[Congressional Record (Bound Edition), Volume 153 (2007), Part 22]
[Senate]
[Pages 30459-30462]
[From the U.S. Government Publishing Office, www.gpo.gov]




                                 PAY-GO

  Mr. GREGG. Mr. President, this morning, while I was working out in

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the gym, on the air came one of my friends, a gentleman with whom I 
enjoy serving, who has a great sense of humor--Senator Schumer from New 
York. He was being interviewed by the CNBC team, which is a great and 
enjoyable team to watch: Mark Haines and Becky Quick and others--David 
Faber. He said the Democratic Party had been disciplined because they 
had used pay-go as a way to control spending here in the Congress.
  I almost fell off the treadmill, because that statement is so 
outrageous that it could only be made by somebody from New York who 
sees things in big pictures, sees the forest but misses the trees. The 
statement represents, or implies, that pay-go is a fiscally 
disciplining event around here when just the opposite is what has 
occurred. Pay-go has become a term of art which has a nice name, and 
which is thrown out by some of my colleagues on the other side of the 
aisle as their representation of fiscal discipline, but in fact it has 
become a mechanism for spending money at an outrageous rate in 
entitlement and mandatory accounts.
  I don't call it pay-go anymore, I call it ``Swiss-cheese-go.'' The 
record is now pretty clear. Since this Congress came into being under 
the control of the other party, with the representation that pay-go was 
going to be used to discipline spending around here, there have been 13 
major incidences--these don't count the minor ones--major incidences of 
pay-go being waived, manipulated, or manhandled so that it didn't apply 
to spending.
  Items which should have not been allowed to occur, spending 
initiatives which should have been subject to the pay-go rules have 
been ignored, manipulated, or gimmicked so that pay-go did not apply on 
these 13 incidents, which now total $143 billion--billion--in new 
spending.
  So when Senator Schumer spoke on CNBC this morning--I think he was 
being asked by Mark Haines--Mark Haines said to him: Will pay-go 
survive? Senator Schumer said: Sure, it will survive. We are committed 
to this type of fiscal discipline.
  What Mark Haines should have asked is: What happened to pay-go? Why 
have so many holes been put in the process? Why has the Democratic 
leadership allowed it to be waived, manipulated, and gimmicked so that 
$143 billion of spending, which should have applied to pay-go, which 
should have had pay-go applied to it, has simply been allowed to pass?
  Well, it is very simple. Pay-go was never meant to discipline 
spending. It is a fraud to represent that pay-go is used to discipline 
spending. Honestly, if we as a Congress had to sign financial 
statements the way we make people sign financial statements in the 
corporate world as a result of the Enron case--you know, the heads of 
our various corporations have to actually sign their statements, and 
they are subject to criminal penalty if they are inaccurate.
  If we were forced to sign a fiscal statement that said we were using 
pay-go to discipline spending, we would all go to jail because if we 
signed that statement we would be defrauding the American people at a 
level that would make Enron look like a little exercise.
  Now, $143 billion of fraud has occurred under the alleged pay-go 
rules because pay-go, which should have applied, has not been applied. 
But this is just the first step in the exercise of profligate spending 
around here. This is one of the more ingenious ones because under the 
name of pay-go, we are representing that we are controlling spending, 
when, in fact, using pay-go, we are actually spending $143 billion.
  There is the second step, which is the discretionary side. This is 
all entitlement spending, of course. Now, $23 billion is being spent 
over what the President requested this year. We hear from the other 
side of the aisle: Well, it is only $23 billion. It is being spent on 
good causes. Everything gets spent on a good cause around here.
  Then in the Labor-HHS bill, which represents $11 billion of that $23 
billion, obviously many good causes are listed. But what people fail to 
mention is, first, $23 billion is a lot of money. In fact, there are 
something like 30 States in this country which could operate their 
entire budgets on $11 billion; $23 billion would probably be the budget 
of almost every State in this country.
  But this builds the baseline. This $23 billion is not the end of the 
number we are spending, it is the beginning of the number of the add-
ons. When you take it out to 5 years, the baseline jumps by $133 
billion. If we take it out to 10 years, that is $313 billion--billion--
of additional spending.
  So this is not just $23 billion of new spending that is being spent 
above what the President believes is necessary in order to operate the 
Government, it represents $313 billion of spending over 10 years. That 
is a big number. That is a massive number. You could do a lot with that 
amount of money. You could cut a lot of taxes, for example. You could 
eliminate the double tax on people who are married, which is going to 
go back up in 2010, if you did not spend this money.
  You could give higher tuition tax credits to people trying to get 
their college degrees if you did not spend this money. You could extend 
the capital gains and dividends tax rates, which disproportionately 
benefits senior citizens, especially the dividends tax rate if you did 
not spend this money.
  This is real money. Real money--$23 billion this year totals $313 
billion over a 10-year period. So you take this $313 billion and you 
attach it to the swiss-cheese-go attack here of $143 billion. You are 
up to half a trillion dollars, half a trillion dollars that this 
Congress has spent in 10 months. They have only been in charge for 10 
months--half a trillion dollars.
  Multiply that out. My goodness, you are up to $2 trillion over the 
term of this Congress, theoretically. Now, $2 trillion, that is even 
real money by Democratic terms. I think colleagues on the other side of 
the aisle would even agree that $2 trillion is a lot of money.
  Now, that might be a bit of hyperbole, but the half a trillion 
dollars is not. That is how much this Congress has cost the American 
people in the first 10 months in office, while they have been living 
under the fiscal discipline of pay-go, while they go on TV shows and 
say: We are disciplined because we believe in pay-go.
  As a result of that, we get half a trillion dollars of new spending.
  Well, that is a lot. We have a bill on the floor right now that 
regrettably follows on with this exercise in excess and profligateness. 
The farm bill alone has $34 billion of gimmicks in it to try to avoid 
budget discipline, $34 billion of gimmicks. That is huge. I think it 
adds four new major subsidy programs for new crops, including asparagus 
and camellia--I do not even know what that is--and a variety of other 
crops; creates or authorizes programs which study or work to alleviate 
stress on farmers; adds Chinese gardens in places; does a little 
gimmick which is even creative by the creativeness of this place, 
creates a new standard of creativeness where they now are taking 
entitlement spending and freeing up entitlement spending by giving tax 
credits.
  In other words, they create a new tax credit, and the purpose of that 
tax credit is to pay for items which historically have been paid for by 
entitlement spending under the farm bill, mandatory spending. Since 
they no longer have to pay for that with mandatory spending, they have 
created an extra $3 billion they could spend on new farm programs.
  So the farm bill itself is a continuation of this exercise in making 
the concept of pay-go superfluous. And, certainly, the claims that pay-
go applies around here are fraudulent. It is about time, hopefully, 
people start paying attention.
  When you are up to half a trillion dollars of new spending in 10 
months, much of which has been done outside of the budget window, so 
that the budget rules have not been allowed to apply to it, that gets 
to serious money. It gets to a serious lack of fiscal discipline.
  I hope we would change this course, but we do not appear to be 
changing this course. We actually appear to be aggravating this problem 
by bringing forward bills such as the farm bill,

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which continues this failure of fiscal discipline.
  Who has to pay for all of this? Well, I see those young pages. They 
are enthusiastic, they smile, they help us out. Regrettably, every day 
they are here--most of them have been here for a little while--we add 
about a billion dollars to their debt.
  Interesting how this adds up. But that $500 billion has been put on 
the books in the last 10 months. We are not going to pay for it. Our 
generation is not going to pay for it. These pages and their generation 
are going to have to pay for it. It is all debt. It is not fair to 
them, and it is certainly not fair to the American people to represent 
that we are exercising some sort of fiscal discipline around here under 
the term ``pay-go,'' when, in fact, just the opposite is happening. 
That is used as a stalking horse, not for fiscal restraint but for 
spending.
  Mr. DURBIN. Would the Senator yield for a question?
  Mr. GREGG. I would be happy to yield for a question.
  Mr. DURBIN. I just have one question for the Senator from New 
Hampshire. As I understand it, the President is going to ask for $196 
billion for 1 more year in the war in Iraq, not paid for.
  So would the Senator be voting against the President's request for 
$196 billion, unpaid for, to continue the war in Iraq?
  Mr. GREGG. Well, that is a good question, an excellent question. And 
the answer is, the first obligation of a Federal Government is to 
defend the country. And when you have soldiers in the field, you do 
that. You pay for them being in the field.
  I would suggest the way we could pay for that, in fact, would be that 
we not waive the pay-go rules for this $143 billion of spending which 
has nothing do with national defense or, alternatively, we could 
eliminate the $23 billion of nondefense spending which has been added 
by the Democratic Party in this year's budget cycle. That would save us 
a significant amount of money.
  So I would be happy to pay for it by cutting either of those 
accounts. But, in any event, I am going to pay for soldiers who are in 
the field.
  Mr. DURBIN. Will the Senator yield for a further question?
  Mr. GREGG. I would be honored.
  Mr. DURBIN. Can the Senator tell me how many Presidents in the 
history of the United States of America have proposed tax cuts in the 
midst of a war?
  Mr. GREGG. Well, I would be happy to respond to that if I knew the 
answer, but I do not. But let me talk about the tax cuts. The tax cuts 
which were put in place were put in place prior to 9/11. As a practical 
matter, had they not been in place, the effect of the burst of the 
Internet bubble in the late 1990s, which was the occurrence of a 
dramatic expansion of the economy with a paper expansion of equities 
being issued for companies which had value in the late 1990s, was a 
speculative event.
  That collapse, coupled with the 9/11 attack which put this country 
into trauma, both physically and politically, but also economically, 
would have led us into a very severe recession if we had not had those 
tax cuts.
  The fact that we put those tax cuts in place early in this 
administration has led to economic growth, which has led to 43 months 
of growth, 8.7 million new jobs, and interestingly enough, those tax 
cuts have actually led to our revenues today being at a historic high. 
Over the last 3 years we have collected more money in revenue growth 
than we have received at any time in our history.
  We are now getting 18.7 percent of gross national product in 
revenues, when historically we usually get about 18.2 percent. And the 
vast majority of that revenue growth has come directly from the cut in 
capital gains rates, as we have received over $100 billion of new 
revenue in just the capital gains activity.
  So I would say, first, the tax cut was not put in place during the 
war. It was put in place at the beginning of the war; and, secondly, it 
has had the right effect, which is to energize economic expansion and 
energize revenue to the Federal Government.
  I do appreciate that question.
  I yield the floor.
  Mr. DURBIN. Mr. President, how much time is remaining on the 
Democratic side?
  The PRESIDING OFFICER. There remains 11 minutes.
  Mr. DURBIN. Mr. President, I have the greatest respect for my 
colleague from New Hampshire, and he and I have had many conversations 
about our views on spending and budget policy.
  Although he is critical of the pay-as-you-go approach, which the 
Democrats have brought to Congress since we came into the majority this 
year, the fact is, the Republicans, the so-called fiscally conservative 
party, never, ever initiated pay as you go.
  What is ``pay as you go''? It is something with which every family is 
familiar. If you want to buy a new washer and dryer, do you have the 
money? If you do not have the money, you do not do it. You may borrow 
the money, but we are trying to avoid that.
  Pay as you go says, if you want to spend new money on new projects, 
you either have to raise taxes or cut spending. If you want to cut 
taxes, you either have to increase another tax or cut spending. It is 
just that simple.
  The Republicans, the fiscally conservative party, or so they brand 
themselves, did not initiate this. The Democrats did. And we are living 
by it.
  The Senator quarrels with some of the conclusions on various bills. 
But he has to concede, I hope, the point that we are doing this, and 
doing it in a fiscally responsible way, and it is painful. It is not 
easy. It was far easier when the Republicans controlled Congress. They 
gave tax cuts to the wealthiest people in America, adding to our 
deficit without cutting spending on programs, without increasing other 
taxes. They gave tax cuts.
  When the Senator from New Hampshire says that when the President 
asked for $196 billion for the next year for the war because he wants 
to stand behind our soldiers, he expresses a partial sentiment we all 
share. We don't want to shortchange the soldiers in any way. But isn't 
the fiscally and morally responsible way to fund a war to pay for it? 
The documentary of Ken Burns on World War II talked a lot about the 
sacrifices Americans made to fund the war. It ran up quite a debt. 
Families across America bought U.S. savings bonds to help fund the 
debts of America. It was a special effort, a special sacrifice. This 
President, this administration has never asked for that level of 
sacrifice from anyone other than the soldiers and their families.
  Instead, what he has said to the rest of America is: While we wage a 
war that costs almost $200 billion a year, $10 or $12 billion a month, 
we are going to give tax cuts to the wealthiest. So when my colleague 
from New Hampshire comes to give us pious exhortations about fiscal 
soundness, I am at a loss to understand how he can continue to vote for 
the war and $196 billion that is not paid for. If he believes we have 
to pay as you go, why wouldn't he want to pay for the war as we go? 
Clearly, he makes an exception.
  When the President receives a bill such as the Labor-Health and Human 
Services legislation, which has $10 billion more in spending than he 
asked for, he says he will veto it. What is included in that $10 
billion? For the first time since the President came up with the notion 
of No Child Left Behind, we are going to make a massive investment to 
help school districts get test scores up, improve the education of 
kids. The President vetoes it. He voted for the test. He voted for the 
critique of schools but would not provide the resources for those 
schools to improve test scores.
  There is also money in there the President didn't ask for, for 
medical research at the National Institutes of Health. I would take 
that one on, on the stump, with the President any day. Let's have a 
debate on that. Should we spend $196 billion on the war in Iraq or 
should we at least put enough money in to improve medical research at 
the National Institutes of Health? It is a small amount in comparison. 
Most Americans believe as I do, that a strong America begins at home. 
It begins at home with health insurance for

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our children, a bill the President vetoed. It begins at home with 
better schools for our kids, which the President is about to veto on 
the Labor-Health and Human Services legislation. It begins at home when 
we realize medical research is important for all of us. None of us 
knows what tomorrow may bring. We want to know if we are stricken, or 
someone in our family, we can count on the best minds in America 
looking for the cures. The President says we can't afford that. He is 
going to veto it.
  Shortly, we will vote on something called the Water Resources 
Development Act, $23 billion over 5 years and $23 billion is a lot of 
money. How does it compare with the war that costs us $12, maybe $15 
billion a month? The $23 billion for water resources development is 
money invested in America to build our infrastructure, the levees, the 
locks and dams, the things that are critical for America to function 
and succeed. The President says we can't afford that. He vetoed the 
bill. I hope we override it.
  In the meantime, I hope the Labor-HHS bill, the one that includes 
money for No Child Left Behind and medical research, is a bill the 
President will reconsider and sign. If he does not, I hope on a 
bipartisan basis we will override that veto as well.
  This President, for 6 years, never discovered his veto pen. Now he 
has found it. He has used it to veto our efforts to change direction in 
the policy in Iraq. He has used it twice to veto stem cell research to 
fund cures for diseases which threaten Americans and their families. He 
has used it to veto the Children's Health Insurance Program. He now 
threatens to use it to veto money for our schools. A pattern is 
emerging. This President, when he gets up in the morning and looks out 
the window of White House, sees Iraq. He does not see America and the 
American families who count on us, those families going to work every 
day who don't have health insurance for their children, those families 
sending their kids to school who are disappointed with test scores and 
believe their kids can do better and we can do better, and those 
families who want the American economy to be strong, creating good-
paying jobs here at home that cannot be outsourced.
  The President's veto pen is defining his Presidency. As it comes to a 
close, it is telling us his priorities. His priority is a war, a war 
that has cost us over $500 billion and, even more importantly, almost 
3,900 American lives. America's priorities are not only to be safe and 
secure but also to make sure this economy grows and the people in 
America striving for opportunity and for a better day tomorrow have a 
chance through the programs we are supporting in this legislation.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Akaka). The Senator from South Dakota is 
recognized.
  Mr. THUNE. Mr. President, I ask unanimous consent to speak as in 
morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. THUNE. Mr. President, I have been listening with interest to my 
colleagues from New Hampshire and Illinois talk about tax cuts and pay-
go and all those issues we deal with on a daily basis. It strikes me 
that the thing that seems to get lost by our colleagues on the other 
side when it comes to reducing taxes is that when you reduce taxes, you 
actually get not less government revenue but more. History has proven 
that. It has proven it time and time again, going back in the 1920s 
under Harding, the 1960s under Kennedy, the 1980s under Reagan, and 
currently. If you look at what has happened, when you reduce the 
marginal income tax rate and the capital gains tax rate, you actually 
not only see the job growth we have seen--as my colleague from New 
Hampshire noted, 8.7 million new jobs--22 consecutive quarters of 
economic growth, lowest unemployment numbers in a generation, but you 
also see a dramatic increase in Government revenues.
  It was predicted, at the time of the tax cuts in 2001 and 2003, that 
all this money was going to be lost because somehow the Government 
wasn't going to have enough money to do things because we were going to 
reduce the tax burden on the American people. What has happened is the 
exact opposite, which has been a historical fact, that when you reduce 
taxes on hard-working people, they take the realization of paying less 
taxes, they reinvest that, create more jobs, and you get more 
Government revenue.
  If we look at the last several years, we have seen Government 
revenues coming into the Treasury increasing 12 percent, 13 percent, 
this year 9 percent, at least the last numbers I had. But the fact is, 
revenues have been going up. We reduced the tax burden on the American 
people. Everybody says: But it just helped those on the wealthy end of 
the income spectrum. Again, I submit that when you reduce marginal 
income tax rates, as we did, everyone on the income scale benefits. 
People on the lowest income scale went from a 15-percent marginal 
income tax rate down to 10. They benefited directly as a result of the 
tax relief enacted by the Republican majority.
  Frankly, this is a philosophical debate that goes on in the Congress 
year after year after year, but we happen to believe that when you 
allow the American people to keep more of what they earn, allow them to 
invest that in their family and their community, you get a much better 
outcome than when you send your dollars to Washington, DC, and allow 
the Government to spend it for them. When you allow the American people 
to put their dollars to work, you create more jobs, grow the economy, 
and you see the dramatic expansion in Government revenues that we have 
seen over the past 3 years.
  When it comes to the capital gains tax rate, that again has led not 
to less Government revenues but to about a 65-percent, somewhere in 
that neighborhood, increase in capital gains tax revenues coming into 
the Federal Treasury over the period since 2004, when the 2003 tax cuts 
were enacted. Since that period, we have seen a dramatic increase in 
capital gains tax revenues.
  Everybody can put up their charts and talk statistics, and we have a 
lot of that in Washington, but you cannot create facts. You are 
entitled to your opinions but not your own set of facts. In this case, 
the facts are clear. That is, when you reduce marginal income tax rates 
and capital gains tax rates, the American people respond. We have seen 
more Government revenue as a result.

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