[Congressional Record (Bound Edition), Volume 153 (2007), Part 20]
[Senate]
[Pages 28105-28108]
[From the U.S. Government Publishing Office, www.gpo.gov]




                      FISCAL HEALTH OF THE NATION

  Mr. VOINOVICH. Mr. President, I rise today to comment on the sad 
state of the appropriations process, as well as our long-term fiscal 
health. The new fiscal year began 23 days ago, and we are debating 
appropriations bills that haven't even passed the Senate yet, as 
Government agencies operate on temporary, stopgap funding. When we 
Republicans were in the majority, we consistently failed to enact all 
of the appropriations bills before the end of the fiscal year. We 
enacted short-term continuing resolutions, or CRs, to keep agencies 
funded while we wrapped several of those bills into an end-of-the-year 
omnibus bill.
  After the Democrats won control of the Senate, I sincerely hoped they 
would fulfill their promises to manage the budget better. But while the 
party in power has changed, the results have stayed the same. In fact, 
the results, so far, have been even worse. Fiscal year 2008 has already 
started, and we have enacted exactly zero appropriation bills.
  Government-by-CR has consequences. Agencies cannot plan for the 
future. They cannot make hiring decisions. They cannot sign contracts. 
As a result, we get more waste and inefficiency from Government. We get 
lower quality services provided to the people. At the end of the day, 
we get higher spending and less accountability and oversight of the 
taxpayers' money.
  On September 23, the New York Times reported that our failures could 
have a devastating effect on cancer research because scientists are 
waiting around to hear if they will receive grants for their innovative 
research ideas. The same article quoted a transportation industry 
representative as saying our failure could have major implications for 
anyone who rides in cars, trucks, trains, buses, and subways. If you 
want more examples of how Congress's failure to do its job on time 
affects ordinary Americans, I invite you to visit my Web site, where I 
provide several additional examples.
  That is why a bipartisan group of Senators agree that we need to 
adopt biennial budgeting by the Federal Government, such as I had as 
Governor of Ohio, so Congress can get its work done on time while also 
conducting the oversight necessary to ensure that programs and agencies 
are functioning effectively.
  Senator Domenici has been a leader on biennial budgeting for years. 
We should adopt it during this Congress and name it the Pete Domenici 
Biennial Budgeting Act as part of Pete's legacy to this country.
  Putting aside our short-term failures and focusing on our long-term 
problems, in January I introduced the Securing America's Future 
Economy, or SAFE Commission Act, legislation that would create a 
bipartisan commission to look at our Nation's tax and entitlement 
systems and recommend reforms to put us back on a fiscally sustainable 
course and ensure the solvency of entitlement programs for future 
generations.
  I commend two of my colleagues, the Budget Committee chairman from 
North Dakota and the ranking member from New Hampshire, for recently 
introducing a bipartisan bill that would create a tax and entitlement 
reform task force very similar to my SAFE commission. In fact, I saw 
them on CNBC recently talking about it. The only major difference is 
that Senators Conrad and Gregg require every congressional appointee to 
be a sitting Member of Congress, whereas the SAFE commission would 
include outside experts. I have signed on as a cosponsor of the Conrad-
Gregg proposal, and I am pleased to learn they intend to hold a hearing 
on the bill in the very near future. I look forward to working with 
them to get the bill passed.
  I also commend Democratic Congressman Jim Cooper of Tennessee and 
Republican Congressman Frank Wolf of Virginia who introduced a 
bipartisan SAFE commission bill in the House of Representatives. I have 
been working with Congressman Wolf for more than a year on this 
proposal, and I welcome Congressman Cooper's decision to join us.
  This bipartisan, bicameral group has support from corporate 
executives, religious leaders, and think tanks across the political 
spectrum, from the Heritage Foundation to the Brookings Institution, 
and former Members from both parties, such as former Senators Warren 
Rudman and Bob Kerrey, and former Congressmen Bill Frenzel and Leon 
Panetta.
  Our entitlement programs are creaking under the strain of an aging 
society and runaway health care costs. Our Tax Code is imploding from 
the hundreds of economic and social policies that Congress pursues 
through tax incentives and from the dozens of temporary tax provisions 
that wreak havoc on families and businesses trying to plan their 
affairs.
  Neither our major entitlement programs nor our Tax Code are 
sustainable in the current form. The appropriations bills that we are 
debating this week are shrinking as a share of the budget as 
entitlements crowd out domestic discretionary spending. We must come 
together and develop a bipartisan consensus to fix these systems so our 
children and grandchildren can enjoy prosperity and increasing 
standards of living.
  I want to share with my colleagues some extraordinary numbers that 
reveal our Nation's looming fiscal crisis. I speak out of concern not 
only for our generation but also for our children and our 
grandchildren. They are going to bear the burden of reckless fiscal 
policies.
  Sir Edmund Burke, the father of conservative thought, said:

       Society is . . . a partnership not only between those who 
     are living, but between those who are living, those who are 
     dead, and those who are to be born.


[[Page 28106]]


  Unless we change course, we will break that partnership with those 
who are yet to be born. This grave situation can be addressed only 
through hard bipartisan work, and we must begin our work now, for every 
day we wait, the solutions become more painful.
  In the simplest of terms, the Federal Government continues to spend 
more than it brings in. Running up the credit card for today's needs 
and leaving the bill for future generations should not be the policy of 
this country, this Congress, or this administration. It represents a 
recklessness that threatens our economic security, our global 
competitiveness, and our future quality of life. The Federal Government 
has become the biggest violator of credit card abuse in the world.
  Comptroller David Walker has said:

       The greatest threat to our future is our fiscal 
     irresponsibility.

  He added:

       America suffers from a serious case of myopia, or 
     nearsightedness, both in the public sector and the private 
     sector. We need to start focusing more on the future. We need 
     to start recognizing the reality that we're on an imprudent 
     and unsustainable fiscal path, and we need to get started 
     now.

  Everyone in this great body should heed Comptroller Walker's warning.
  Our commitments to the war on terror, to securing our borders, to 
educating our workforce, and to investing in our Nation's 
infrastructure demand tremendous resources and require long-term 
financial commitments. At the same time, we cannot ignore the 
demographic tide that will soon overwhelm our resources. We need a 
system for raising the revenues necessary to fund these priorities that 
does as little damage to the economy as possible. In short, the need 
for tax reform and entitlement reform has never been greater.
  A historical perspective helps to highlight the gravity of our 
current situation.
  The fiscal year 2007 budget deficit was $163 billion, but that figure 
hides the true degree to which our fiscal situation has deteriorated, 
mainly because it uses every dime of the Social Security surplus, as 
well as surpluses in other trust funds, to hide the true size of the 
Government's operating deficit. The Social Security surplus, however, 
must be reserved for future retirees. As far as I know, you cannot 
spend the same money twice, but Congress keeps pretending that it can.
  If you wall off the Social Security surplus so Congress cannot spend 
it on other programs, as I believe we should do, then the Government's 
operating deficit more than doubles to $344 billion, not $163 billion. 
And if you add back the money the Government is borrowing from other 
trust funds, such as Federal employee pensions, the deficit explodes to 
$441 billion, almost triple the reported deficit.
  In other words, we are hiding from the public how much we are 
borrowing because we don't tell them about the money we are borrowing 
from trust funds. As a result, they see these numbers, such as the $163 
billion, and they think things are getting better, but we are hiding 
the fact that we are spending every dime of these trust funds to keep 
the Government going.
  The annual difference between revenues and outlays is not what is 
truly threatening our future. It is the cumulative, ongoing increase in 
our national debt that matters.
  Remember, in 1992 when Ross Perot ran for President and he showed us 
those frightening fiscal charts? Well, I have my own charts, and I call 
these charts my Halloween charts. I call them that because, No. 1, the 
Government's new fiscal year starts in October and, No. 2, because the 
fiscal picture is terrifying.
  Fifteen years ago, when Ross Perot was sounding the alarm, the 
national debt was about $4 trillion. He showed a chart projecting that 
by 2007, the debt would increase to $8 trillion. Well, guess what. As 
of 2007, the national debt stands at almost $9 trillion. Ross Perot's 
doomsday predictions turned out to be too rosy. In the more than 200 
years that have passed between the Declaration of Independence and Ross 
Perot's 1992 campaign, the U.S. Government accumulated $4 trillion in 
debt. We have now added even more than that in the last 15 years.
  This Congress has acknowledged that it will pass right by $9 
trillion. A few weeks ago, Congress very quietly voted to allow the 
national debt to increase by another $800 billion, from about $9 
trillion to $9.8 trillion.
  What does that mean, $9 trillion? How do we even fathom that number? 
For one thing, it represents two-thirds of our entire national economy, 
the worst number in 50 years. For another thing, it means that each 
man, woman, and child in the United States owes $30,000 of the Federal 
Government's debt. I want my colleagues to think about these young 
people, the pages here today. All of you, every one of you, owe $30,000 
on the debt we have accumulated.
  That $30,000 only represents the debt racked up by the Government in 
the past. Because we continue borrowing more than we bring in, that 
number is increasing every single day. And those numbers pale in 
comparison with the budget problems looming in our future as the baby 
boom generation begins to retire just 69 days from now, on January 1, 
2008. In fact, just last week, the first baby boomer applied for Social 
Security retirement benefits. Reality is setting in that this is not 
just a far-off prediction. It is a growing storm that threatens to 
overwhelm our economy if we do not act now.
  Perhaps even more concerning is that 55 percent of the privately 
owned debt is held by foreign creditors, mostly foreign central banks. 
That's up from 35 percent just 6 years ago. Foreign creditors provided 
more than 80 percent of the funds the United States has borrowed since 
2001, according to the Wall Street Journal.
  And who are these foreign creditors? According to the Treasury 
Department, the three largest holders of U.S. debt are China, Japan, 
and the OPEC nations. Borrowing hundreds of billions of dollars from 
China and OPEC puts not only our future economy, but also our national 
security, at risk. It is critical that we ensure that countries that 
control our debt do not control our future.
  If after hearing all this, one still thinks this is a problem that 
exists only in the distant future, consider recent projections by the 
major credit rating agency, Standard & Poor's. For decades, U.S. 
Treasuries have been considered the risk-free investment against which 
the risks of all other investments are judged. A good place to invest, 
our Treasuries. In fact, the global financial system is largely based 
on the notion of U.S. Treasuries as the only risk-free investment out 
there.
  But in just 5 years, that will cease to be true. According to 
Standard & Poor's, U.S. Treasuries will lose their triple-A credit 
rating in 2012 because of the Government's deteriorating long-term 
fiscal position. Don't think that the world markets aren't looking at 
what we are doing in the United States. What kind of global economic 
turmoil awaits us 5 years from now when the U.S. Government is 
considered as risky as a typical corporation? What happens if the 
foreign banks decide they are going to move their money out of the 
United States and send it somewhere else? And what economic catastrophe 
awaits our children and grandchildren in 2025 when Standard & Poor's 
projects that U.S. Treasuries will be classified as junk bonds?
  Why do we refuse to see the warning signs? A decade ago, who ever 
would have imagined that the Canadian dollar would be worth just as 
much as a U.S. dollar? A few years ago, the Euro was worth 83 cents. 
Now it is worth $1.42. Meanwhile, our trade deficit has gone through 
the roof as we Americans are forced to borrow the money we need to buy 
foreign products.
  What is driving this train wreck? Certainly additional revenues have 
to be part of the solution. But this is not a problem that will be 
solved simply by reaching deeper into the American people's pockets. 
Many colleagues are familiar with Pete Peterson, former Commerce 
Secretary. He made it clear that ``The minute you start looking at a 
tax increase as the primary solution, you're confronted with tax 
increases that are clearly beyond anything anyone can imagine.''
  Even the Democratic chairman of the Budget Committee has acknowledged

[[Page 28107]]

that most of the heavy lifting will have to be done on the spending 
side. Revenues will be on the table for sure, but the coming storm will 
require significant changes to entitlement programs.
  Here are some numbers tho help put this situation in perspective. 
Forty years ago in 1967, Social Security, Medicare, and Medicaid made 
up only 3 percent of the GDP. In 2007, their cost has tripled as a 
share of the economy to 9 percent. The Congressional Budget Office 
projects that over the next 40 years, this number could double again to 
18 percent, a frightening thought when we consider that in 2006 total 
federal revenues accounted for only 18 percent of GDP. It reminds me of 
when I was Governor of Ohio. I called Medicaid the Pac-Man in Ohio.
  Well, today I would refer to entitlements as the Pac-Man in terms of 
our national finances. If entitlement spending continues on this path, 
we will be required to use every cent of our Federal revenue to fulfill 
these entitlement obligations. Our grandchildren will have no money for 
national defense, energy security, education, the environment, or our 
infrastructure. And, they'll look back at our generation and ask how we 
could be so reckless with their futures.
  Our Nation faces one of the most competitive environments in its 
history, and the question is, in this new world of global 
competitiveness, will future generations be able to enjoy the same 
standard of living we are experiencing? Will my kids, will my 
grandchildren be able to enjoy the same standard of living I have 
enjoyed? Will they have the opportunity for the same quality of life? 
With the largest national debt in 50 years, will we be able to remain 
competitive with foreign economies?
  Congress must view our Tax Code, entitlement system, and the budget 
process as 3 components or pillars of the Nation's fiscal foundation, 
and not as separate problems. Each is linked to the other 2 pillars, 
and we must reform all 3 to raise the necessary revenue to fund the 
Government in an economically efficient manner, to keep our obligations 
to future generations, and to keep the size of Government to a 
manageable level.
  We must enact fundamental tax reform to help make the Tax Code 
simple, fair, transparent, and economically efficient. According to the 
President's Advisory Panel on Federal Tax Reform, headed by former 
Senators Connie Mack and John Breaux, only 13 percent--think of this, 
only 13 percent--of taxpayers file without the help of either a tax 
preparer or computer software. Since enacting the Tax Reform Act of 
1986, over 15,000 provisions have been added to the Internal Revenue 
Code.
  It is not just a matter of saving taxpayers' time and effort. This is 
about saving real money. The Tax Foundation estimates that 
comprehensive tax reform could save Americans as much as $265 billion a 
year in compliance costs associated with preparing their returns. Now, 
that would be a real tax reduction that wouldn't cost the Treasury one 
dime.
  Mr. President, I have been working on tax reform for years. In 2003, 
I attached an amendment to the Jobs and Growth Tax Relief 
Reconciliation Act that would have created a blue ribbon commission to 
study fundamental tax reform. The amendment was adopted by voice vote 
but later removed in conference. Then, in the autumn of 2004, I offered 
my tax reform commission amendment again, this time to the American 
Jobs Creation Act. The Senate again adopted my amendment. During 
conference negotiations, the White House contacted me and requested I 
withdraw my amendment because the President was preparing to take a 
leadership role by appointing his own tax reform panel. I 
enthusiastically agreed to defer to his leadership, and I withdrew my 
amendment. It seemed to me that the tax reform bandwagon was finally 
starting to roll.
  In January 2005, President Bush announced the creation of the all-
star panel headed up by former Senators Connie Mack and John Breaux, 
and that panel spent most of the year engaging the American public to 
develop proposals to make our Tax Code simpler, fairer, and more 
conducive to economic growth. In November of 2005, the panel issued its 
final report. While not perfect in everyone's mind, the panel's two 
plans provided a starting point for developing tax reform legislation 
that would represent a huge improvement over the current system. The 
panel's proposals belong as a key part of the national discussion on 
fundamental tax reform.
  Tinkering with the current Tax Code won't get it done. Tinkering is 
what has got us in this mess in the first place. It's time to rip the 
Tax Code out by its roots and replace it with something that works.
  The President's panel had a number of great ideas that we should 
incorporate into tax reform legislation. For example, we should 
simplify the code by repealing the complex, unfair, and antigrowth 
alternative minimum tax. We should consolidate all the various tax-
preferred savings plans into just two or three plans that average 
workers and families can understand and utilize. We should scale back 
the tax subsidies that we use to pursue social engineering and dictate 
economic policy, forcing Americans who fail to qualify for tax breaks 
to pay higher rates to make up the lost revenue.
  We must create a tax system that is conducive to job creation and 
economic growth. We should start by addressing one of the biggest 
problems with the current code, and that is it rewards moving 
production overseas. We are taxing our exports heavily and taxing our 
imports lightly. Such a system sounds absolutely perverse, but that's 
what we have in the United States.
  In fact, a constituent of mine, Tom Secor, from Norwalk, OH, who owns 
his own small business, came to my office and told a story about a 
business trip he made to China. He said he saw an editorial in a 
Chinese newspaper that was discussing the concerns of Americans about 
Chinese competition. The conclusion of the editorial was that Americans 
could solve most of their problems with Chinese competition if they 
would just reform their own Tax Code. Imagine that, even Communist 
China knows the United States needs tax reform to stay competitive. But 
for some reason we refuse to learn that lesson ourselves.
  We must also understand that unless we do tax reform, the lower 
marginal rates, the lower capital gains taxes, the lower taxes on 
dividends will evaporate and we will have gained nothing in regard to 
fundamental tax reform and entitlement reform. And I think such reform, 
folks, must take into account our failure to pay for the Iraq war. This 
administration will have to explain why they are leaving us holding the 
bag and why they did not keep their promise for tax reform. They 
promised us.
  I know there is bipartisan support in this chamber to move forward on 
fundamental tax reform. Some of our colleagues have already taken steps 
towards developing legislation that would represent a huge improvement 
over our current system. As I already mentioned, we have Senator Gregg 
and we have Senator Kent Conrad who want to get going, so we should 
endorse the approach they want to take and submit legislation that 
Congress could consider under fast-track procedures. The proposal 
basically is to appoint eight Democrats and eight Republicans, 
including two top administration officials, and it would require a 
three-fourths vote for submitting a proposal to Congress.
  In other words, they do their work, and if three-fourths have said 
this is what we want to do for tax reform and entitlement reform, we 
have to vote on it up or down. That is really important because you 
can't ask some of our colleagues to spend that kind of time on tax 
reform and entitlement reform and not guarantee them that if they agree 
on something, they will get a vote on it.
  Some say to me: George, it is too late to do something. Well, it is 
not. And I think of Bill Bradley. Bill Bradley, in 1982, came up with a 
tax reform program. It took 4 years, but it was adopted in 1986. In 
other words, Ronald Reagan, working with Congress, reformed the Tax 
Code in 1986, and President Reagan is still fondly remembered

[[Page 28108]]

as the leader who set the stage for years of prosperity at the end of 
the 20th century. He worked on a bipartisan basis. I think this 
President really has an opportunity to do something in regard to this. 
I think the President and the administration should say to Congress: 
Everything is on the table. No holds barred. I will sit down with you, 
and I will work on it. And you know what. Maybe we will not get it 
done, but at least we will start it. We will let the American people 
know that we understand that tax reform and entitlement reform is 
fundamental to the future of our country. What a nice legacy for our 
President, to at least say he got into the game and did something about 
it and didn't say you guys worry about it; it is your problem.
  Mr. President, the time to act is now. When you look at the numbers, 
it is self-evident we must confront our swelling national debt; that we 
must make a concerted bipartisan effort to reform our tax system, slow 
the growth of entitlement spending, and halt this freight train that is 
threatening to crush our children and grandchildren's future.
  Right now, in my lifetime, where I am at this stage, what I am 
worried about is the kids of America. I am worried about my 
grandchildren and other people's grandchildren. What is the legacy that 
we are going to leave those children and grandchildren? I don't know 
about my colleagues, but I am worried. I am really worried. I am 
worried about whether we are going to develop the infrastructure of 
competitiveness so those kids can compete in that global marketplace.
  It is in our hands. Folks back home sent us here to take on the tough 
problems and make the tough decisions and do what is right for our 
country.
  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.
  The PRESIDING OFFICER. The Senator from Washington.
  Mrs. MURRAY. 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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