represent nearly 28,000 Washington State students who will be denied 
title I services this year under the President's budget request.
  The President's budget falls $84 million short of the title I funding 
that was promised to my State under the No Child Left Behind Act.
  The President's budget also freezes funding for impact aid, dropout 
prevention, school counseling, afterschool programs, teacher quality, 
migrant education, and rural education.
  How can we expect our students and teachers to succeed when we fail 
to provide them with the resources they need? That is why I offered an 
amendment to provide $8.6 billion to help our local schools implement 
the No Child Left Behind Act.
  Once again, in committee my amendment failed on a party-line vote. We 
cannot expect our schools to do everything we required of them under 
the No Child Left Behind Act without the support we promised to them.
  Let me talk about health care. I believe this budget also seriously 
jeopardizes health care for many in my home State of Washington. This 
budget could jeopardize critical support for community health centers, 
the community access program, NIH, and the CDC.
  This budget also reduces our commitment to Medicaid. That is a 
program we should be expanding and strengthening to address the rising 
number of uninsured and increasing costs of health care.
  Today, Washington State is struggling to keep its commitment to low-
income children through the Medicaid and CHIP programs. Medicaid cuts 
could result in another 74,000 uninsured individuals in my home State 
alone. We need more help from the Federal Government and, frankly, this 
budget falls short.
  Finally, let me say a word about transportation. Less than a month 
ago, this Senate passed a strong, bipartisan bill to invest in our 
Federal highways, transit, and transportation safety programs for the 
next 6 years. Unfortunately, despite the overwhelming support of the 
Senate, the budget that we see now before us today cuts $62 billion for 
investment in our surface transportation needs. That is about jobs and 
about economic growth.
  It is estimated that for every $1 billion we spend on transportation 
infrastructure, we create over 47,000 good paying family wage jobs.
  We know that investing in our transportation priorities today will 
help us not only improve our quality of life but will provide for our 
future economic growth. If this Congress truly cares about investing in 
jobs, we will provide the funding agreed to by the Senate less than 1 
month ago today.
  As I see it, as this budget is written today, it fails our families 
in areas such as security, veterans, education, health care, and 
transportation. I am hopeful that we can improve this resolution 
through the amendment process this week and really create a budget that 
makes the right investments, that is fiscally responsible, and reflects 
the priorities of working families across this country.
  I look forward to working with my colleagues throughout this week to 
address those issues.
  I thank the Chair, and I thank the Senator from North Dakota for his 
work. I see the chairman of the Budget Committee. I know this is the 
last budget he will shepherd through the Congress. I thank him for his 
commitment to our country as well.
  The PRESIDING OFFICER. Who yields time? The Democratic leader.
  Mr. DASCHLE. Mr. President, I wish to speak to the budget resolution 
for a couple minutes, if I can. I know we are getting closer to the end 
of the day. This budget, obviously, maps out this Nation's fiscal 
present and future in great detail, but this budget, as all budgets, is 
more than about numbers. It is about choices. The choices we make in a 
budget tell us who we are and what we value as a nation.
  Unfortunately, the budget resolution brought to the floor by our 
Republican colleagues, like the budget proposed by President Bush last 
month, makes the wrong choices, sets the wrong priorities, and fails to 
prepare our Nation for the challenges we will face in the future.
  Since President Bush took office, 3 million private sector jobs have 
been lost. Today, 8.2 million Americans are out of work, and the number 
of long-term unemployed is at the highest point in 20 years. But even 
with so many Americans looking for work, the Republican budget fails to 
provide a strategy for creating new jobs.
  Nearly 60,000 veterans are on waiting lists for care at veterans 
hospitals. When our troops fighting in Iraq and Afghanistan return 
home, the lines could get even longer. But despite the extraordinary 
sacrifices our soldiers have made for us, the Republican budget offers 
veterans only longer waits and higher fees.
  School districts across the country are facing an early end to 
classes because they do not have the resources to offer students a full 
year of learning. Despite the strain on local school budgets and the 
promises the President made in the No Child Left Behind Act, the 
Republican budget falls $9.4 billion short of their commitment and 
leaves millions of children behind in the process.
  Al-Qaida and other terrorist groups are still plotting against 
Americans and still capable of carrying out catastrophic attacks on 
American soil. Despite CIA Director Tenet's warnings of continuing 
threats, the Republican budget fails to provide our first responders 
and port officials the resources they need to make us more secure.
  Our Nation is at war, our economy is flagging, our schools are 
struggling, and our Government is facing record deficits as far as the 
eye can see. Despite the tremendous challenge our Nation faces, this 
budget inexplicably proposes a staggering $1.3 trillion in new tax 
breaks primarily for those at the very top.
  When President Bush took office, he inherited record surpluses that 
ensured a rock solid fiscal foundation for a generation to come. But in 
3 years, due to

[[Page 3566]]

these reckless policies and irresponsible choices, this administration 
has steered our country toward an unprecedented fiscal meltdown. Rather 
than try to repair the damage caused by these policies, this budget 
continues these policies and digs an even deeper hole.
  This is not an accident. It is becoming increasingly clear that 
supporters of these policies have pursued them knowing that--some would 
say hoping--the record deficits would unravel the Nation's retirement 
security net.
  Three years ago, the administration and Republicans tried to 
obfuscate this fact with budget gimmickry. During the 2000 campaign and 
numerous times since then, the President assured us that under his 
watch none of the Social Security surplus would be used to fund other 
spending initiatives or tax relief. But late last month, Federal 
Chairman Alan Greenspan blew the cover off this budget strategy. He, 
too, said, in 2001, that the President's tax breaks would not endanger 
Social Security, but now that the deficits caused by the tax breaks are 
unmistakable, Chairman Greenspan and the Republican leadership say it 
is Social Security that must be cut rather than the tax cuts that drove 
us into deficits in the first place.
  In the face of the unending flow of red ink, President Bush publicly 
shifted his position as well. When asked his opinion of Chairman 
Greenspan's comments, President Bush responded:

       My position on Social Security benefits is this: Those 
     benefits should not be changed for people at or near 
     retirement.

  The President appears to be indicating that cutting Social Security 
benefits for the coming generation of retirees, including the baby boom 
generation, is an option he is prepared to take. The choice many of our 
colleagues are making is now apparent for all of us to see. They are 
choosing tax breaks for the wealthy elite over a strong Social Security 
system upon which every American can depend.
  Democrats have a different set of priorities. In the course of the 
coming debate, we plan to offer a series of amendments aimed to repair 
our fiscal problems, keep the promises made to our seniors and 
veterans, and prepare our country for the challenges of the future. 
Each amendment will fix a glaring weakness in the Republican budget, 
and each will be fully paid for. In fact, most will actually reduce 
deficits that the budgets have created.
  First, we will offer an amendment to strengthen Social Security. As I 
noted earlier, when President Bush was elected, he promised not to 
touch the trust fund. The administration flip-flopped on that promise, 
and in the last 3 years has taken $550 billion from Social Security to 
pay for the tax breaks. But they are not done yet. According to the 
Congressional Budget Office, the Republican budget spends every penny 
of the 10-year $2.4 trillion Social Security surplus on tax cuts and 
other Government programs. In other words, in 3 short years, the 
Republicans have gone from promising not to touch a penny of the Social 
Security surplus to proposing that we spend all $2.4 trillion to fund 
their tax breaks and other Government spending.
  We believe the Social Security system represents a solemn promise to 
our seniors, and we will propose an amendment that protects Social 
Security for generations to come.
  Second, we will offer an amendment to help end the jobs crisis and 
get more Americans back to work. On average, more than 80,000 private 
sector jobs have been lost each and every month since this President 
took office. The manufacturing sector alone has lost 2.8 million jobs. 
We will offer an amendment that encourages the creation of American 
jobs, discourages shipping American jobs overseas, and provides 
dislocated workers the assistance they need.
  Third, we will offer an amendment to provide the resources necessary 
to ensure that our veterans receive the care and treatment they 
deserve. According to CBO, the President's request is $257 billion 
below last year's level when adjusted for inflation. With 60,000 
veterans already on waiting lists for health care and tens of thousands 
of military personnel scheduled to return home from Iraq and 
Afghanistan as the newest generation of veterans, this underfunding 
will only increase an already unacceptable backlog.
  Moreover, just as the administration last year, the budget also 
contains policies--higher fees and copayments--that will drive 800,000 
individuals out of the system and make those who choose to stay pay 
more. When our soldiers in uniform come home from Iraq and Afghanistan, 
they will deserve a parade, and they will get it. But our obligation to 
our veterans does not end with the parade. Our amendment will give all 
Members of the Senate an opportunity to demonstrate their recognition 
of and appreciation for all these veterans have done for our country.
  Fourth, Democrats will offer an amendment to fully fund the Leave No 
Child Behind law. This law offered schools a deal. It said, if you hold 
your students to higher standards, we will guarantee you the funding to 
meet those standards. Schools are holding up their end of the bargain, 
but the President has reneged.
  In the years since the bill was passed, President Bush has failed to 
request the funding he committed in this legislation. This year, the 
President's budget request is $9.4 billion short. The Democratic 
amendment will keep the promise we made to our children. This budget is 
a portrait of broken promises, bad choices, and misplaced priorities.
  At a time when it is critical that we begin to regain a firm fiscal 
footing, this budget drives us even deeper in the hole. The White House 
and Republican leadership have chosen to continue their reckless fiscal 
policy all in the name of providing massive tax breaks to the 
privileged few and giveaways to special interests. As a result, their 
budget fails our veterans, our seniors, our children, and millions of 
Americans who are looking for work. We could do better. We must.
  Our Nation has the resources to fulfill our promises to seniors, our 
veterans, and our schools. We need to make responsible choices. We need 
to honor the promises we have made. Our budget should reflect the 
priorities and choices of the American people. Democrats are ready to 
make sure it does.
  I yield the floor, and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. NICKLES. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. NICKLES. Mr. President, I think we are coming closer to 
concluding the debate tonight. I urge our colleagues to be aware of the 
fact that this is going to be a busy week. I want to make a couple of 
comments. I have heard two or three of our speakers say this budget 
shortchanges veterans and education.
  I will throw out a few facts about what this resolution does. 
Sometimes people say they are referring to the President's budget, or 
they are referring to something they read in the paper. I will just 
throw out a few facts. The total amount of money we anticipate spending 
in education, mandatory and discretionary, is $68 billion. That is a 9-
percent increase over last year, mandatory and discretionary combined. 
People are acting as if there were significant cuts.
  I also refer back to what we were spending in the year 2000. Today, 
it is at $97 billion. So it has almost doubled since the year 2000, and 
yet we hear a lot of people saying we are cutting education like crazy. 
Education has grown, and grown dramatically in the last few years. 
Those are just a couple of the facts. That includes mandatory and 
discretionary.
  On the discretionary side, we are anticipating a little over $3 
billion increase between 2004 and 2005. That is in the resolution, and 
people should know that.
  I have also heard some comments on veterans. I will restate the 
facts. What we are assuming in our resolution is an increase of 14.3 
percent for veterans, mandatory and discretionary, between 2004 and 
2005. That is a big increase.

[[Page 3567]]

Keep in mind, both in education and nondefense we are assuming very 
close to a freeze, but we are assuming a big increase for veterans, 
primarily on the mandatory side.
  Congress did a lot of things last year to increase payments to 
veterans, including current receipts. So when we add all of these 
things together on the discretionary side, we are assuming over a $1.4 
billion increase, most all of that for medical care. Again, medical 
care has risen dramatically over the last several years. We are looking 
at programs that have been expanding dramatically. Let me mention a few 
figures.
  In the year 1990, on the discretionary side for veterans, we spent 
$13 billion. In the year 2000, 10 years later, we spent $20 billion. 
Today we are forecasting $30.5 billion. So it took 10 years, from 1990 
to the year 2000, for discretionary spending for veterans to go up $7.9 
billion. Now, from the year 2000 to the year 2005, 5 years, it has gone 
up another 50 percent.
  People say you are shortchanging veterans. Maybe no matter what 
figure we had in the budget there would be those same complaints. 
Veterans, if you add discretionary and mandatory, we have a 14.3-
percent increase, if you add the two. Combined, discretionary and 
mandatory, $61.45 billion to $70.2 billion, there is a 14.3-percent 
increase. Yet I have heard three or four speakers saying we are 
shortchanging veterans.
  I heard one speaker a moment ago say, yes, there are going to be new 
fees. The budget we have before us did not assume there will be new 
fees. The President did recommend a proposal increasing the 
prescription drug copay on priority levels 7 and 8, from $7 to $15. 
Those are mostly nonservice-connected disabled and high-income 
veterans. I think a very good argument can be made they should have a 
higher copay. That is not assumed in our budget.
  We also did not include the proposal to establish a $250 deductible, 
again on levels 7 and 8 nonservice-connected disabled and high-income 
veterans.
  Those two proposals were not included; yet I have heard two or three 
speakers already allude to them, so I thought we should point that out.
  We have significant increases for both education and for veterans. I 
urge our colleagues to become aware of that before they say they are 
going to offer amendments to increase funding because we are 
shortchanging education or shortchanging veterans. I think we are fair. 
Given the amount of deficit we have, I think we have very generous 
increases in both functions, and I urge our colleagues to look at that 
before they say, no matter what that figure is, they are going to be 
voting for more money. I think that would be a mistake.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. NICKLES. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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