[Congressional Record (Bound Edition), Volume 151 (2005), Part 22]
[Senate]
[Pages 30489-30499]
[From the U.S. Government Publishing Office, www.gpo.gov]




            DEFICIT REDUCTION ACT OF 2005--CONFERENCE REPORT

  The PRESIDING OFFICER. The clerk will report the conference report.
  The assistant legislative clerk read as follows:

       The Committee of Conference on the disagreeing votes of the 
     two Houses on the amendments of the House to the bill (S. 
     1932), to provide for reconciliation pursuant to section 
     202(a) of the concurrent resolution on the budget for fiscal 
     year 2006 (H. Con. Res. 95), having met, have agreed that the 
     Senate recede from its disagreement to the amendment of the 
     House, and agree to the same with an amendment, and the House 
     agree to the same, signed by a majority of the conferees on 
     the part of both Houses.

  The PRESIDING OFFICER. The Senate will proceed to the consideration 
of the conference report.
  (The conference report is printed in the proceedings of the House in 
the Record of Sunday, December 18, 2005.
  The PRESIDING OFFICER. Who yields time?
  The Senator from New Hampshire.
  Mr. GREGG. Mr. President, we are now on the deficit reduction 
conference report. We have 10 hours of debate, 5 hours equally divided. 
I know my colleague from North Dakota wants to speak tonight.
  Just for the edification of our membership, we will run some time off 
the clock tonight--I think about 2 hours--and then come back tomorrow 
and continue the debate and hopefully wrap this up tomorrow.
  This bill is a culmination of a lot of work done in the Congress, by 
the President, and by the Members of the Republican Party, to try to 
put some discipline into the fiscal accounts of the Federal Government. 
This bill represents the first time in 8 years that the Federal 
Government has attempted to control the rate of growth in entitlement 
spending. People who watch this debate understand this issue, but just 
to frame it again, Federal Government spending is divided into 
basically three different areas.
  There is interest on debt, which we have virtually no control over.
  There is the discretionary spending, otherwise known as the 
appropriations process, which means every year we spend a certain 
amount of money. It is really up to us how much we spend, and it is for 
specific programs. The majority of it goes to the defense spending, but 
other money goes to education, it goes to environmental issues, it goes 
to highways--things for which every year we appropriate, saying we are 
going to spend this much. We can change that number arbitrarily from 
year to year, and we do.
  The third element of Federal spending is called mandatory entitlement 
spending. This spending occurs as a matter of law because certain 
people have come to certain situations in their life which allows them 
to receive a benefit from the Federal Government. They may be veterans 
who have served us well; they, therefore, get benefits. They may be 
persons of low income who need assistance, especially a child in a low-
income family who needs assistance. They may be a retired citizen who 
paid into Social Security, who

[[Page 30490]]

gets health care under Medicare, or a low-income person who gets health 
care under Medicaid, especially nursing care. These are entitlements. 
They make up the vast majority of Federal spending. Discretionary 
spending only makes up 30 percent of the Federal accounts, and half of 
that is defense spending.
  Entitlements are also the fastest growing part of the Federal 
Government. We know because the baby boom generation is going to 
retire, and spending on entitlements, specifically on Social Security, 
Medicare, Medicaid, the health care accounts especially, is going to 
increase radically over the next generation's 30 years as the baby boom 
generation begins to retire. It is estimated today by the Comptroller 
General that there is a $44 trillion--that is trillion dollars with a 
``T''--$44 trillion unfunded liability, which means we don't know how 
we are going to pay for it. The obligation is in place already for the 
cost, primarily for health care programs for retired people who are 
going to be the baby boom generation.
  The practical effect of having that high an obligation out there and 
unpaid for is our children are going to have to pay the price. The 
practical effect of that is our children and our children's children, 
these wonderful young people who work here as pages, when they become 
earners and have kids of their own are going to have to pay so much to 
pay for programs which are already on the books to support our 
generation, the baby boom generation, they are essentially not going to 
be able to have as high a quality of life as we have. They are not 
going to be as comfortable in sending their kids to college, buying a 
car, buying a home, or just doing the day-to-day activities of life 
because they are going to have to pay a huge tax burden for our 
generation, unless we do something about it.
  That is what this bill is about. For the first time in 8 years, the 
Federal Government has stepped up and said: We are going try to do 
something--the Republican side of the aisle--about this huge burden we 
are going to put on our children through entitlement accounts by 
addressing those accounts. We have been aggressive on the discretionary 
side. We have essentially frozen nondiscretionary spending, but on the 
entitlement side it continues to grow at a dramatic rate. This bill is 
a step, really more than a toe, but putting our whole foot up to our 
ankle in the water of trying to control entitlement spending, mandatory 
spending. It amounts to almost $40 billion in savings in Federal 
spending.
  If this bill passes, it will reduce the debt of the Federal 
Government which will be passed on to our children by $40 billion. That 
is a big number. It is a big number in New Hampshire, and I know it is 
a big number in the State of every Member of this Senate. In the 
context of overall Federal spending, regrettably it is not as big a 
number as I would like, but it is still a big step forward on the road 
toward fiscal responsibility, and it is the first attempt to do this in 
8 years. And this is an important point to stress. This is the only 
opportunity any Member of this Senate is going to have in this session 
of this Congress to try to control spending, to try to reduce the debt 
of the Federal Government.
  We are going to hear a lot of talk from the other side saying: Well, 
you have a tax relief bill out there which is being reconciled, and it 
is twice the size of the spending restraint here. The tax bill isn't 
being voted on tonight or tomorrow; the deficit reduction bill is being 
voted on tonight or tomorrow. If you want to reduce the deficit, if you 
want to reduce the debt of the Federal Government, reduce the costs 
that will be passed on to our children and our children's children, 
this is your opportunity to do it. If you want to vote against the tax 
relief bill, go ahead.
  I note as an aside that the tax relief bill has as its major function 
commitments to programs which I think have vast support across this 
Congress. In fact, I have heard other Members on the other side of the 
aisle say: Why aren't we passing a patch to the AMT so 20 million 
people do not fall under the alternative minimum tax? That is $30 
billion of the tax bill. Why aren't we extending the deductibility of 
State and local sales taxes? That is a big chunk of the tax bill. Why 
aren't we extending the R&D tax credit, which causes us to create jobs 
in this country by giving entrepreneurs an incentive to go out and 
invest in R&D?
  We are hearing that from the other side of the aisle. The majority of 
the items in the tax relief package of $70 billion are items which have 
very broad support in this Congress--Democratic and Republican support. 
So it is a bit of a straw dog--in fact, it is a very large straw dog, 
maybe a Newfoundland straw dog--to claim that extension of the tax bill 
for some reason, the majority of which is supported on both sides the 
aisle, is somehow reducing the effort on the deficit in this bill.
  The two don't have that much relationship, and furthermore the tax 
bill already has broad support on the main elements of it. The only 
ones at issue are dividends and capital gains, which do not even impact 
this year or next year because that part of the tax relief package 
doesn't kick in until 2009 or 2010.
  This is it, folks. It is your one chance as Members of Congress, as 
Members of the Senate, to actually do something about the debt we are 
going to pass on to our children. You have an opportunity to reduce 
that debt by almost $40 billion.
  In addition, I would note, there is a net number, the $40 billion.
  There are initiatives in this bill which are fully paid for which 
make a lot of sense and which are pretty good policy. We decided to put 
them in after we had saved money to pay for them.
  For example, the Pell Grant Program is expanded dramatically to low-
income kids. This is a program to encourage low-income children who are 
especially interested in math and science to be successful in our 
schools. We know it is the seed corn for our productivity and our 
competitiveness as a Nation to promote math and science skills.
  There is an expansion of Medicaid to low-income children. About 1 
million--over 1 million--needy kids today who are low income, who do 
not have health coverage will get health coverage.
  There are efforts in this bill to assist the people in the gulf 
coast, significant efforts. It would be very hard, I would think, if I 
were from the gulf coast to vote against this bill because there is a 
tremendous amount of funds being focused on the gulf coast, to address 
the needs of the gulf coast in the area of education and in the area of 
Medicaid. Literally billions of dollars, all paid for.
  In addition, there is money for LIHEAP, $1 billion. Those from cold 
regions of the country know because of the runup in the price of gas 
and oil it will be very hard for a number of low-income families to 
make it through the winter. They will have to make some tough choices. 
We want to fund the low-income energy assistance program. This bill 
does it; it pays for it with spending reductions.
  In addition, there is significant and positive welfare reform 
language which the Governors are asking for, bipartisan governorship is 
asking for, as well as Medicaid reform language--again, with 
bipartisan, strong support from the Governors--giving the Governors 
more flexibility and allowing them to deliver more service to more low-
income people at less cost.
  This bill has a lot of good policy in it as well as saving $40 
billion. It is the first and only opportunity--not the first 
opportunity because we voted on it a few times--the last opportunity to 
cast a vote to save $40 billion and not pass the debt on to our 
children.
  It is a positive bill. I hope my colleagues will support it.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. Mr. President, I thank the chairman for his spirited 
defense of this package. He is quite right. There are elements of this 
package that are positive. There are elements of this package that at 
some point we will adopt. Perhaps we will adopt them this year.
  The chairman has left out certain chapters in the book of 
reconciliation.

[[Page 30491]]

Reconciliation was part of this year's budget process. There are three 
chapters in the book. The first chapter is the spending cuts that have 
now come back from the conference report, deliberations between the 
House and the Senate, that cut spending $40 billion over 5 years. That 
is $8 billion a year when the budget is $2.5 trillion. If my math is 
right, that is one three-hundred-fiftieth of the spending for a year.
  But what is left out of the chairman's presentation is the other 
chapters of the book. Chapter No. 2 is the tax cuts. He is quite right, 
they are not before the Senate today, but they are coming. They are 
part of this package. They are part of this book. They are the second 
chapter. The second chapter cuts $70 billion of taxes. Put the two 
together, a $40 billion spending cut and a $70 billion tax cut, and 
guess what. You have increased the deficit, not reduced it.
  This is all part of a package. It is part of the budget process, 
three chapters that one has to read to reach a conclusion on the 
meaning of the book. The third chapter is the one they really do not 
want you to read. The third chapter increases the debt of the country 
by $781 billion. That is the third chapter. We do not hear them talk 
about that chapter at all. There is a reason for that.
  If we go back and look at what the President has said--in 2001, when 
we enacted his economic program, he said:

       [W]e can proceed with tax relief without fear of budget 
     deficits, even if the economy softens.

  Mr. SARBANES. Will the Senator yield?
  Mr. CONRAD. I am happy to yield.
  Mr. SARBANES. That was in March of 2001. At that time, wasn't the 
Federal budget running a surplus?
  Mr. CONRAD. The Senator is exactly right. The Senator from Maryland, 
a valued member of the Senate Committee on the Budget, remembers very 
well the budget was in surplus. In fact, we had a projection from the 
administration that we were going to have almost $6 trillion of 
surplus.
  Mr. SARBANES. So at the time we were running this surplus--and let me 
just note, it had taken a lot of work to get out of an earlier deficit 
into surplus--and there was some concern expressed that the excessive 
tax cuts the President was proposing would throw us into a budget 
deficit and we would lose that surplus, the President told us in no 
uncertain terms that there was no reason to fear budget deficits; is 
that correct?
  Mr. CONRAD. The Senator is exactly correct. The President told us 
there was no concern about the possibility of budget deficits. In fact, 
the Senator may recall this chart provided by the Congressional Budget 
Office and the Office of Management and Budget of the President that 
said this was the range of possible outcomes going forward with the 
fiscal affairs of the country. They adopted the midpoint of this range 
of possible outcomes showing very dramatic surpluses, all above the 
line, dramatic surpluses throughout this entire period coming to 2005.
  Look what actually happened. At that time, the worse case scenario 
was this bottom line. We can see for the most part it was all in 
surplus territory. This is what they said was the best case scenario. 
They adopted the middle of the range of possible outcomes.
  I can remember very well our Republican friends saying to me: Don't 
you understand, Senator, it will be way above this midrange because the 
tax cuts will generate greater economic activity and more revenue.
  Now we can look back and test that theory and see what happened in 
the real world. Here is what happened in the real world: This red line, 
it is far below the worst case estimate of what might happen. In fact, 
it represents massive deficits, the biggest in our history. That is 
what really happened.
  Then the President said the next year, in the State of the Union 
Address:

     . . . Our budget will run a deficit that will be small and 
     short-term . . .

  That was after saying there would not be any deficits. That proved to 
be wrong.
  Mr. SARBANES. Will the Senator yield?
  Mr. CONRAD. I am happy to yield.
  Mr. SARBANES. So the previous year the President was saying there 
would be no deficit, and a year later, in the face of what obviously 
would be a deficit, he said, well, it will be a small and short-term 
deficit.
  Mr. CONRAD. That is exactly what he stated in 2002, small and short-
term deficit. Now we are able to check that record.
  He made that claim in 2002, the first year we were into deficit, 
after running surpluses in the years leading up to that.
  In 2001, the first year he was in office, the budget from the 
previous administration had a surplus. The next year, after his 
policies were adopted, we plunged into deficit. Then he told us that 
year the deficits were small and short term.
  The chart shows what has happened. The next year the deficit got much 
worse. In 2003, it was approaching $400 billion. In 2004, the deficits 
actually exceeded $400 billion. This year, the deficit is over $300 
billion. Of course, much of the Katrina costs have not been included in 
this year's deficit because it will be coming next year.
  It is very interesting, the President was wrong about saying no 
deficits. We saw that in 2002. So in 2002 he said they will be small 
and short term. He was wrong again. Instead of small and short term, 
they are large and long lasting; in fact, the biggest deficits we have 
ever had in the history of the country.
  Mr. SARBANES. Will the Senator yield for a question?
  Mr. CONRAD. Yes.
  Mr. SARBANES. In 4 years, after the President said there would be no 
deficits, we have incurred deficits of, according to my quick 
calculation, over $1.2 trillion; is that correct?
  Mr. CONRAD. The Senator is correct.
  If you go to the next step, what we have is a situation that is more 
serious even than that. The deficit does not capture the increases in 
the debt. The deficit last year was $319 billion. I say ``last year'' 
because we are now in Federal fiscal year 2006. That started October 1. 
So the 2005 deficit ending the end of September, the year ending the 
end of September, was $319 billion. But here is how much got added to 
the debt: not $319 billion but $551 billion. All of it has to be paid 
back.
  Of course, as the Senator knows, the big difference between the two 
calculations--the deficit and what got added to the debt--the biggest 
difference is the money being taken from Social Security to pay other 
bills.
  Last year, the last Federal fiscal year, $173 billion of Social 
Security money was taken to pay for other things. The result is, when 
you add that with the deficit and other trust funds that are being 
raided--another $59 billion--what got added to the debt was really $551 
billion.
  If we look back on the relationship between spending and revenue 
expressed as a share of gross domestic product--and we do it in that 
way because economists tell us that is the best way to make these 
comparisons--the red line on this chart is the spending line. You can 
see, the spending had come down substantially until we reached the year 
2000. Spending had come down each and every year of the Clinton 
administration as a share of gross domestic product. Now we have had a 
substantial uptick because of defense costs and homeland security, 
rebuilding New York.
  But look at the revenue line. The revenue line, which was at a peak 
when the President came into office--he said this was a record high. He 
was right--but look at how the revenue plunged with the President's 
policies. Most of this is tax cuts. And the other, of course, is 
economic slowdown. The result is, we have opened up a chasm between the 
revenue line of the United States and the spending line. We see that 
gap going forward, and really at the worst possible time because this 
is before the baby boomers retire.
  In looking at that, the President told us--the next year, after his 
2002 address--in 2003:

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

  So first he told us there would be no deficits. Then he told us the 
deficits

[[Page 30492]]

would be small and short term. Both of those proved to be wrong. Then 
he said to us, well, they will be small by historical standards.
  Let's check that assertion because here is what we see: They are not 
small by historical standards. In fact, they are the biggest deficits 
we have had in the history of the United States. I know the President 
likes to say, well, as a share of GDP they are not as big as the 
deficits in the 1980s. But that is because he excludes the money he is 
taking from Social Security. Back in the 1980s, there was no money to 
take from Social Security, or very little. Now there are large amounts 
to take from Social Security, and the President is taking it all, every 
penny; last year, $173 billion.
  Over the next 10 years, under the President's plan, he is going to 
take $2.5 trillion of Social Security money and use it to pay for other 
things. This is at a time when he says there is a shortfall in Social 
Security. Well, he is helping create the shortfall in Social Security 
because he is taking the money and using it to pay for other things. 
Then the President told us in 2004:

       So I can say to you that the deficit will be cut in half 
     over the next five years.

  Let's review. In 2001, he told us there were going to be no deficits. 
He was wrong. In 2002, he said it was going to be small and short term. 
Wrong again. The next year he told us, in 2003, the deficits were going 
to be small by historical standards. Wrong again. They are the largest 
deficits we have ever had in dollar terms. And if you measure 
appropriately, as a share of GDP, it is as large as the deficits in the 
1980s, when you include the money from Social Security that he is 
taking to pay for other things.
  Now he says he is going to cut the deficit in half over the next 5 
years. Well, let's examine that claim. Here is what the President says 
is going to happen: The deficit is going to get cut in half over the 
next 5 years. But he has really left out a lot of things to make that 
assertion. He has left out the war cost past September 30 of this year. 
There is nothing in his budget for that. He has left out the money to 
fix the alternative minimum tax, the old millionaire's tax that is 
rapidly becoming a middle-class tax trap. It costs $700 billion to fix. 
He has no money in his budget to do it. And, of course, his Social 
Security plan, which is the biggest budget buster of all, he has no 
money in his budget to do that.
  When you put all those items back in, you see quite a different 
picture emerge. In fact, past this 5 years, you see the deficit growing 
dramatically. Of course, the biggest reason for that is, the cost of 
the President's tax cuts absolutely explodes in the second 5-year 
period.
  Now, the President told us, back in 2001, how important it was to pay 
down the debt. He said at the time:

     . . . [M]y budget pays down a record amount of national debt. 
     We will pay off $2 trillion of debt over the next decade. 
     That will be the largest debt reduction of any country, ever. 
     Future generations shouldn't be forced to pay back money that 
     we have borrowed. We owe this kind of responsibility to our 
     children and grandchildren.

  So the President, back then, was telling us he was going to pay down 
the debt. Well, there is no paydown of debt occurring here. The debt is 
exploding. It was $5.7 trillion back in 2001. It is $8 trillion today. 
And here is where it is headed: By 2010, under the terms of the budget 
that we are discussing, the debt is going to reach $11.3 trillion. So 
on this President's watch, the debt will have doubled. All the while, 
he was telling us he was going to have maximum paydown of the debt, and 
that we owed it to future generations to pay down debt. There is no 
paydown of debt going on here. The debt is skyrocketing.
  Mr. SARBANES. Will the Senator yield for a question?
  Mr. CONRAD. I am happy to yield.
  Mr. SARBANES. This reconciliation process really is a package, in 
which you have to consider not only the spending cuts but the tax cuts 
they are pushing through, as well as the increase in the debt. Am I 
correct that this reconciliation package includes raising the debt 
limit by some $800 billion?
  Mr. CONRAD. The Senator is correct. This package really does have 
three chapters. The first chapter is the spending cuts, $40 billion 
over 5 years. There is only $8 billion a year in a $2.5 trillion 
budget. It is so insignificant. But then the second chapter is cutting 
taxes $70 billion, which, if you put the two together, there is no 
deficit reduction going on here. They are increasing the deficit. And 
the third chapter is extending the debt limit of the United States by 
$781 billion.
  That is what happens if you read this whole book. It is not a 
pleasant ending.
  Mr. SARBANES. If the Senator will yield further?
  Mr. CONRAD. I am happy to.
  Mr. SARBANES. I want to tell the Senator one story. I was in a 
shopping center over the weekend, and I saw a bumper sticker on a car. 
The bumper sticker said: ``Mr. Bush, we will be forever in your debt.'' 
Just then, the person whose car that was came along, and I said to 
them: What was it you were thinking about that the President has done 
when you say we are going to be forever in his debt? I thought it was 
for something he had done. The person said: Think about it. I meant 
exactly what it says. Mr. Bush, we are going to be forever in your 
debt.
  Here is the debt, which the Senator from North Dakota is pointing 
out. I think the person is right. We are going to be forever in this 
debt. This is what is being handed to this generation, the next 
generation, and the generation after that.
  As the Senator pointed out in the previous chart, they have doubled 
the debt over this very short time period.
  Mr. CONRAD. They have doubled it. And the amazing thing to me is our 
colleagues are out here with a bill that is headlined, ``Deficit 
Reduction.''
  If you read the fine print and look at their own estimates of what 
happens if this budget is finally approved and implemented, here is 
what it does to the debt. Anybody see any reduction of deficit here 
anywhere? This is taking us from $7.9 trillion of debt at the end of 
fiscal year 2005 and it is going to run it up to $11.3 trillion in 5 
years. Each and every year, according to their estimates of what their 
budget does, the debt of the country is going to increase by $600 to 
$700 billion a year. They are out here talking about a deficit 
reduction package. Please. Do words have no meaning? Do we make phrases 
up in order to fool people? People aren't going to be fooled because 
each and every year they are going to be able to see what has happened 
under the claims that are being made. Have the deficits been reduced? 
Has the debt been reduced? Or is it skyrocketing?
  I make the assertion today that if this budget is actually 
implemented for the next 5 years, for which it has been approved, at 
the end of the time, the debt will be dramatically larger than the debt 
today. The kind of stunning result of all this is that our country is 
borrowing more and more money, much of it from abroad. I went and 
looked at the external debt of the country. It took 42 Presidents--here 
are their pictures, all of these Presidents--224 years to run up a 
trillion dollars of external debt. In fact, it was $1.01 trillion of 
external debt. This President has more than doubled it in 5 years. This 
President has run up more debt that is held by foreigners than 42 
Presidents did in 224 years. That is a remarkable accomplishment. I 
hesitate to call it an accomplishment because accomplishment suggests 
something positive. There is nothing positive about it.
  The result is, here are the countries to which we owe money. We owe 
Japan almost $700 billion. We owe China almost $250 billion. And my 
favorite is the Caribbean Banking Centers. We owe them over $100 
billion. One would think, in the midst of all this, Congress would want 
to actually do something to reduce the deficit.
  Mr. SARBANES. Will the Senator yield for a moment?
  Mr. CONRAD. Yes.
  Mr. SARBANES. Let me go back to this external debt that is being held 
outside the country. Isn't it important to understand, as difficult as 
the deficit and debt problems are, that when

[[Page 30493]]

the debt is held internally, it is Americans owing it to Americans. But 
when the debt is being held externally, it means that as a nation, we 
have to service this debt which is being held outside of the country. 
So that amount becomes a charge, as it were, against our own standard 
of living; isn't that correct? Would not our standard of living be 
lowered as a consequence of having to meet this external debt-servicing 
requirement?
  Mr. CONRAD. The Senator is exactly right. What is happening now is, 
we used to borrow the money largely from ourselves. Now we are 
borrowing from abroad. Since the President took over, the debt of the 
country has gone from $5.7 trillion to $8 trillion. That is a $2.3 
trillion increase. Look at this: The debt has increased by $2.3 
trillion, but a trillion of it has come from abroad. Over 40 percent of 
the debt that has been increased under this President is coming from 
abroad. Again, I go back to the historic record. It took 224 years and 
42 Presidents to run up a trillion dollars of debt held abroad. This 
President has exceeded that amount in 5 years.
  During the President's term, the debt has increased $2.3 trillion, a 
trillion of it coming from foreigners.
  Mr. SARBANES. Will the Senator yield? I note from his chart, in 2001, 
we had $5.7 trillion in debt, of which $1 trillion was held abroad.
  Mr. CONRAD. Right.
  Mr. SARBANES. So about a sixth, maybe 17 or 18 percent, was being 
held abroad.
  Mr. CONRAD. That is correct.
  Mr. SARBANES. This President has added $2.3 trillion in debt, of 
which $1.1 trillion is being held abroad. So there has been a dramatic 
shift in who is holding this debt and what that represents in terms of 
a burden on our society.
  Mr. CONRAD. It is very dramatic. You can see the trend continuing. 
Now, when we have a bond auction, about half of the debt is being 
bought by foreigners.
  Mr. SARBANES. There is a wonderful line in a Tennessee Williams play 
where Blanche DuBois says: I have always depended on the kindness of 
strangers. It seems to me that is what is happening to the fiscal 
situation of the United States. We are becoming increasingly dependent 
on foreigners and in particular foreign countries, since this debt now 
is being purchased largely by the central banks and not by individual 
investors. There has been a dramatic shift in terms of who is holding 
our debt. We are becoming increasingly dependent on others for our 
fiscal survival. It is a dramatic and deeply concerning development.
  Mr. CONRAD. I spoke to the student council leaders of my State. There 
were 900 to 1,000 of them in the room. I pointed out this fact about 
more and more of our debt being held externally. I asked them: How many 
of you think this is a sign of strength and how many think it is a sign 
of weakness? Some people say this is a sign of strength that people 
will loan us this amount of money. And I would say 98.9 percent of the 
students said they saw it as a sign of weakness, not a sign of 
strength. Maybe one reason is they realize they are the ones who will 
have to pay this bill.
  Now we have this bill before us. Here is the total spending we are 
going to do over the next 5 years--$14.3 trillion. Our friends come 
here with $40 billion of spending cuts. That is one three- hundredth, 
less than one three-hundredth, in fact, one three-hundred-fiftieth of 
the spending that is going to occur over the next 5 years, one three-
hundred-fiftieth of the spending. Of course, it is going to be 
completely topped by the tax cut that they are proposing, a tax cut of 
$70 billion that is going to occur. It is interesting. Why do we have 
this package before us? Here is what the chairman of the Ways and Means 
Committee said in the House. He told a group of lobbyists that the 
spending cuts are necessary to make room for tax cuts. The spending 
cuts are $40 billion over 5 years. The tax cuts in the Senate are $70 
billion. In the House, the tax cuts are even bigger. In the House, the 
tax cuts over 5 years are $95 billion.
  Some people have said to us: Senator, who knows what is going to 
happen in 5 years? How about this next year? What is the comparison in 
this package between the spending cuts and the tax cuts? Here you have 
it. In the Senate package, the spending cuts are $5 billion for the 
year and a $2.5 trillion budget. That is one five-hundredth of the 
spending. And the tax cuts are $11 billion. So in the first year, they 
are $6 billion under water. They are adding to the deficit, adding to 
the debt by $6 billion, not cutting it as they claim here in their 
speeches. But when you put the whole package together, they are 
increasing the deficit.
  If you look at the House package and their proposed tax cuts, it's 
much worse. Five billion dollars of spending cuts, $21 billion in tax 
cuts in the first year. So they are adding to the deficit by $16 
billion in the first year alone, adding to the debt.
  (Mr. Talent assumed the Chair.)
  Mr. SARBANES. Will the Senator yield for a question on that chart?
  Mr. CONRAD. I am happy to.
  Mr. SARBANES. Is it not also important to ask the question, who is 
being affected by the spending cuts and who is benefitting from the tax 
cuts, because that gives you a sense of what the priorities are? It is 
my perception that the spending cuts are affecting those who have 
little--working people, or people in difficult circumstances, such as 
young people trying to get a college education. The tax cuts for which 
these spending cuts are being imposed--as the chairman of the House 
Ways and Means Committee said, to make room for them--are going 
primarily to benefit those at the upper end of the income and wealth 
scale. So aren't those the priorities that are being set here? People 
have to make the connection. They say we are doing the spending cuts to 
reduce the deficit. Of course, then they admit they are trying to hold 
the deficit down through spending cuts in order to make room for the 
tax cuts.
  So you have to ask, who is being hit by the spending cuts? Who is 
getting the benefit of the tax cuts? Those priorities, it seems to me, 
are standing completely on their heads. They are just the wrong set of 
priorities. We have to make that connection, don't we, to understand 
what is happening?
  Mr. CONRAD. We do. I have in my hand a report from the Center on 
Budget Policy Priorities, a group the Senator knows well, a very well 
respected group in this town. This is the headline: ``Budget Conference 
Agreement Contains Substantial Cuts Aimed at Low-Income Families and 
Individuals.''
  One of the points they make is that this budget agreement increases 
the copayment and premiums for those who are on Medicaid. Those are the 
least fortunate among us. They say:

       A large body of research has found that such cost-sharing 
     increases are likely to lead many low-income Medicaid 
     patients to forego various health care services and 
     medications or not to enroll in Medicaid at all.

  Second, it provides for benefit reductions. They go on to report that 
the conference report retains about a third of the House-passed cuts 
that, for many Medicaid beneficiaries, would eliminate the Federal 
standards which assure that they receive comprehensive health care 
coverage.
  It goes on. Some of the cuts are for, stunningly enough, child 
support enforcement. So they are cutting funds for child support 
enforcement. The CBO estimates show the conference report includes a 
billion and a half in cuts in Federal funding for child support 
enforcement efforts. That is funding that States use to track down 
absent parents, for child support orders, and to collect and distribute 
child support. The Congressional Budget Office has estimated that this 
loss in Federal child support funding will result in child support 
going uncollected over the next 5 years of $2.9 billion.
  Some of those advocates for this say they are friendly to families. 
What is friendly about letting deadbeat dads escape their 
responsibilities to their kids and their families? That is part of what 
is done here. If this package were really reducing the deficit, that 
would be one thing. It doesn't reduce the deficit. This package, when 
you include the tax cuts, dramatically increases the deficit. When you 
look at this package,

[[Page 30494]]

not only does it cut child support enforcement and Medicaid for those 
who are the lowest income among us, it also badly underfunds child care 
because also buried in the package is reform of welfare.
  The Congressional Budget Office estimates that it would cost $8.4 
billion for the States to meet the new work requirements. Only a 
billion dollars is provided. So if we are going to have these people go 
to work, one of the things that happens is the cost of childcare goes 
up. The cost of childcare goes up by $8.4 billion, and they short-
funded it by $7.4 billion. We all know who gets the benefit of the tax 
cut. The tax cuts on the House side go overwhelmingly to the wealthiest 
among us. The average tax cut just on the capital gains and dividend 
provisions in the House bill provides those earning over a million 
dollars a year a $35,000 tax cut.
  I don't find this in any religious teaching that I have been exposed 
to. But the message is very clear. We take from the least among us to 
give to those who have the most among us. That is what this bill does. 
On top of that, when you put the whole reconciliation package together, 
it increases the deficit, increases the debt, and in chapter 3 expands 
the debt of the United States in one fell swoop by $781 billion.
  Mr. SARBANES. Will the Senator yield?
  Mr. CONRAD. Yes.
  Mr. SARBANES. In light of what we previously looked at as to how this 
debt is being financed from outside the country, in effect what is 
happening is that in order to give tax cuts to very wealthy people, we 
are borrowing from Japan, China, Korea, and the Caribbean money 
centers, and so forth and so on. That is where we are finding the money 
to fund this debt that is being created and run up in order to give tax 
cuts to wealthy people, is it not?
  Mr. CONRAD. I was speaking to people in my State, and one person in 
my audience said: You know, the President says that it is the people's 
money and we ought to give it back to the people. Well, that is 
absolutely true. This person in the audience said: But it is turning 
out that it is the Chinese people's money, the Japanese people's money. 
That is whose money we are giving back. We are having to borrow from 
them to give it back.
  This is a bizarre situation that we are in, but that is what is 
happening. Some say, well, if you borrow the money, somehow it will pay 
off. Let's make sure that Chairman Greenspan doesn't believe that. He 
said this before the Joint Economic Committee:

       We should not be cutting taxes by borrowing.
       We are borrowing in huge amounts.

  This is his statement on restoring the pay-go provisions that we 
tried hard to get restored, which say you can have additional tax cuts, 
but you ought to pay for them. You can have new spending, but you ought 
to pay for it.
  He said this on March 2 before the House Budget Committee:

       All I am saying is that my general view is I like to see 
     the tax burden as low as possible. And in that context, I 
     would like to see tax cuts continued. But as I indicated 
     earlier, that has got to be, in my judgment, in the context 
     of a pay-go resolution.

  That is what we offered to our colleagues, but they didn't accept it. 
Here are the major provisions in this package. It cuts low-income 
beneficiaries in Medicaid. It cuts child support. It cuts foster care. 
I mean, really, is this the priority of the country to cut child 
support enforcement, foster care, and medical help for those who have 
the least among us?
  It delays Social Security supplementary benefit income payments for 
poor, disabled individuals. Now there are new work requirements 
imposing unfunded mandates on the States.
  Mr. President, I think these are the wrong priorities for the 
country. The reconciliation bill unfairly targets Medicaid 
beneficiaries. The Senate proposed no increase in cost sharing for 
these very low income people. The House insisted on $2.4 billion from 
those same very low income people. The conference report included 80 
percent of what the House proposed.
  Mr. SARBANES. Will the Senator yield for a question?
  Mr. CONRAD. Yes, I will be happy to yield.
  Mr. SARBANES. The way the Medicaid Program is structured, as I 
understand it, is that in order to be a Medicaid beneficiary, in order 
to receive Medicaid to meet your health care needs, you have to be 
adjudged to be at an income level that is so low it is clear you can 
not afford medical care. In order to get Medicaid to begin with, don't 
you have to meet that requirement?
  Mr. CONRAD. Absolutely. The Senator is correct.
  Mr. SARBANES. And now they are proposing to take people who get 
Medicaid because their income is so low that they can't meet their 
health care needs in any other way, and they are imposing additional 
burdens on these Medicaid recipients.
  Mr. CONRAD. I say to my colleagues, it is not just in Medicaid. They 
are cutting foster care. They are cutting child support enforcement. 
You have to ask yourself: What can they be thinking?

       The President's 2006 budget cites the child support program 
     as one of the highest rated block/formula grants of all 
     reviewed programs government-wide.
       This is a program that epitomizes the value of parental 
     responsibility--increasing family self-sufficiency, 
     decreasing public assistance use, reducing out-of-wedlock 
     births and discouraging divorces.

  That is what the Center for Law and Social Policy said on November 17 
of this year. And we have a bill before us that cuts child support.
  One has to wonder, What are they thinking? What are the priorities 
that are contained here, priorities that cut the spending $40 billion 
by targeting those who are the least fortunate among us--$40 billion 
over 5 years. It is only $8 billion a year. The first year it is only 
$5 billion of savings in a $2.5 trillion budget. That is one five-
hundredth of the budget, and then they cut the taxes, especially for 
the wealthiest among us, much more. So, when you put the two together, 
they have increased the deficit, not reduced it; they have increased 
the debt, not reduced it at the very time the debt is exploding before 
the baby boomers even retire, which will put even more pressure on our 
budget.
  This is a budget that makes no sense. It makes no sense. I have never 
seen this town more disconnected from reality than we are with this 
budget.
  This bill hurts companies, farmers, and workers, repeals the 
antidumping provision, eliminating assistance that benefits U.S. 
companies, farmers, and workers who have been targets of unfair and 
predatory trade practices.
  I conclude as I began. This package does not make sense. When you put 
together all of the elements of reconciliation, it increases the 
deficit, it increases the debt at the very time the debt has already 
been dramatically increased, at the very time we are borrowing more and 
more money from abroad to float this boat, and this budget and this 
budget plan pushes us down the road to more deficits and more debt, and 
they have labeled it deficit reduction, but nothing could be more 
misleading.
  This is a package, when you put it all together, that increases 
deficits and increases debt and at the worst possible time--before the 
baby boomers retire--and puts even further pressure on these fiscal 
imbalances that are leading us to borrow more and more money from all 
around the world.
  At some point, we have to stop and we have to get on a firmer fiscal 
course. We have to restore fiscal discipline to our country.
  I thank the Chair and yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. GREGG. I ask the Senator from Maryland how much time he wishes to 
speak?
  Mr. SARBANES. Five minutes, at most.
  Mr. President, I first thank and commend the very able Senator from 
North Dakota for a very powerful presentation and also for his work, 
day in and day out, as the ranking member on the Democratic side on the 
Budget Committee. I don't think there is anyone in the Senate who 
understands the fiscal situation better or has a more perceptive 
analysis of what has happened

[[Page 30495]]

than the very distinguished Senator from North Dakota. I thank him for 
his leadership on this issue.
  I will be very brief. I simply want to say that this conference 
report before us is worse than what the Senate passed, significantly 
worse. It will cut crucial assistance to working families, to students, 
and to the elderly, amongst others. I think these cuts will move the 
Nation in the wrong direction. I particularly disagree with imposing 
these cuts on low- and moderate-income Americans, supposedly to bring 
our budget deficit under control but actually to make room to give tax 
cuts to very wealthy people.
  The budget resolution provides for reconciliation protection for both 
the spending bill and a tax bill. So to see the impact of the 
reconciliation process, one has to take the two together. Although we 
only have the spending bill now, the tax bill will follow along as 
surely as the night follows the day.
  The budget resolution requires almost $40 billion in spending cuts. 
The same budget resolution tells the committees to report tax cuts of 
$70 billion. So we have a reconciliation process supposedly intended to 
reduce the deficit--in fact, they call it the Deficit Reduction Act; 
where is George Orwell when we need him?--which, when both the spending 
bill and the tax bill are considered, is going to increase the deficit, 
not reduce the deficit.
  So these spending cuts are being made not to address our budget 
deficit, they are being made to make room for tax cuts--the quote from 
the chairman of the House Ways and Means Committee was absolutely on 
point. This legislation is a clear example of a fiscal policy that 
places a higher priority on tax cuts than on funding needed services 
and reducing the deficit. This is clearly a misplaced priority, 
regrettably one that has characterized this administration.
  We have seen this incredible swing in our fiscal position over the 
last 5 years. When President Bush came into office, we were projecting, 
over the next 10-year period, a surplus in the Federal budget of $5.6 
trillion. Today, after a series of excessive tax cuts, we are 
projecting a deficit over 10 years of $4.5 trillion. This is a swing in 
our fiscal position of $10 trillion in the wrong direction, from a $5.6 
trillion projected surplus to a $4.5 trillion projected deficit.
  We are risking our fiscal future. We are targeting tax cuts to those 
who need them the least and we are cutting programs for those who need 
them the most.
  This is an incredibly wrong set of priorities. I am very much opposed 
to this conference report, and I very much urge my colleagues to reject 
this conference report when it comes to a vote.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. Who yields time? The Senator from New 
Hampshire.
  Mr. GREGG. Mr. President, I want to respond briefly to a couple of 
the comments that were made, and then I think what we will do--I have 
talked with the Senator from North Dakota and he has been very 
accommodating--I think we will deem 2 hours off the bill equally 
divided as of this evening, which means he gives up 15 minutes and I 
give up 45 minutes. That is how negotiations are almost every time we 
get together.
  A couple points were made. First, that the antidumping language was 
taken out. Actually, the antidumping language is still in the bill.
  So that item of concern by the Senator from North Dakota has been 
addressed, and I would think that that would cause him to vote for the 
bill.
  The second item was the issue of child support enforcement. Now, the 
House bill did have some initiatives in there which the Senate spoke on 
relative to a motion to instruct, and the final language came very 
close to the Senate position on child enforcement. In fact, essentially 
what the bill says is that we are not going to reduce the effort on 
child support again. What we are not going to allow States to do, 
however, is game the system where they take Federal funds, use those 
Federal funds, claim them to be State funds and then ask for a Federal 
match to Federal funds when they should be using State funds. That 
sounds a little confusing but the way it works is this: The State has 
to match $100 to get $1,000 from the Federal Government. What they will 
do is take $100 from the Federal Government--instead of coming up with 
$100 from the State, they will say they got their $100 from the Federal 
Government and they are going to claim it is a State $100 and then they 
are going to match and then they ask for another $1,000. Well, that is 
gaming the system and it is not appropriate. I think there is general 
agreement that that is bad policy.
  In fact, what the bill does in the area of child support is increase 
child support under the current TANF laws. There is welfare reform in 
this bill, and it is pretty positive in the area of child support, in 
expanding child support. So I think that, again, there is positive 
child support language in here. Some of the language which was referred 
to is reflective of the way the original House bill was but is not 
reflective of the conference. The same is true for the foster care 
area. To the extent foster care is addressed, it is addressed in a very 
reasonable way, dealing with Federal-eligible children who are living 
with unlicensed relatives in another ineligible setting or who have not 
yet entered foster care. So basically, again, there is an issue of 
gaming the system by the States, but it does not impact--and in fact, 
again, this bill specifically addresses, in a positive way, the foster 
care issue.
  So those three items were raised. There were a lot more which were 
raised, but those three items need to be addressed. More importantly, 
on a broader scale, this bill, rather than, in my opinion, impacting 
low-income individuals in a negative way, actually has a pretty 
positive impact on a lot of low-income accounts. As was mentioned 
earlier, there is a very large expansion of the Pell grant program for 
low-income students. There is a very large expansion of something 
called the SMART Program for low-income students who are going to 
participate in math and science. There is a significant expansion of 
Medicaid assistance. Over a million children will be picked up under 
this bill. The Medicaid proposals which are in this bill will basically 
protect the integrity of the system so that it can be expanded rather 
than be gamed by people who spend down inappropriately and basically 
pass their burdens on to the Federal taxpayer when they can actually 
afford some of the costs of their nursing home care, and it will give 
the State Governors much more flexibility.
  That is why I believe it was the Governor of Virginia, Governor 
Warner, who came out strongly for the flexibility language and the 
spend-down language because, and I believe I am representing this 
correctly, he saw this as a positive step to be able to deliver more 
child care to more kids who are low income by having more flexibility 
and doing it with less of an increase in dollars.
  Remember, we are not talking about cutting anything in Medicaid. 
Medicaid will spend $1.2 trillion during this 5-year window. It will 
grow at 40 percent. We are talking about a $5 billion cut on a $1.2 
trillion base. Essentially, it does not even show up if one does a 
chart--because the lines are so close together--as being a significant 
reduction in the Medicaid accounts.
  What is important about Medicaid is the policy that comes with that 
proposal, which policy specifically will give the Governors what they 
have asked for in a bipartisan way. They came to the Congress and said: 
This is what we would like to deliver this program more effectively to 
more people. This bill carries that type of language with it and that 
is the way we should approach this. So it is a good bill relative to 
low-income individuals, especially those on Medicaid and those wanting 
to go to college.
  There are initiatives in here which will benefit those people and be 
positive. But it is also a good bill for all Americans. The idea that 
we are going to actually, if we pass this bill, reduce the debt by $40 
billion is a pretty good idea. Most Americans would like to see the 
Federal debt go down, and they

[[Page 30496]]

would like to see us do something to discipline Federal spending in 
some way, and this is not a dramatic way.
  The Senator from North Dakota held up a chart to point out that it 
was not dramatic. He made our case for us. One cannot say all of these 
things are egregious and then hold up a chart that says there is $14 
trillion of spending that is going to occur in the next 5 years and 
only $40 billion of cuts and look how small that cut is--it is not a 
cut but a reduction in rate of growth--compared to all the spending 
that is going on, so it is not relevant, and then turn around and say 
but the $40 billion is inappropriate because it does too much.
  Well, it does not do too much. It is a step forward. It has some 
policy which will hopefully drive the outyears in a very positive way, 
give the Governors more flexibility in the Medicare area, do a number 
of things in a number of other accounts which will be positive. As a 
result, most importantly, we will have for the first time put not our 
toes but at least up to our ankles in the waters of trying to put some 
fiscal responsibility into the area of mandatory and entitlement 
spending, which is the single largest driver of our deficits and our 
outyear problems relative to being able to pay the cost of the Federal 
Government.
  So I certainly hope we will pass this bill because it is the 
responsible thing to do in my view.
  I ask unanimous consent that we deem 2 hours have been used on the 
bill and that those 2 hours would be equally divided between the 
parties.
  The PRESIDING OFFICER. Is there objection?
  Mr. CONRAD. Mr. President, I would like 1 minute to respond to two 
points that were made and then I would be happy to agree.
  The PRESIDING OFFICER. The Senator is recognized.
  Mr. GREGG. I will reserve until the Senator has used his 1 minute, 
which I hope the Chair will discipline very precisely.
  Mr. CONRAD. Mr. President, on the question of foster care, the bill 
includes $343 million in net cuts in foster care funding, including two 
cuts that will make it harder for some States to provide federally 
funded foster care benefits to certain grandparents who are raising 
their grandchildren. That is not the right priority for the country.
  On the question of child support enforcement, the Congressional 
Budget Office estimates show the conference report includes $1.5 
billion cut in Federal funding for child support enforcement efforts 
over the next 5 years. This is funding that States use to track down 
absent parents, establish legally enforceable child support orders and 
collect and distribute child support owed to families.
  CBO has estimated that this loss in Federal child support funding 
will result in $2.9 billion in child support going uncollected over the 
next 5 years. These cuts are smaller than in the House bill. It will 
nevertheless take billions of dollars out of the pockets of mothers and 
children who are owed child support.
  This report goes on to say the conference agreement also contains 
some modest improvements in child support but the cuts in Federal 
support for the program and the associated loss of child support 
collections far outweigh the very modest benefits that some families 
would see as a result of a few improvements.
  I ask unanimous consent that this report from the Center on Budget 
and Policy priorities be printed in the Record after my statement.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1).
  Mr. GREGG. Mr. President, I renew my request.
  The PRESIDING OFFICER. Is there objection?
  Mr. CONRAD. I reserve the right to object for another 30 seconds. On 
the Byrd antidumping proposal, the Senator is correct that the repeal 
is not immediate but the repeal is still in the bill. It is postponed 
by 2 years. So I say on these issues we have a difference of position. 
I think this goes in the wrong direction. I think it expresses the 
wrong priorities for the country. Most seriously to me the whole 
reconciliation package increases the deficit and increases the debt. We 
ought to be doing precisely the opposite.

                               Exhibit 1

    [From the Center on Budget and Policy Priorities, Dec. 18, 2005]

  Budget Conference Agreement Contains Substantial Cuts Aimed at Low-
                    Income Families and Individuals

         (By Edwin Park, Sharon Parrott, and Robert Greenstein)

       Some are claiming that the conference agreement on the 
     budget reconciliation bill is closer to the Senate-passed 
     bill in the low-income area than to the House bill and does 
     not harm low-income Americans to any significant degree. 
     While some low-income cuts in the House bill have been 
     dropped, the conference agreement contains numerous cuts in 
     various low-income areas--including Medicaid--that are much 
     closer to those in the House-passed bill than to the 
     provisions of the Senate bill.
       Taken as a whole, the provisions in the conference 
     agreement would cause considerable hardship among low-income 
     families and people who are elderly or have disabilities. 
     This is due in no small part to action by the conferees to 
     shield certain powerful special interests--principally 
     pharmaceutical companies and the managed care industry--and 
     to extract deeper savings from low-income families instead.


                                MEDICAID

       The CBO estimates show that conference agreement retains 
     the majority of the Medicaid cuts contained in the House-
     passed bill that directly affect low-income beneficiaries.
       According to the preliminary estimates issued by the 
     Congressional Budget Office (no legislative language is yet 
     available), the reconciliation conference report achieves 
     much of its Medicaid savings by retaining a number of 
     provisions in the House-passed reconciliation bill that would 
     require low-income Medicaid beneficiaries to pay more out-of-
     pocket for health care or reduce the health care services for 
     which many beneficiaries are covered. The conference report 
     forgoes the Senate reconciliation bill's more balanced 
     approach; the Senate had avoided changes that would harm low-
     income beneficiaries by achieving larger savings in the area 
     of Medicaid prescription drug pricing and by reducing 
     excessive payments made to Medicare managed care plans. Key 
     aspects of the Medicaid component of the conference report 
     include the following:
       Increases in co-payments and premiums. The conference 
     report leaves largely intact the House-passed cuts that would 
     allow states to increase substantially the co-payments that 
     many Medicaid beneficiaries are required to pay to access 
     health care services and medications, as well as the premiums 
     they can be charged to enroll in Medicaid in the first place. 
     The cuts in the cost-sharing area in the conference report 
     (i.e., the cuts resulting from increases in co-payments and 
     premiums) are 80 percent of the size of the House-passed cuts 
     in this area over five years, and 90 percent the size of the 
     House cuts over ten years. A large body of research has 
     found--and CBO has concluded--that such cost-sharing 
     increases are likely to lead many low-income Medicaid 
     patients to forgo various health care services and 
     medications or not to enroll in Medicaid at all.
       Altogether, the conference report includes cuts related to 
     co-payments and premiums that total $1.9 billion over five 
     years and $10.1 billion over ten years (as compared to $2.4 
     billion over five years and $11.2 billion over ten years in 
     the House-passed reconciliation bill). The Senate bill 
     included no increases in co-payments and premiums.
       Benefit reductions. The conference report retains about 
     one-third of the House-passed cuts that, for many Medicaid 
     beneficiaries, would eliminate the federal standards which 
     assure that they receive comprehensive health care coverage. 
     Under the House bill, many beneficiaries could lose access to 
     various medically necessary services, possibly including 
     therapy services, personal care, eyeglasses, hearing aids, 
     and crutches. The conference agreement includes benefit cuts 
     of $1.3 billion over five years and $6.3 billion over ten 
     years from a scaling back of the health care benefits that 
     Medicaid covers. (The House bill contained $4 billion in 
     benefit cuts over five years and $18.5 billion over ten 
     years. The Senate included no reductions in benefit coverage 
     in its bill.)
       Overly restrictive asset transfer rules for people who need 
     nursing home care. The conference report appears both to 
     adopt all of the provisions in the House-passed bill to 
     restrict eligibility for Medicaid long-term care services and 
     to contain additional provisions not included in the House 
     bill that would yield further savings in this area. Under the 
     conference agreement, the savings in this area would be 11 
     percent larger than under the House bill, and seven times 
     larger than under the Senate bill.
       Preventing more-affluent individuals from sheltering assets 
     that could be used to pay for their long-term care is a 
     laudable goal. The provisions in the conference agreement, 
     however, appear to go well beyond that. For example, one 
     provision of the House bill that appears to have been 
     retained in the conference report would penalize many non-
     affluent individuals who make modest gifts to

[[Page 30497]]

     relatives or contributions to charity, and then experience an 
     unexpected decline in their health several years later that 
     causes them to need long-term care. The conference agreement 
     includes Medicaid reductions in this area of $2.4 billion 
     over five years and $6.4 billion over ten years (higher than 
     the $2.2 billion over five years and $5.8 billion over ten 
     years in the House-passed bill). The Senate's more targeted 
     and carefully designed provisions in this area would have 
     produced savings of $335 million over five years and $890 
     million over ten years.
       The conference report's health care provisions also move 
     toward the House bill in another respect: they cater to 
     powerful special interests--in particular, the pharmaceutical 
     and managed care industries--at the expense of low-income 
     beneficiaries.
       No increase in drug manufacturer rebates. The Senate bill 
     avoided harmful co-payment and premium increases and benefit 
     reductions in part because it achieved much of its Medicaid 
     savings by restraining the amounts that Medicaid pays for 
     prescription drugs. To ensure that Medicaid gets the best 
     prescription drug prices, the Senate bill increased the 
     minimum rebates that drug manufacturers are required to pay 
     the Medicaid program for drugs dispensed to Medicaid 
     beneficiaries. The Senate bill also applied the rebates to 
     drugs provided to Medicaid beneficiaries through managed care 
     plans. The Senate drug rebate provisions produced Medicaid 
     savings of $3.9 billion over five years and $10.5 billion 
     over ten years, which helped the Senate reach its savings 
     target without harming low-income beneficiaries.
       In a victory for the powerful pharmaceutical industry, the 
     conference agreement fails to include the Senate's 
     significant rebate provisions. The conference agreement 
     includes only two minor provisions related to drug rebates 
     already included in both the House-passed and Senate-passed 
     bills; these provisions generate savings of only $220 million 
     over five years and $720 million over ten years.
       No elimination of the Medicare stabilization fund. The 
     conference report also protects Medicare managed care plans. 
     It drops a Senate provision that would have eliminated a 
     wasteful $10 billion slush fund to encourage participation in 
     Medicare by regional Preferred Provider Organizations (PPOs). 
     The Medicare Payment Advisory Commission (MedPAC)--the 
     official, independent advisory body to Congress on Medicare 
     payment policy--recommended this summer, in a nearly 
     unanimous vote, that this fund be eliminated because it is 
     unnecessary and unwarranted and provides an unfair 
     competitive advantage to PPOs over traditional Medicare fee-
     for-service and other managed care plans such as Medicare 
     HMOs. Nevertheless, the conference agreement leaves this fund 
     fully intact, forgoing $5.4 billion in savings over five 
     years (and twice that over ten years) that were contained in 
     the Senate bill. The removal of this Senate provision likely 
     was done at the behest of the managed care industry and the 
     Administration, which threatened to veto the budget bill if 
     the Senate provision was included in the final conference 
     agreement.
       Partially gutting another provision to curb overpayments to 
     managed care plans. There is near-universal agreement among 
     analysts that the current Medicare payment structure provides 
     excessive payments to managed care plans, and the 
     Administration announced earlier this year that it would act 
     administratively to eliminate a feature of the payment 
     formula that is responsible for a significant volume of 
     excessive payments. MedPAC endorsed the Administration's 
     action, and the Senate reconciliation bill wrote the 
     Administration's planned administrative action into law, for 
     a savings of $6.5 billion over five years and $26 billion 
     over ten years, according to CBO. Under the conference 
     agreement, however, the ten-year savings have been lowered 
     from $26 billion to $4.1 billion, according to the CBO 
     estimates. While the conference report language is not yet 
     available, it appears that the conference agreement is 
     written so the part of the Medicare payment formula that 
     would be reformed would revert to its current, problematic 
     status after five years, and after that time, managed care 
     plans would again receive the overpayments this provision is 
     supposed to curb.
       In short, in place of the Senate's reasonable savings from 
     eliminating the wasteful Medicare stabilization fund and 
     lowering the prices that Medicaid pays pharmaceutical 
     companies for prescription drugs, the conference agreement 
     includes a hefty share of the House Medicaid provisions on 
     cost-sharing and benefits, which the research indicates are 
     likely to reduce the affordability and accessibility of 
     health care for large numbers of low-income patients.


              LOW-INCOME PROGRAMS OUTSIDE THE HEALTH AREA

       The Senate reconciliation bill did not include cuts in any 
     low-income program other than Medicaid, and did not seek to 
     rewrite the welfare rules in a reconciliation bill. The 
     conference agreement, by contrast, includes sizeable cuts in 
     child support enforcement, SSI, and foster care, as well as 
     highly controversial TANF provisions that would impose 
     expensive, unfunded work requirements on states and result in 
     the loss of child care for many low-income working families 
     not receiving TANF cash assistance.
       1. Child Support Enforcement: The CBO estimates show that 
     the conference report includes a $1.5 billion cut in federal 
     funding for child support enforcement efforts over the next 
     five years and a $4.9 billion cut over the next ten years. 
     This is funding that states use to track down absent parents, 
     establish legally enforceable child support orders, and 
     collect and distribute child support owed to families, CBO 
     has estimated that this loss in federal child support funding 
     will result in $2.9 billion in child support going 
     uncollected over the next five years, and $8.4 billion going 
     uncollected over the next ten years. These cuts are smaller 
     than those in the House bill, but will nevertheless take 
     billions of dollars out of the pockets of mothers and 
     children who are owed child support. (The conference 
     agreement also contains some modest improvements in the child 
     support program. The cuts in federal support for the program 
     and the associated loss of child support collections, 
     however, far outweigh the very modest benefits that some 
     families would see as a result of a few improvements in other 
     child support provisions.)
       2. TANF: Despite representing the largest change in welfare 
     policy since 1996, the nature of the TANF provisions in the 
     conference report has been a closely guarded secret. CBO 
     analyses show, however, that the conference agreement would 
     impose very expensive new work requirements on states. 
     Moreover, in a major change in policy that goes well beyond 
     anything in any prior TANF bill, including the House budget 
     reconciliation bill, the conference agreement would remove 
     from states the flexibility they now have to apply different 
     types of work-related requirements to people receiving 
     assistance funded entirely with state ``maintenance of 
     effort'' funds. (These are state funds that a state must 
     expend to draw down federal TANF funds.)
       CBO estimates that if states attempt to meet the work 
     requirements in the conference agreement by placing more 
     parents in welfare-to-work programs (rather than by reducing 
     the number of poor families receiving assistance at all), the 
     cost to states would be $8.4 billion over the next five 
     years, which is slightly more than the cost would have been 
     under the House reconciliation bill. CBO projects that some 
     states would not meet the new mandates and would face fiscal 
     penalties as a consequence.
       It is widely known that there was a concerted effort in the 
     conference to redesign the House bill's work requirements so 
     that the Congressional Budget Office would conclude that some 
     states would not be able to meet the requirements and thus 
     would be subject to fiscal penalties. This was purposefully 
     done to get around the ``Byrd rule,'' a procedural rule that 
     generally prohibits the inclusion in a reconciliation bill of 
     changes in policy that do not significantly reduce or 
     increase federal costs or revenues. The goal here appears to 
     have been to secure an estimate from CBO that the changes in 
     the work requirements would, in fact, save money for the 
     federal Treasury and to do so by making the new requirements 
     sufficiently unrealistic that some states would not be able 
     to meet them. (It remains unclear whether the TANF work 
     provisions in the conference agreement succeed in meeting the 
     Byrd rule test.)
       3. Child Care: The conference report includes $1 billion in 
     additional funding for child care, which is $7.4 billion less 
     than CBO estimates to be the cost to states of meeting the 
     new work requirements, and more than $11 billion less than 
     what states will need both to meet the new work requirements 
     and to ensure that their current child care programs for low-
     income working families not on TANF do not have to be scaled 
     back as a result of the impact of inflation on child care 
     costs. This means the conference agreement includes no new 
     funding for states to help meet the intensified work 
     requirements that will be imposed upon them or to provide 
     child care for children whose parents will newly be placed in 
     work programs.
       To come up with the funds to meet the new work requirements 
     and provide child care for the children of mothers placed in 
     these excluded work programs, many states will have little 
     alternative but to scale back child care slots for working 
     poor families not on welfare and shift those slots to TANF 
     families instead. As a result of the under-funding of child 
     care in the conference agreement, we estimate that by 2010, 
     some 255,000 fewer children in low-income working families 
     not on TANF will receive child care assistance than received 
     such assistance in 2004.
       The $1 billion in child care funding in the conference 
     agreement is higher than the $500 million in the House-passed 
     bill. It is $5 billion lower, however, than the amount 
     included for child care in the bipartisan TANF legislation 
     approved by the Senate Finance Committee earlier this year.
       4. SSI: Under the conference agreement, poor individuals 
     with disabilities who have waited months for the Social 
     Security Administration to review and approve their 
     applications for SSI (a common occurrence in SSI), and 
     consequently are owed more than three months of back 
     benefits, would have to receive these benefits in 
     installments that could stretch out over the course of a 
     year.

[[Page 30498]]

     The first installment would include no more than three months 
     of back benefits. By contrast, under current law, most such 
     disabled individuals receive their back benefits in a single 
     lump sum payment. Individuals owed more than 12 months' worth 
     of benefits receive benefits in installments, but the first 
     installment is equal to 12 months of benefits.
       This provision of the conference agreement means many poor 
     SSI recipients with disabilities would have to wait longer 
     for benefits they are owed, making it more difficult for them 
     to pay off arrears in bills that have built up during the 
     period when they were unable to work due to their disability 
     and were not receiving monthly SSI benefits because SSA was 
     still processing their application. Under the conference 
     agreement, some poor individuals with disabilities could die 
     before receiving the full back benefits they are owed. (With 
     two minor exceptions, if a person dies before being paid SSI 
     benefits they are owed, the SSI benefits are not paid to the 
     person's relatives or estate. These back benefits are not 
     even available to help family members pay for funeral costs.)
       This SSI provision is largely a budget gimmick; it would 
     make most of the affected beneficiaries wait longer for the 
     benefits they are owed, thereby shifting costs from one year 
     to the next and providing savings in the five-year budget 
     ''window.'' (Some ``true'' savings apparently would be 
     achieved, as well, as a result of some individuals dying 
     before receiving the back benefits they are owed.) CBO 
     estimates the savings from this provision at $425 million 
     over five years. This is an example of a budget gimmick with 
     a real human cost, since many impoverished individuals with 
     disabilities will face a more difficult time making ends meet 
     as a result of the delays they will be forced to experience 
     in receiving SSI payments that they are owed.
       5. Foster Care: The bill includes $343 million in net cuts 
     in foster care funding, including two cuts that will make it 
     harder for some states to provide federally funded foster 
     care benefits to certain grandparents who are raising their 
     grandchildren.

  The PRESIDING OFFICER. The Senator from New Hampshire has the floor. 
He repeats his unanimous consent request. Without objection, it is so 
ordered.
  The Senator from New Hampshire.
  Mr. GREGG. Mr. 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. GREGG. 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. JOHNSON. Mr. President, I express my concerns about the fiscal 
year 2006 Budget Reconciliation Conference Report currently pending in 
the Senate. I intend to vote against the conference report because I 
believe it sets the wrong budget priorities for our nation.
  This omnibus spending reduction bill mandates a five-year spending 
cut of $39.7 billion. The vast majority of the cuts enacted as a 
consequence of this conference report will impact poor and middle-class 
Americans.
  While the budget reconciliation pulls out all the stops to protect 
the interests of insurance companies and drug manufacturers, the 
package makes several changes to the Medicaid program that will have a 
devastating impact on the health of the most vulnerable individuals in 
South Dakota. Low-income Medicaid recipients will see cuts in health 
coverage while at the same time facing increased cost-sharing through 
the program. Increased copayments and premiums for our poorest citizens 
will likely mean that many individuals will forgo necessary care until 
emergency services are needed, costing our health system a great deal 
more in the long run.
  The bill also establishes very strict asset rules for seniors 
applying for Medicaid coverage for their nursing home care. While some 
adjustments to the asset tests are needed, this package goes too far 
and will negatively impact many average to low income earners in their 
final years. Finally, the payment methodology changes proposed for 
pharmacies are shortsighted and will reduce access to Medicaid coverage 
in the future. The conference package reduces reimbursements paid to 
pharmacies for generic drugs by approximately 40 percent by 2007. Under 
those circumstances, community pharmacies will have a hard time making 
ends meet and will lose the incentive to provide this service entirely.
  I have recently received a letter signed by 142 national 
organizations expressing their concerns about the Medicaid provisions 
in this conference report. They understand the devastating impact these 
health care cuts will have on the poor and elderly.
  The conference report also slashes funding for vital farm programs. 
In fact, commodity programs face the brunt of the agriculture cuts in 
the bill, and will be reduced by $1.7 billion over the next 5 years. In 
addition, the conference report cuts $934 million from conservation 
programs, $620 million from research, and $400 million from rural 
development programs.
  The farm bill that was signed into law by President Bush represented 
a contract with rural America. Farmers have based their own financial 
decisions on the provisions and funding that were promised in that 
bill. To now make changes to the farm bill by enacting steep cuts to 
commodity and conservation programs undermines our family farmers and 
ranchers and demonstrates the administration's lack of commitment to 
rural economic development.
  This conference report also contains $12.7 billion in cuts to the 
federal student loan program. Unfortunately, this marks the largest cut 
to student financial aid programs in history. While the legislation 
does contain funding for the creation of the new Academic 
Competitiveness Grants and the National Science and Mathematics Access 
to Retain Talent Grants, National SMART Grants, the Senate-passed 
budget reconciliation legislation contained more than $8 billion in new 
need-based assistance to supplement Pell Grants.
  The Academic Competitiveness Grants Program would limit aid to a 
small subset of financially eligible students that completed a rigorous 
secondary school program to be defined by the Secretary of Education. I 
support students taking a rigorous high school curriculum, but this 
would be the first time the Federal Government links need-based 
financial aid to the academic curriculum available to a student.
  The National SMART Grants Program would limit aid to only those 
students choosing to major in math, science, technology, engineering, 
computer science, or high-need foreign language. While we all want more 
students to study math and sciences, we also need to find additional 
need-based aid for students that choose other important academic 
fields.
  Finally, this will be the fourth year in a row that Congress has 
failed to increase the maximum Pell Grant award from $4,050.
  The Republican leadership has argued that these cuts are a necessary 
step toward restoring fiscal discipline. However, when these cuts are 
paired with the tax reconciliation bill, they will actually cause an 
increase in the national debt. Leaders in Congress have made it clear 
that after the completion of the omnibus spending bill, Congress will 
consider the extension of investment tax breaks geared 
disproportionately toward the super rich with incomes in excess of 
$200,000 annually. Correspondingly, the estimated cost from these tax 
cuts to the Treasury and the American public far outweigh the savings 
forecast from the omnibus spending bill. A key intent of the 
reconciliation process is to reign in the governmental spending or to 
move through the Congress changes to mandatory domestic programs.
  The majority intends to pervert this process by using the omnibus 
spending bill as a device to free up room in the budget for costly tax 
cuts primarily geared toward the wealthiest two percent of taxpayers. 
The end result is that future generations will be saddled with higher 
borrowing costs and lower economic growth in order to pay off the 
national debt charges run up by the fiscally irresponsible tax cuts 
pushed by this Congress. This vote is not for fiscal discipline and 
reduced deficits. Instead, those pushing through today's spending cut 
bill are doing so to make room for further tax cuts and billions more 
to the national debt.
  Mr. President, I recognize we must get our fiscal house in order. 
However, I do not believe that budget cuts should come at the expense 
of ordinary

[[Page 30499]]

people and struggling family farmers when huge agribusinesses continue 
to reap millions without effective payment caps in place, and tax cuts 
for multimillionaires are being preserved. The priorities set forth in 
this conference report are wrong; I will vote against the conference 
report and urge my colleagues to do the same.

                          ____________________