[Congressional Record (Bound Edition), Volume 154 (2008), Part 7]
[Senate]
[Pages 10150-10163]
[From the U.S. Government Publishing Office, www.gpo.gov]




                               THE BUDGET

  Mr. CONRAD. Madam President, we are now considering the conference 
report on the budget. For the knowledge of my colleagues, and 
especially my colleague, Senator Gregg, I will consume somewhere in the 
range of 35 minutes. If he has other things to do, we can get that word 
to him so he is not inconvenienced while I make an opening statement.
  Here is what we are confronting--a very dramatic deterioration in the 
budget condition of our country. You can see, in 2007, the official 
deficit was $162 billion; that is down from what had been record 
levels. We achieved an all-time--not achieved, there is no achievement 
to it--we saw an all-time record deficit in 2004 of $413 billion. That 
became the record. The year before was the record up until that point--
$378 billion in the red. Of course, the real situation is far worse 
because this does not disclose how much the debt has been increased.
  Then we saw some improvement, to 2007, a deficit of $162 billion. But 
now we are right back at record levels--$410 billion estimated for this 
year. I believe it is going to be even worse, and 2009 will be about 
the same level.
  When I talk about debt, here is what I am talking about. The gross 
debt of the United States has gone up like a scalded cat under this 
administration. When this President came into office at the end of the 
first year, the debt stood at $5.8 trillion. By the time we are done 
with the 8 years he will have been responsible for, the debt will have 
increased to more than $10.4 trillion--a near doubling of the debt of 
the country. Increasingly, this money is being borrowed from abroad. As 
this chart shows, it took 42 Presidents--all the Presidents pictured 
here, 224 years to run up $1 trillion of U.S. debt held abroad. This 
President has far more than doubled that amount in just 7 years. There 
are over $1.5 trillion of foreign holdings of U.S. debt run up by this 
President in just 7 years. He has taken what 42 Presidents took 224 
years to do and he doubled it and then added another 50 percent to 
foreign holdings of U.S. government debt. The result is we owe Japan 
over $600 billion, we owe China almost $500 billion, we owe the United 
Kingdom a little over $200 billion, we owe the oil exporters over $150 
billion. My goodness, we owe Hong Kong over $60 billion. We now owe 
Russia over $40 billion. That is a sad fiscal record, but that is the 
legacy of this President's fiscal policy.
  This tremendous runup in foreign debt means we have spread dollars 
all over the world and are now increasingly dependent on the kindness 
of strangers to finance our debt here. One of the results of that has 
been a substantial drop in the value of our currency. If you think 
about it, the value of a currency is in part a reflection of supply and 
demand. When you put out a tremendous supply of dollars, guess what 
happens to the value of the dollar--it goes down. That is what has 
happened.
  You can see back in 2002, this is Euros per dollar. It was 1.13 in 
January 2002. Through the end of last month, we were down to .63. The 
value of the dollar against the Euro has dropped like a rock. It has 
dropped 44 percent.
  If anybody is wondering why food prices are going up so rapidly, why 
oil prices are going up so rapidly, here is one of the key reasons. 
Those commodities are sold in dollar terms in the world market. When 
the dollar goes down in value, guess what happens to the value of 
commodities: there is tremendous upward pressure on their value. That 
is what, in fact, has happened.
  We have also seen the economic growth of the country stagnate. You

[[Page 10151]]

can see, if we look at the nine previous business cycles we have 
experienced since World War II, you can see that economic growth 
averaged 3.4 percent a year during previous business cycle expansions. 
But, if we look at average annual economic growth since the first 
quarter of 2001, we see it is stagnating at 2.4 percent.
  Something is happening in this business cycle that is unlike what we 
have seen in the nine major business cycles we have seen since World 
War II. We see this recovery is much weaker. We see it in job creation; 
we see it in business investment.
  For example, on job creation, if you look at job creation, again 
looking at the nine previous business cycles since World War II, and 
you look at the months after the business cycle peak and look at job 
creation--this dotted red line is the average of the nine other major 
business cycles since World War II--that is the dotted red line. Now, 
this other line is the current business cycle. You can see that we are 
10.3 million private sector jobs short of the typical recovery since 
World War II. In other words, if you take all the previous nine major 
business recoveries since World War II and you average them, compare 
them to this business recovery, we are running 10.3 million private-
sector jobs short in this recovery.
  What does that tell us? That tells us something is wrong, something 
is wrong with our economic performance.
  We don't just see it in job creation. We see it in business 
investment. Again, the dotted red line is the average of the nine 
previous recoveries since World War II. The black line is this 
recovery. You can see that we are now running 59 percent below the pace 
of business investment at the same point during the nine previous 
recoveries. Something quite significant is happening in terms of our 
national economy. Anybody who does not see this and understand it and 
seek to find solutions to it, I think is missing the point. There is 
something wrong with the underlying economy that has been affecting us 
since 2001. It is so atypical, it is so different than the other nine 
recoveries since World War II.
  This budget resolution seeks to address some of what we know. It 
seeks to strengthen the economy and create jobs in several different 
ways, first, by investing in energy, education, and infrastructure. We 
think those are priorities to strengthen the economy. It expands health 
care coverage for our children; it provides tax cuts for the middle 
class; it restores fiscal responsibility by balancing the budget by the 
fourth and fifth year of this 5-year budget plan.
  It also seeks to make America safer by supporting our troops, by 
providing for veterans health care, by rejecting our homeland and 
rejecting the President's cuts in law enforcement, the COPS Program, 
and for our first responders, our emergency personnel, our 
firefighters, our emergency medical responders.
  In terms of the tax relief that is in this budget resolution, this 
budget conference report that has come back from an agreement with the 
House of Representatives, we do the following things. We extend middle-
class tax relief, specifically: the marriage penalty relief is provided 
for; the child tax credit is provided for; and an extension of the 10-
percent bracket.
  We also provided for alternative minimum tax relief, because we know 
if we did not, the number of people who would be exposed to the 
alternative minimum tax would explode from roughly 4 million now to 26 
million if we failed to take action.
  We also provided for estate tax reform. Right now we are in this 
bizarre situation where the estate tax goes up to $3.5 million of 
exemption per person in 2009; the estate tax goes away completely in 
2010, there is no estate tax; and then in 2011, it comes back with only 
a $1 million exemption. We say that makes no sense at all. We should 
extend the $3.5 million provision per person, $7 million a couple, and 
index it for inflation.
  We also provided for energy and education tax cuts to provide 
incentives to develop alternative forms of energy and reduce our 
dependence on foreign oil. We also provided property tax relief and, of 
course, the popular and important tax extenders, things such as the 
window energy credit, the solar credit, the research and 
experimentation credit. All of those are provided for in this budget.
  We balance the books by the fourth year, $22 billion in the black, or 
in this case in the green, by 2012. By 2013 we maintain balance, all 
the while we are bringing down the debt as a share of gross domestic 
product from 69.3 percent of GDP to 65.6 percent of GDP in 2013. So we 
are bringing down the debt as a share of gross domestic product each 
and every year of this budget resolution. Let me be the first to say, 
that is not enough. We need to be doing more. I will say in a minute 
how I think we can and should do more. But this is an important 
beginning.
  One of the ways we do it is we restrain spending. Under this budget 
conference report, we bring down spending as a share of GDP each and 
every year of the 5-year plan from 20.8 percent of GDP down to 19.1 
percent in 2012 and 2013.
  The other side will be quick to say, but you are spending more money 
than the President is. That is true, we are spending somewhat more 
money than the President, because we have rejected his cuts to law 
enforcement, to our first responders, and to other things we think are 
priorities of the American people.
  But when they talk about the difference in spending, they have a 
tendency to dramatically overstate the difference. Here is the 
difference between our spending line, which is in green, and the 
President's spending line. If you are looking at this on television, 
you probably cannot see any difference. That is because there is almost 
no difference between our spending line and the President's spending 
line.
  In fact, for this year, the difference in total spending between our 
budget and the President's budget is 1 percent. That is the difference, 
1 percent. Over the life of this 5-year plan, you can see it is a very 
modest difference.
  Let me turn to 2009, because that is the most immediate year covered 
by this budget plan. You can see the Bush budget calls for $3.03 
trillion of spending. We call for $3.07 trillion of spending. Again the 
fundamental differences are, we are investing in education, in energy 
to reduce our dependance on foreign oil, and on infrastructure which is 
so critically important to our future economic success.
  On the revenue side of the equation, we also have somewhat more 
revenue than the President's plan because we have lower deficits and 
lower debt than the President's plan. Here you can see the difference. 
The green line is our revenue line; the red line is the President's 
revenue line. You can see in the first 2 years there is virtually no 
difference between our revenue lines; they are right on top of each 
other. In 2011 there is a slight difference, and 2012, 2013, as we 
climb out of deficit and balance the books.
  But again the differences are quite modest, and here they are over 
the 5 years. We are calling for $15.6 trillion of revenue, the 
President is calling for $15.2 trillion of revenue. That is a 
difference of 2.9 percent. That is the difference between the revenue 
we have proposed, which leads to lower deficits and lower debt than the 
President's plan.
  You will hear our friends on the other side say, this represents the 
biggest tax increase in the history of the world. We beg to disagree. 
We do not think any tax increase is necessary to meet these numbers. If 
someone is listening and they heard me say, well, Senator, you said you 
have got more revenue, although it is only 2.9 percent more revenue, 
than in the President's plan, but you say you can do that without a tax 
increase, how is that? How can you do that?
  Well, here is how I would propose to do it. First, the Internal 
Revenue Service estimates the tax gap, the difference between what is 
owed and what is paid, is $345 billion a year, the difference between 
what is owed and what is paid.
  Now the vast majority of us pay what we owe. But unfortunately there 
are an increasing number of people and companies who do not pay what 
they owe.

[[Page 10152]]

That difference is now estimated at $345 billion a year. That goes back 
to 2001. I personally believe it has grown substantially since then so 
it would be a higher number. But that is not the only place where there 
is leakage in the system. I have shown this chart many times on the 
floor of the Senate. This is a five-story building in the Cayman 
Islands called Ugland House. This little building down in the Cayman 
Islands is the home to 12,748 companies. Let me repeat that. This 
little five-story building down in the Cayman Islands is the home, at 
least they say it is their home, to 12,748 companies. They say they are 
all doing business out of this building.
  Now I have said that is the most efficient building in the world, 
little tiny building like that, and it houses 12,000 companies. How can 
any building be that efficient? Well, we know they are not doing 
business there. They are doing monkey business, and the monkey business 
they are doing is to avoid taxes in this country. And how do they do 
it? Well, they operate through a series of shell corporations, and they 
show their profits in the Cayman Islands instead of the United States 
to avoid taxes here. Why would they do that? Do they not have taxes 
down in the Cayman Islands? No. Is that not convenient? So they do not 
show their profits here, even though they make their profits here, they 
show their profits down in the Cayman Islands. That is the kind of scam 
that is going on. If you doubt it, here is a story that came to us from 
the Boston Globe on March 6 of this year:

       Shell companies in the Cayman Islands allow KBR [that is 
     Kellogg, Brown and Root] the nation's top Iraq war 
     contractor, and until last year a subsidiary of Halliburton, 
     has avoided paying hundreds of millions of dollars in Federal 
     Medicare and Social Security taxes by hiring workers through 
     shell companies based in this tropical tax haven.
       More than 21,000 people working for Kellogg, Brown and Root 
     in Iraq, including about 10,500 Americans, are listed as 
     employees of two companies that exist in a computer file on 
     the fourth floor of a building on a palm-studded boulevard 
     here in the Caribbean. Neither company has an office or phone 
     number in the Cayman Islands, but they claim it is their 
     home.

  This is a scam. That is what is going on here. This is the largest 
defense contractor in Iraq, and they are engaged in a total scam to 
avoid taxes in this country. If this does not make people angry, I do 
not know what it would take, because what they are doing is they are 
sticking all of the rest of us who are honest with our tax obligations. 
It does not stop there.
  Here our own Permanent Committee on Investigations issued this report 
last year:

       Experts have estimated that the total loss to the Treasury 
     from offshore tax evasion alone approaches $100 billion per 
     year, including $40 to $70 billion from individuals, and 
     another $30 billion from corporations engaging in offshore 
     tax evasion. Abusive tax shelters add tens of billions of 
     dollars more.

  So when somebody says: Well, you have got to raise taxes to produce 
2.9 percent more revenue than the President has called for, I say, no, 
you do not. Let us go after some of this stuff. Let us go after these 
offshore tax havens. Let us go after these abusive tax shelters. Let us 
go after this tax gap.
  Now, the other side will say, well, there is nothing you can do about 
it. Well, certainly there is nothing you can do about it if you do not 
try. You cannot do a thing if you do not try. But if you try, you can 
get this money. Let me say, I know you can, because I used to be the 
tax commissioner for my State. I was the chairman of the Multistate Tax 
Commission. I went after this money. I got hundreds of millions of 
dollars for my little State of North Dakota going after some of these 
scams. The United States could do much more.
  Here is a picture of a foreign sewer system. This is a sewer system 
that is in France. Why do I put up a picture of a sewer system in 
Europe when I am talking about the budget of the United States? Well, 
because the two have a linkage. What is the linkage? The connection is 
that we actually have investors in this country buying European sewer 
systems, not because they are in the sewer business, no, no, no. They 
are buying European sewer systems to reduce their taxes in this 
country. How do they do it? It is very simple. They go over, they buy a 
European sewer system, they then show that on their books as a 
depreciable asset. They depreciate it over a period of years to reduce 
their taxes in this country, and then lease the sewer system back to 
the European city or municipality that built it in the first place.
  Now, why should we allow that? This is the kind of thing I think we 
can shut down and easily achieve 2.9 percent more revenue than the 
President has proposed. The question comes, well, why haven't you done 
something about shutting down these scams already? There is a very 
simple reason we have not. It is called the President of the United 
States. Because the President of the United States has repeatedly 
blocked attempts to shut down these scams.
  Here are a few of the examples. We tried to codify economic 
substance, prohibiting transactions with no economic rationale, things 
that were done solely to avoid taxes. The President threatened a veto.
  We tried to shut down schemes to lease foreign subway and sewer 
systems and depreciate the assets in this country. The President 
threatened a veto.
  We proposed ending deferral of offshore compensation by hedge fund 
managers trying to evade taxes in our country. The President threatened 
to veto it.
  We proposed expanding broker information reporting so we could close 
down some of this tax gap. The President threatened a veto.
  We proposed taxing people who give up their U.S. citizenship in order 
to evade taxes here in America. The President threatened a veto.
  Now, I have indicated, I have acknowledged, we have 2.9 percent more 
revenue in our plan than in the President's budget.
  The other side will say: Biggest tax increase in the history of the 
world. That is exactly the same speech they gave last year. Now we have 
the benefit of a record. Because we can look back, we can look at the 
speeches they gave last year, and we can look at what has actually 
happened this year. We can see, what did this Democratic Congress do? 
Did they raise taxes? No. In fact, here is precisely what happened: 
They reduced taxes in the House and the Senate by $194 billion. They 
had offsetting loophole closers, for a net tax reduction of $187 
billion.
  Anybody who is listening can reality test. Just go to your mailbox. 
Have you gotten a little check from the U.S. Treasury representing a 
tax cut as part of a stimulus package? Millions of Americans have, and 
millions more will. That is part of this $194 billion of tax reduction 
that has occurred with Democrats running both Houses, despite claims of 
our colleagues on the other side that we were going to have the biggest 
tax increase ever.
  We all know some of the things that are happening in this economy. 
One is that gasoline prices are soaring. I filled up my car last week. 
I have a 1999 Buick. I know people think all Senators have limousines 
and drivers. Not me. I have a 1999 Buick that I drive myself. I filled 
it up last week, $52.19. The price of gasoline has soared.
  In January of 2001, gas was $1.47 a gallon; in May of 2008, $3.79. We 
are hearing by Memorial Day gas average $4 nationwide. We have 
addressed that in this budget by investing in energy, creating green 
jobs, reducing dependence on foreign oil, and strengthening the 
economy.
  We have provided for energy tax incentives in this budget. We have 
provided for $2.8 billion over the President's budget for energy to 
provide for alternative sources of energy, homegrown sources of energy 
so we are less dependent on foreign oil. We have also created an energy 
reserve fund to invest in clean energy and the environment. But we know 
skyrocketing gas prices are not our only problem.
  We also know if we look at what is happening to education, we are 
falling behind our global competition. This is one metric to look at 
that, the number of engineering degrees in China and the number of 
engineering degrees in this country. The red line is China's 
engineering degrees. You can see they are

[[Page 10153]]

absolutely soaring. There are over 350,000 a year graduating as 
engineers in China. In this country, we are down here at about 75,000 
engineering graduates. Engineering is critical to future economic 
growth. We know that. So that has to be a concern. Here, China is now 
graduating 350,000 engineers a year; we are in the 75,000 range. That 
is something we have to pay attention to. Obviously, I have used one 
example. There are many others.
  This budget resolution invests in education to generate economic 
growth and jobs, to prepare our workforce to compete in a global 
economy, to make college more affordable, and to improve student 
achievement. We have provided for education tax incentives to encourage 
people to go to college. We have provided $5.5 billion over the 
President's budget in discretionary funding for education, and we have 
created an education reserve fund for school construction and for the 
reauthorization of the higher education legislation.
  It doesn't stop there. We also have serious infrastructure issues in 
this country. Here is a picture of the dramatic collapse of the bridge 
on 35-W between Minneapolis and St. Paul last year. I am acutely 
familiar with this bridge because when my wife was in medical school, I 
went across that bridge many times a week. Can you imagine the absolute 
horror of the people who were on that bridge? Here are the cars of 
people who were on that bridge when it fell out from underneath them. 
This was at rush hour last year, one of the most heavily used bridges 
in the State of Minnesota.
  This budget seeks to address infrastructure by providing targeted 
investments to repair crumbling roads and bridges, improve mass 
transit, expand airports and schools. It creates a reserve fund to 
allow for major infrastructure legislation. It provides $2.5 billion 
more than the President for key discretionary transportation accounts. 
It fully funds highways, transit, and increases funding for the Airport 
Improvement Program.
  This budget resolution also deals with other critical national 
priorities, including fully funding the defense requests of the 
President. The President has asked for $2.9 trillion over the next 5 
years. This budget provides $2.9 trillion. We also provide $3.3 billion 
more for our veterans health care than the President. The President has 
called for $44.9 billion over a 5-year period. We have adopted the 
independent budget, which is a budget that was put together by the 
veterans organizations to more fairly reflect the needs we see coming 
because of veterans coming back from Iraq and Afghanistan. We have 
allocated $3.3 billion more than the President for that purpose. We 
think we owe these veterans the high-quality care they were promised.
  All of us who have been to our VA hospitals, who have been to Walter 
Reed, are acutely aware of the need for more investment in those 
facilities. We have also provided in this budget, in fiscal year 2009, 
$2.8 billion more than the President's budget for law enforcement and 
first responders. Inexplicably, at least to this Senator, the President 
has called for the complete elimination of the COPS Program. The COPS 
Program has put 100,000 police officers on the street, over 200 
officers on the street in my home State of North Dakota. The President, 
in his budget, didn't just call for cutting that program. He called for 
its total elimination. It makes no sense to me. I just had my house 
here broken into while I was back home during the break. I have a 
fellow who rents from me in the basement. He came home from work and 
our place had been broken into. The place was totally trashed. Many of 
his things were stolen. Why we would take police off the street when, 
in jurisdiction after jurisdiction, we are facing heightened criminal 
activity doesn't make any sense.
  I am getting to the end. I know my colleague has been riveted 
listening to me talk about these charts. He has only had a chance to 
see them maybe 12 times. I thank him for his patience.
  We also have budget enforcement in the budget resolution, 
discretionary caps for 2008 and 2009. We maintain a strong pay-go rule 
that I know my colleague will probably want to comment on. We also have 
a point of order against long-term deficit increases, a point of order 
against short-term deficit increases. We allow reconciliation for 
deficit reduction only. I know this is a place where my colleague will 
agree. I am sure he is pleased that we don't have a reconciliation 
instruction in this conference report for any other purpose, and we 
have no reconciliation instruction for any purpose.
  We also have a point of order against mandatory spending on an 
appropriations bill. Again, this is something the Senator will strongly 
support because we have seen the games that were beginning to be played 
when the appropriators figured out they could start to do that. We 
tried to shut it down or at least to create a budget point of order, 
maintain a budget point of order to prevent that practice from 
expanding.
  The budget conference report also addresses long-term fiscal 
challenges. I don't want to overstate this because, the truth is, I 
don't believe an annual budget resolution is the place to deal with the 
long-term fiscal challenges facing the country. The annual resolutions 
tend to be done on a partisan basis. Our fiscal challenges are so big, 
so deep, my own conviction is this has to be done with a special 
process, a special procedure.
  The Senator, who is the ranking member of the Budget Committee, and I 
have teamed up to offer our colleagues legislation that would create a 
bipartisan task force that would be responsible for coming up with a 
plan to deal with our long-term challenges, our fiscal challenges, the 
imbalance between spending and revenue, and the overcommitments we have 
made on the entitlement programs.
  The proposal we have made is very different from what others have 
made because our proposal would require a vote in the Congress, not 
another commission report that sits on a dusty shelf somewhere. That is 
not going to cut it. We need a plan. We need a plan that is bipartisan. 
We need a plan that gets a vote. The Senator and I have a plan to do 
that.
  While we are getting ready for that process to occur--and I hope it 
will--we have provided for a comparative effectiveness reserve fund to 
deal with health care, a health information technology reserve fund--
the Rand Corporation has told us we could save $80 billion a year if we 
had information technology widely deployed in the health area, program 
integrity initiatives to crack down on waste, fraud, and abuse in 
Medicare and Social Security, and a long-term deficit point of order to 
guard against legislative initiatives that would increase the long-term 
deficit.
  Finally, as I mentioned, Senator Gregg and I have a proposal to 
address these long-term imbalances, a panel of lawmakers and 
administration officials with an agenda of everything being on the 
table, with fast-track consideration, and a requirement that Congress 
must vote. If the members of this task force, at least a supermajority 
of them, were to agree on a plan, that plan would come to Congress for 
an assured vote and a further assurance that there would be a 
bipartisan outcome because we would require not only a supermajority of 
the task force to report a plan but a supermajority in Congress to pass 
it as well.
  Before surrendering the floor, I thank Senator Gregg for his many 
courtesies and the very constructive way that he has helped run the 
Committee on the Budget throughout this year. He is a gentleman, a 
person of honor whose word is gold. I deeply appreciate that. I also 
appreciate very much the professionalism of his staff.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. GREGG. Madam President, first, I thank the chairman of the 
committee, the Senator from North Dakota, for his generous comments and 
reciprocate by saying it is a pleasure to work with him. Obviously, we 
have disagreements or we wouldn't be in different parties. That is the 
purpose of democracy. You have disagreements and reach some conclusion 
that, hopefully, is constructive for all.

[[Page 10154]]

  The budget, unfortunately, tends to be a uniquely partisan statement 
of a party's political positions. Therefore, it is more difficult to 
reach agreement, especially when the Congress has both Houses of the 
same party. But that doesn't mean you can't do it in a cordial and, 
hopefully, constructive way, have your disagreements, and make your 
points.
  I appreciate that the Senator from North Dakota has always been 
cordial and professional and constructive, as has his staff, to say the 
least.
  I don't want to start off with too much hat tipping to the Senator 
from North Dakota; I don't want to get carried away. Let me simply say 
this: It is important that the Congress have a budget. It is uniquely 
the Congress's responsibility to have a budget. Although the 
President's budget gets soundly beaten about the ears here, the 
President's budget is not a factor in the sense that it is part of the 
congressional budget process.
  The congressional budget is uniquely an entity of the Congress. The 
Congress passes it. It does not go to the President for his signature. 
The elements of the budget which are most important, such as the 
allocations to the Appropriations Committee, such as reconciliation 
instructions, are uniquely the purpose of the Congress as a way of 
giving a blueprint and defining spending and tax revenues within the 
fiscal policy of the Congress.
  The Congress retains, under the Constitution, the right to the purse 
strings, and the budget is an element of exercising that right. So 
although the President sends up a budget under the Budget Act, that 
budget rarely, if ever, becomes law. I am not aware it has ever become 
law. It is simply a point for discussion. When you have a Democratic 
Congress and a Republican President, it tends to be discussed less 
other than in opposition by the Congress.
  So this budget is totally the responsibility of the Democratic 
Congress. It is passed by the Democratic membership of the Congress, 
not by the Republican membership of this Congress, and the President's 
input is at the margins, to say the least. But it is important there be 
a budget. Even though I may strongly disagree with it, I do think it is 
the responsibility of the Congress to do a budget.
  Thirdly, as a note of appreciation, I do thank the Senator from North 
Dakota for his insistence that reconciliation instructions not be 
included in the bill. Reconciliation is an extraordinarily strong 
hammer which is contained within the Budget Act which allows basically 
the Budget Committee to, hopefully, control the expansion of 
entitlement programs. Unfortunately, last year, it was used to expand 
Government, not to control the rate of expansion of Government, and 
that was a mistake, a serious mistake that undermined, in my opinion, 
the integrity of the act. I am glad we are not doing it this year, and 
I appreciate the Senator from North Dakota insisting on the Senate 
position on this issue.
  To address the budget specifically, this budget, as it is brought 
forward by our colleagues, by the Democratic membership, is a ``back to 
the future'' budget. You hear Senator Obama say he wants change. Well, 
this is ``back to the future'' change. It is essentially a restatement 
of things which always happens under a Democratic Congress. It says: 
Yes, we can raise taxes and a lot of taxes. It says: Yes, we can 
increase spending and a lot of new spending. It says: Yes, we can run 
up the debt and a lot of new debt. It says: Yes, we will not address 
entitlements and the fact that entitlement spending is a major threat 
to our fiscal integrity.
  It is a ``back to the future'' budget. The term ``tax and spend'' 
exists. It may be trite, but it exists because it is accurate. This 
budget has the largest increase in taxes in the history of the world. 
It has one of the largest increases in spending. It has a $500 billion 
increase in entitlement spending, a $200-plus billion increase in 
discretionary spending. The debt goes up $2 trillion under this budget. 
And it is on the watch of the other party. Those are policies of the 
other party that are being put in place, and they are not good 
policies. They are not healthy. They are not constructive for the 
American people.
  The budget, as I outlined, has the largest increase in taxes in the 
history of this world, especially this country, and it has an impact on 
working Americans. You hear a great deal, especially from Senator 
Obama, who is the presumptive nominee now of the Democratic Party after 
last night, that he is going to raise taxes to pay for all his 
programmatic activity, but he is only going to raise it from the 
wealthy.
  Well, this budget does not assume, to begin with, most of the 
proposals by Senator Obama to spend money, but it does assume a tax 
increase. It assumes a $1.2 trillion tax increase, and that tax 
increase cannot be paid for only by wealthy Americans. If you take the 
top tax rate in America, and you raise it back to the top tax rate 
under the Clinton years, which would be 39.5 percent, every year you 
will add $25 billion of new revenue to the Federal Government, assuming 
people do not try to avoid taxes and reduce their tax liability, which 
wealthy people tend to do because they get accountants to show them how 
to do that. Well, that does not come anywhere near covering the 
additional taxes which are proposed in this budget, the $1.2 trillion--
the $25 billion a year.
  No, it is the families who are going to pay that. Forty-three million 
families in America will be hit under this budget, in the year 2011, 
with a tax increase of $2,300 or more. Those are working families, by 
the way. A family of four making $50,000 will have a $2,300 tax 
increase.
  Seniors. Eighteen million seniors under this budget, in 2011, will 
see a $2,200 tax increase. Small businesses--the engine for economic 
activity, the engine for jobs in this country--27 million small 
businesses will see a $4,100 increase. There will be 7.8 million people 
brought onto the tax rolls who were taken off the tax rolls by 
President Bush. These are low-income individuals who no longer have to 
pay taxes as a result of the tax policies of the early 1980s. Those tax 
policies, by the way, worked. They worked. Yet there is tremendous 
opposition around here from the other side of the aisle to continuing 
those tax policies, as this budget points out.
  The capital gains--I think we have a capital gains chart in the 
Chamber--the capital gains revenues during the last 4 years have jumped 
dramatically--dramatically--as a result of getting a capital gains rate 
which Americans feel is fair and are willing to pay. In fact, over $100 
billion has been collected in the last 4 years from capital gains--$100 
billion--more than was expected to be collected by the Congressional 
Budget Office.
  Now, why is that? Why, when we cut the capital gains rate down to 15 
percent, did we get more revenue? Well, as I have said before on the 
floor of the Senate, it is called human nature. If you say to somebody: 
We are going to give you a fair tax rate on your capital gains income, 
people will do things that generate capital gains. People do not 
necessarily have to do anything to generate capital gains. If you own a 
stock or you own a home or you own a small business and you feel the 
capital gains rate is too high, you would not want to sell that stock, 
home or small business because you would not want to pay all that money 
to the Government. But if the Government sets a fair capital gains 
rate--15 percent--then you say: All right, I will pay that tax in order 
to turn over that stock, in order to sell my business, in order to sell 
my home. I am willing to take that tax rate.
  So people go out and they do things which generate economic activity. 
They generate capital gains. That generates revenue to the Federal 
Government. That is what has happened here. We have generated 
significant amounts of revenue we did not expect because people were 
willing to undertake activity which was taxable.
  It has a second very positive effect, besides getting a lot of 
revenue in the Federal Government. A low capital gains rate--a 
reasonable capital gains rate--causes people to invest their money more 
productively. They go out and they take risks. Entrepreneurs

[[Page 10155]]

take risks. Job creators take risks. Small businesses are started and 
jobs are created as a result of money being invested in a way that 
generates more jobs. It generates more activity, more entrepreneurship, 
more jobs.
  This bill assumes the capital gains rate will be doubled. This bill 
assumes the rate on dividends may be more than doubled, depending on 
what your bracket is. This bill is a massive tax increase on working 
Americans and seniors. By the way, it is senior citizens who take the 
most advantage--and that is logical--of capital gains and dividend 
income. Most seniors have a fixed income. It is a dividend income. It 
usually comes from a pension they are getting or they invested in while 
they were in their working years or they have a home they sold, so they 
have a capital gains.
  So the idea in this bill, which is to end the capital gains rate as 
it presently exists and raise it and to end the dividend rate as it 
presently exists and doubling it, that idea is going to 
disproportionately hit senior citizens. It is not going to raise the 
revenue that is projected in the bill because people are going to take 
tax-avoidance action.
  But because of the way CBO scores things--it is static around here; 
there is no dynamic scoring--they claim this is going to raise all this 
revenue. It will not. But the fact is, those tax increases will slow 
this economy and damage working Americans and working families, as was 
shown by the prior chart. That is not fair.
  Now, my colleague on the other side of the aisle will argue--and he 
argues all the time--that, no, we are not going to have a tax increase, 
even though the tax increase in the bill is the exact amount of money 
that CBO scores the ending of the capital gains rate and its increase 
and the ending of the dividend rate and its doubling--the exact amount 
of money that generates by CBO scoring.
  So CBO at least is presuming, and the Democratic Party in setting 
forward this budget is taking advantage of, revenues that are expected 
to come from a significant increase in capital gains rates, dividend 
rates, and general rates. But we hear from the other side: Oh, we don't 
have to do that. We don't have to do that. They try to fudge this issue 
by claiming: We are going to collect this all from the tax gap.
  As to the tax gap--the Senator from North Dakota probably went on for 
15 minutes showing us buildings here and buildings there and subway 
systems here and subway systems there. Well, do you know something. We 
had testimony which totally rejects that. The Commissioner of the IRS 
came in and said: You couldn't possibly collect the type of dollars 
that are represented in this bill in tax increases from closing the tax 
gap. You can claim it in theory, but it will not happen in practice. 
This canard, so to say, has been used for years--years.
  In 1987, the Senator from North Dakota said: I pound away at the need 
for a share. He said: That includes the tax gap between what is owed 
and what is paid. He said that in 1987.
  In 1990, he said: It is both fiscally irresponsible and insulting to 
the vast majority of honest taxpayers in this country if we fail to tap 
this revenue from those who have not complied.
  Then again, last year, he said: If we collect 15 percent of the tax 
gap, it would be over $300 billion, and that alone would come close to 
meeting the revenue needs under our budget.
  That was last year's budget, by the way. How much did they collect 
from the tax gap? Zero. How much did they collect from the tax gap in 
1987, when he first made this statement? Zero. How much did they 
collect in 1990, when he made the statement again? Zero. Throughout the 
1990s, through the 2000s, the tax gap is not being closed.
  In fact, instead of being closed, last year, they cut the funding to 
the IRS, those elements of the IRS who would most logically be people 
who would go out and collect extra money if it was owed. So this whole 
tax gap thing is nice rhetoric, but it has no substance, and it is not 
defensible on its face in light of the numbers in this bill. What is in 
this bill is the largest increase in taxes in the history of this 
country--$1.2 trillion.
  Now, there is, in addition, the issue of the debt. The Senator from 
the other side is fond of pointing to the President, saying: He has 
increased the debt this much, he increased the debt this much. Yes, the 
debt has gone up significantly. I do not like that. Nobody likes that. 
But you cannot wash your hands of it when you produced the budget last 
year that added $200 billion to the debt--well, $400 billion it was 
going to add to the debt. I am sorry. I misstated. Over $400 billion 
will be added to the debt for the first Democratic Congress's budget--
$400 billion. This budget presumes another $370 billion to that debt.
  So this wall of debt chart--yes, the President of the United States, 
because he put forward budgets that increased the debt, deserves some 
significant responsibility here, but so do our colleagues on the other 
side of the aisle who are producing this budget. There is $2 trillion 
of new debt added to the wall of debt under the Democratic budget.
  You could reduce that. You could reduce that by not spending so much 
money, which gets us to the next point. The spending in this bill goes 
up significantly. We passed the trillion-dollar threshold--$1 trillion 
of discretionary spending--in this bill.
  Now, I suggested--and I agree it would maybe be a statement more of 
an attempt to make a point than a substantive event, but I suggested we 
set spending limits in this bill which would keep discretionary 
spending under $1 trillion. That would have meant that instead of 
increasing spending in this bill, as the Democratic proposal does, by 
$24.5 billion next year--which, by the way, is the 1-year number that 
goes up over 5 years and represents over $200 billion in new 
discretionary spending--they would have only been able to increase 
spending by $10 billion and then they would have stayed under the $1 
trillion limit. But they couldn't even do that. I mean the desire to go 
out and spend is a genetic effect; it is a genetic existence in the 
Democratic position. That is why we have different parties. They 
believe the Government is better when it is bigger. They believe the 
Government is better when it takes your money and spends it. They 
believe Government knows how to spend your money better than you do and 
therefore, when they are in control--which they are and which they have 
been--they significantly raise your taxes and they significantly 
increase spending.
  This budget isn't any different. As I said, it is back to the future. 
Is this change? It is change that takes us back to where we were when 
we had the last Democratic Congress. Significant increases in spending, 
and the budget doesn't even account for most spending which we know is 
coming down the pike which has already been signed on to by the 
majority of this party on the other side of the aisle.
  For example, we have pending in the wings later today or tomorrow a 
supplemental that is going to add spending in the area of unemployment 
insurance of $15 billion, spending in the area of veterans of $54 
billion. We have a farm bill coming at us that is a $300 billion bill. 
We have an AMT fix which this budget claims to pay for, but which we 
know won't be paid for, of $70 billion. The numbers go up and up and up 
and up, the debt goes up and up and up and up, the spending goes up and 
up and up, and the taxes go up and up and up. There can be no denying 
that. It is the way it is. I understand there is a difference of 
opinion, but I think it ought to be admitted to by the other side. 
There shouldn't be an attempt to obfuscate it by claiming we are going 
to get taxes from the Oz somewhere behind the curtain. The tax revenues 
are going to come out of working Americans. It shouldn't be claimed we 
are going to generate a reduction in spending when we are generating an 
increase in spending, and a fairly significant one. The other side of 
the aisle holds up this chart and says there is no real difference 
between the President's number and our number. ``Ours is a 1 percent 
difference.'' But 1 percent on $3 trillion is $300 billion. I don't 
know where they come from, but $300 billion is a huge amount of money--
a huge amount of money.

[[Page 10156]]


  Mr. CONRAD. Would the Senator yield on the math?
  Mr. GREGG. I would yield.
  Mr. CONRAD. I say to the Senator a 1-percent difference is a 1-
percent difference, whatever the denominator is. One percent is a very 
small amount of money. I think the Senator would acknowledge that 1 
percent difference is--
  Mr. GREGG. I reclaim my time then. The point is I don't consider $300 
billion a small amount of money. Now, maybe it is a small amount of 
money in North Dakota, but I do know that $300 billion would run the 
State of New Hampshire for I think approximately 10 years. Maybe it 
would only run the State of North Dakota for a couple of years, because 
I know you have big budgets up there, but I think it is a lot of money, 
$300 billion. So that is--
  Mr. CONRAD. Would the Senator yield for one more moment on the 
numbers? One percent of $3 trillion, I think the Senator would 
acknowledge, is not $300 billion, it is $30 billion?
  Mr. GREGG. Well, Madam President, I am happy to reclaim my time. 
Thirty billion dollars is a lot of money in New Hampshire. It would run 
the State for 10 years.
  Mr. CONRAD. But would the Senator acknowledge that the $300 billion 
that he referenced is simply not accurate.
  Mr. GREGG. No, I wouldn't, because $300 billion is a 5-year number. 
But I thank the Senator for making it clear that he agrees with the 
fact that $30 billion is a lot of money. Maybe he doesn't agree that 
$30 billion is a lot of money. I think $30 billion is a lot of money.
  Mr. CONRAD. I would say--
  Mr. GREGG. I have the time, Madam President. I have the time.
  So we are talking about big dollars, real dollars and lots of new 
spending. Under any scenario, we are talking a number which is going to 
drive large tax increases not only next year but in the outyears for 
working Americans in this country, and it is not right to do that to 
them, in my humble opinion--well, in my opinion. It is not necessarily 
humble. I apologize.
  There is another point here that needs to be made, which is there is 
a claim in this budget that they have put in some sort of enforcement 
mechanisms called pay-go. They keep returning to pay-go as an 
enforcement mechanism. To begin with, they have waived pay-go, adjusted 
pay-go or manipulated pay-go on at least 17 different occasions for 
well over $175 billion in new spending. Pay-go is only used as a 
vehicle to try to increase taxes. If somebody wants to cut your taxes, 
they will claim pay-go and you have to increase somebody else's taxes 
to do that. But when it comes to spending around here, as we saw with 
the farm bill that rolled through here, pay-go has no relevance at all. 
It is adjusted by changing years. It is adjusted by moving numbers 
around. It is adjusted by, as in the SCHIP bill, artificially ending a 
program when you know the program is not going to end. It is scammed. 
So there is no credibility to claiming pay-go is in this bill.
  Furthermore, real pay-go isn't even in this bill. Real pay-go says 
you match the year of the spending to the year of the cost, the year it 
is going to be offset against. This bill doesn't do that. The first 
year of pay-go under this bill--- you can claim you are going to offset 
a new spending program in the fifth year under this bill. So you game 
that system right to the end.
  Then there is the alleged tax proposal in this bill--the Baucus 
amendment, as it is referred to. Well, we went through this exercise 
last year. The Baucus amendment was brought forward last year and the 
other side of the aisle put out a lot of press releases claiming they 
had extended the tax cuts within the Baucus amendment which included 
things such as the childcare tax credit and the spousal marriage 
penalty and I think R&D tax credit. They did a lot of press on that and 
there was a great deal of fanfare after they took the vote on the 
budget that claimed they were going to pass a bill which would 
accomplish these tax cuts, extending them. Where is the bill? Where is 
the bill? It never passed. There were no extenders passed. The whole 
amendment turned out to be a fraud. So they--well, it worked so well 
last year with the press release, they have done it again this year. 
They have done it again this year. They have claimed they are going to 
pass those extenders, which they didn't do last year, and they may do 
it this year, I don't know. I haven't seen anything yet that implies to 
me they are going to do it. But if they did do it, just to make darn 
sure that it actually never had any serious effect, they put language 
in the bill which basically creates a Rube Goldberg system where they 
take back the tax deductions if a deficit occurs. Well, they know a 
deficit is going to occur because they have already put in place 
spending initiatives which exceed the alleged surpluses they have in 
this bill. Just the veterans benefit we are going to vote on tomorrow 
theoretically, and which will pass here at some point, is going to 
knock out the alleged surplus. So all of these alleged tax extenders 
which theoretically they are going to pass and at least they are going 
to put press releases out on are not going to occur, because they put 
language in this budget which says if there is a deficit, those tax 
extenders are recaptured, and they end. They come to an end.
  So this budget is obviously, from our point of view--and it is our 
point of view. It is not their point of view. I don't argue with the 
fact that they believe they have put together a great budget. I mean in 
their mind, in the mind of the person who believes we should 
dramatically expand the size of government, dramatically increase taxes 
on the American people, this is a heck of a good budget. I don't argue 
with that. But from our perspective, when we think Americans should 
keep as much of their tax dollars as we can leave them with, because it 
is their money and they will spend it better, and they are more 
efficient using it than we are--we should keep a low capital gains 
rate; we shouldn't penalize seniors who have dividend income as their 
main source of income--from our perspective, this budget has the wrong 
priorities because it raises the taxes on capital gains and raises the 
taxes on dividends significantly.
  In addition, it has the wrong priorities because it expands spending 
significantly--$500 billion in new spending and entitlements. Remember: 
Probably the biggest threat we face as a nation--fiscal threat--in 
fact, the biggest threat after, in my opinion, the threat of Islamic 
fundamentalism and the terrorists using a weapon of mass destruction 
against us--is the impending economic meltdown of this country as a 
result of the burden that our generation, the baby boom generation, is 
putting on the next generation through the entitlement accounts. There 
is $66 trillion of unfunded liability, $66 trillion--a huge number. 
Nobody knows because it is hard to define what $1 trillion is. But if 
you take all the taxes paid since the beginning of this Republic--I 
think you are talking about something like $37 trillion--and if you 
take all of the net worth of the American people--all their cars, all 
their homes, all their stock--and add it together, you come up with 
something like $45 trillion.
  So we have a liability on our books which involves three programs--
Social Security, Medicare, and Medicaid--that exceeds the net worth of 
the Nation and exceeds the amount of taxes paid in this Nation since we 
began as a nation. That is a huge problem for us. You have to start to 
address it.
  One of the good things the President's budget did was suggest a 
couple of ways to address it. In fact, he sent up a proposal which 
would take about 20 percent of this problem as it relates to Medicare, 
which is the biggest part of the $66 trillion, and would have made 
Medicare 20 percent less insolvent--which is a big number, by the way. 
That was a big step. The proposals he sent us had no impact on the vast 
majority of beneficiaries--no impact at all. He suggested that wealthy 
Americans such as Warren Buffett, for example, qualify for the Part D 
premium under Medicare, under the Medicare drug program, or some other 
extraordinarily wealthy person, should pay a fair share--not all, but 
should pay a fair share of the cost of the premium of

[[Page 10157]]

their drug program. That was a reasonable suggestion. What happened to 
it? It was rejected by the other side of the aisle.
  The President suggested that we use IT and disclosure of performance 
at different levels that medicine integrates with the patient so people 
could make more intelligent purchasing decisions, so employers and 
insurers could make more intelligent decisions but, more importantly, 
Medicare could. What happened to that idea? It was rejected by the 
other side of the aisle.
  The President suggested we should do something about the runaway cost 
of malpractice, about the trial lawyers essentially running up 
extraordinary costs on health care providers, especially doctors, and 
that we should do something to limit that. It is a reasonable 
suggestion rejected by the other side of the aisle.
  How much entitlement saving is in this bill? Zero. Zero entitlement 
saving is in this bill. Here we are facing probably the most 
significant fiscal issue of our time and we do nothing about it in this 
budget. In fact, under the present law, we as a Congress are required 
by something called the Medicare drug trigger to adjust Medicare 
spending to bring it down under what is known as a trigger level. It is 
a technical point, but Medicare Part D premium isn't supposed to exceed 
45 percent from the general fund. And we have now gotten a directive 
from the trustees in the Medicare trust fund to act, and it would cost 
not a large amount of money in the context of this entire budget--$1.3 
trillion.
  Mr. CONRAD. Billion.
  Mr. GREGG. Billion, thank you. Billion. I got into my trillions. It 
would cost $1.3 billion to correct this. That proposal is nowhere in 
this budget; nowhere in this budget. It is hard to believe we couldn't 
even do $1.3 billion when we have been directed to do it, when we 
passed the law. It was our law that said we would do this if this 
problem occurred. Yet the courage isn't there to do even that in the 
area of entitlements, which is truly irresponsible, an act of 
malfeasance by the Congress. So entitlement spending remains 
unaddressed.
  Interestingly enough, I heard Senator Obama on the stump a couple of 
days ago--maybe it was a week ago--talking about how he was never going 
to allow anything to happen to the Social Security recipient or the 
Social Security trust fund. It is that type of language which 
absolutely guarantees our children are going to get a bill here that 
they can't afford, that our generation, the largest in the history of 
the country, which will double the number of retirees, is going to 
basically put a weight on our children and our children's children that 
will make their lives less enjoyable than ours because they will not be 
able to afford the dollars it costs to support our generation and still 
be able to buy their homes, send their children to college, and buy 
their cars because of the tax burden generated by the entitlement 
costs.
  So that irresponsibility is permeated in this budget when it does 
nothing on the issue of entitlements. Speaking of Senator Obama, I am 
entertained by the fact that this budget, which will have three-fourths 
of its life under the next President, must assume that the next 
President will not be Senator Obama because he has proposed $300 
billion of new spending--$300 billion--in the first year of his 
Presidency. He proposed 187 new programs. We can only score 143 of them 
because the other ones were not specific enough. But if you score 143 
of them, they add up to $300 billion of new spending just in the first 
year.
  As I said earlier, Senator Obama said he is going to pay for this by 
taxing the wealthy. That is what he said. But if you look at this 
budget, they have already spent that money. This budget already assumes 
the wealthy are going to be taxed. The $1.2 trillion tax increase in 
the budget assumes the top rate in the 2010, 2011, and 2012 period 
jumps back to President Clinton's level of 39.5 percent. So the budget, 
which already is projecting deficits in the $400 billion range, already 
presumes inside of it, as it is presented here, a jump in the top 
marginal rate, which is the rate on the richest Americans. That money 
is already spent. It was spent when the other side of the aisle decided 
to increase entitlement spending by $500 billion under this budget and 
increase discretionary spending by close to $300 billion under this 
budget. So where is he going to find the money to pay for his $300 
billion of new programs? I don't know. But one thing is pretty obvious: 
We are going back to the future with enthusiasm. Yes, we can raise 
taxes and, yes, we can raise spending; that will become the theme not 
only of this budget but future budgets should we have a Democratic 
President and a Democratic Congress.
  This budget really doesn't do much to address the issues the American 
people need to have addressed. Those issues involve, No. 1, doing 
something on the issue of entitlements; No. 2, maintaining a tax law 
which creates productivity, which energizes entrepreneurship and says 
to small business people, go out and create jobs; No. 3, disciplines 
our fiscal house by containing discretionary spending under a trillion 
dollars.
  Those are not really that dramatic or that heavy a lift to undertake. 
There is no reason we could not keep spending under a trillion dollars 
on the discretionary side, no reason we could not have taken the small 
steps, like asking wealthy people to pay a bigger part of--or any part 
of--their Part D drug premium. There is no reason this budget could not 
have contained within it some initiatives which would have controlled 
discretionary spending and would have continued to promote the tax 
policy we have seen for the last 3 years, which has generated a massive 
increase in revenues for the Federal Government, especially from 
capital gains.
  Another course that was chosen--the course that is circular--goes 
back to the way we did things in the past when we had the last 
Democratic Congress. That course said you have to raise taxes because 
the American people don't know how to spend their own money, so we have 
to do it for them. It is a course that says the Government should 
always grow, and grow fast. There is nothing in the Government that 
should be reduced. It is a course that says we should add to the 
Federal debt at a radical rate. It is a course that says we should 
ignore real problems--the biggest problem we have, which is entitlement 
spending.
  I want to put in one footnote because I think it sort of encapsulates 
the whole discussion about discretionary spending. The Senator from 
North Dakota got up and said we had to keep the COPS Program, which was 
a great program, and put cops on the street. There isn't one program 
that their budget proposes that we eliminate on the discretionary side 
that I found. Everything either gets increased or is maintained.
  The COPS Program is uniquely appropriate to be eliminated. Why? Don't 
listen to me. Listen to President Clinton. He created the COPS Program, 
and he created it with this caveat: This will be a 3-year program.
  That is what President Clinton said--that when we get to 100,000 
police officers on the street as a result of this program, this program 
will be terminated. That was the program that was proposed. Not only 
did we get the 100,000 police officers on the street--because I chaired 
the committee of jurisdiction at that time--we put 110,000 new police 
officers on the street using Federal funds. Then, following on the 
suggestion of what the original program was, and following the edict of 
President Clinton, we started to phase out that program. It should have 
been completely phased out. That was 8 or 9 years ago that we hit what 
the number was under this Federal program. The program is still here. 
It is a classic example of how programs work. Once they are in place, 
the interest groups that support them demand that they stay in place 
forever. Obviously, we all believe police officers do a great job. We 
admire them, respect them, and they protect us. But this program 
fulfilled its obligation. It did what it said it would do, and it 
worked. It should have been terminated, just like President Clinton 
suggested.

[[Page 10158]]

  Now, the other side of the aisle, 8 to 9 years after that event, is 
still claiming this program has to be kept and grown. That is the 
difference between our parties. We think when somebody puts in a 
program that says it will last 3 years, with certain goals, and those 
goals are met and the 3 years are over, the program should be ended and 
the American taxpayer should get to keep the money from ending that 
program.
  The other side of the aisle thinks we should continue the program 
forever, grow it, and take money out of the American taxpayers' pockets 
to pay for something on which we have already fulfilled the 
responsibility. That is the difference. It is a fundamental difference 
between our parties. They are in the majority. They have the right to 
write a budget however they want it. They have done that. It is a 
budget that has the world's largest tax increase, has significant 
increases in spending, significant increases in entitlement spending, 
crosses the trillion-dollar line on the discretionary side, does 
nothing about containing entitlements, and plays games with enforcement 
mechanisms relative to the budget. We would not have written this 
budget. That is why we are opposed to it.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota is recognized.
  Mr. CONRAD. Madam President, I am delighted that our colleague talks 
about our fiscal record and theirs. He talks about circling back to the 
policies when the Democrats controlled the White House. He is right 
that there is a difference. The difference is that when the Democrats 
last controlled the White House, we had record surpluses, and we were 
paying down the debt. Under the current President, we have record 
deficits and record debt.
  I am delighted to talk about the record because here is their record: 
In each of the last 3 years of the Clinton administration, we had 
achieved a budget surplus, we were paying down the debt, and the CBO 
was projecting that the budget would remain in surplus for years to 
come. By the time the Bush administration came into power, we had 
achieved three consecutive years of surplus and were expecting more. 
But, the Bush administration squandered every dime. By the time this 
President is done with his responsibility, they will have run up the 
debt from $5.8 trillion to over $10 trillion. That is the difference in 
the record. Under the last Democratic administration, we ran surpluses 
and paid down the debt. Since then, under the Bush administration, the 
Nation has been beset by record deficits and record levels of debt. 
That is a fact.
  Now, my favorite quote of my colleague on the other side--first, let 
me say I have respect for the ranking member. I have affection for him, 
and we are friends. But we have a big divide when it comes to fiscal 
policy. I think the policies of this administration have been reckless. 
I think they have dug an enormously deep hole for this country.
  I think the factual record is very clear on the differences between 
our two parties. Under President Clinton, we achieved record surpluses, 
and we were paying down the debt. Under President Bush, the Nation was 
plunged right back into record deficits and debt. That is a fact.
  But the thing I enjoy most about my colleague's speech is how similar 
it was to the speech he gave last year. This is what he said last year:

       It includes, at a minimum, a $736 billion tax hike on 
     American families and businesses over the next 5 years--the 
     largest in U.S. history.

  The only difference is that now he is saying this budget is the 
largest tax increase in the history of the world. We can now go back 
and look at the factual record about what our budget did that was put 
into place last year.
  Did it increase taxes? Did it increase them by the largest in U.S. 
history, as he asserted last year? Well, let's look. Here is the 
record--not a speech but the factual record. We had Democrats 
controlling the House and the Senate, and the assertion last year by 
the Senator from the opposite party was that there would be the largest 
increase in the history of the United States. But what happened? Was 
there the largest tax increase in the history of the United States? No. 
Was there a tax increase? No. Was there a tax reduction? Yes. Here it 
is: Tax cuts enacted, $194 billion; offsets and closing loopholes, $7 
billion; net tax reduction, $187 billion.
  Now, that is the fact. So much for speeches and for hyperbole. Let's 
deal with facts.
  Debt: The President's budget has $83 billion more of debt than the 
budget we have offered from our side. The Senator questions the Baucus 
amendment, which is included in this budget, that extends key middle-
class tax cuts. That is included in the conference report. We provide 
$340 billion of tax cuts in this budget.
  What is he talking about, the biggest tax increase? There is no tax 
increase in this budget. None. Zero. There are $340 billion of tax 
reductions for the middle class in this country who deserve it.
  The Senator says: Why haven't they presented a bill, because they had 
the Baucus middle-class tax cut extension in last year? Why haven't we? 
Because, as the Senator well knows, those tax cuts are in place until 
2010. We didn't need to take action last year. We don't need to take 
action this year. Those tax cuts are in place now. But in this 5-year 
budget, we have provided for their extension because we know they run 
out in 2010. But there is absolutely no need to have taken the action 
to extend them last year or this year because they are already in 
place.
  Let's deal with facts. The Senator talks about Barack Obama's budget. 
Barack Obama doesn't have a budget. Barack Obama is not the President 
of the United States. He is asserting he has $300 billion of spending 
increases. I notice he didn't say anything about the McCain budget 
because while John McCain is not the President, either, he has proposed 
$3 trillion--not $300 billion but $3 trillion--of additional tax cuts, 
and we already can't pay our bills. We already are borrowing hundreds 
of billions from China and Japan. So apparently the McCain plan is to 
borrow some more money from China and Japan. That is what the party of 
the other side has become, a party of borrow and spend--they've spent 
$600 billion so far in Iraq with no end in sight, and they've borrowed 
so much that the debt will have increased from $5.8 trillion to $10.4 
trillion by the time this President is done.
  Then there is one other item to which I need to respond, and that is 
on the question of the pay-go. The Senator says that pay-go is 
meaningless. What is it? It requires that if there is new mandatory 
spending or new tax cuts, they must be offset. That is pay-go.
  The Senator used to support pay-go. This is what he said in 2002:

       The second budget discipline, which is pay-go, essentially 
     says if you are going to add a new entitlement program or you 
     are going to cut taxes during a period, especially of 
     deficits, you must offset that event so that it becomes a 
     budget-neutral event. . . . If we do not do this, if we do 
     not put back in place caps and pay-go mechanisms, we will 
     have no budget discipline in this Congress and, as a result, 
     we will dramatically aggravate the deficit which, of course, 
     impacts a lot of important issues, but especially impacts 
     Social Security.

  The Senator was right in 2002, and, in fact, his prediction came true 
because his party abandoned pay-go, drove up deficits, drove up debt, 
and we are the worse for it as a nation.
  If you wonder about pay-go, here is the record. We had strong pay-go 
in effect between 1993 and 2000. The deficit was reduced each and every 
year between 1993 and 1997 and, by 1998, we actually got into 
surpluses, as I indicated before, which rose in each year through 2000. 
Then our friends on the other side took charge of the White House. They 
immediately weakened pay-go, and we plunged right back into deficit. We 
put pay-go back into effect, and we are starting to dig out of the very 
deep hole they have dug.
  On the issue of pay-go being waived, pay-go has been raised 16 times; 
pay-go has been waived once--once.
  The Senator says pay-go is not working. I disagree. Excluding the 
alternative minimum tax provisions that were put in place last year to 
prevent the alternative minimum tax from

[[Page 10159]]

costing 20 million people more taxes, instead of offsetting that, the 
alternative minimum tax was prevented from being expanded without 
paying for it. If you leave out that one item, the Senate pay-go has a 
scorecard with a positive balance of over $1.5 billion over 11 years.
  Every bill sent to the President, other than the alternative minimum 
tax and the stimulus, which, of course, could not be offset if it was 
to have a stimulative effect--that was totally bipartisan, both those 
were totally bipartisan--every bill sent to the President other than 
those two has been paid for or more than paid for.
  Pay-go also has a significant deterrent effect, preventing many 
costly bills from being offered.
  With respect to the specifics of my colleague's criticism, I will 
enter into the Record every one of the items he referenced: immigration 
reform, the Energy bill, mental health parity, prescription drug user-
fee amendments, minimum wage, Water Resources Development Act. Every 
one of them is paid for. CHIP reauthorization, the farm bill--he just 
talked about the farm bill. The farm bill, which we will vote on 
sometime later today or tomorrow to overturn the President's veto, is 
totally pay-go compliant. It is paid for and without tax increases. 
Higher education, the reconciliation bill, the 2007 supplemental--every 
one of them in terms of the bill that actually went to the President is 
paid for.
  When the Senator from New Hampshire calls pay-go ``swiss cheese-go,'' 
I call their budget approach ``easy cheese'' because they have faked 
fiscal responsibility around here long enough, and we are calling them 
on it because now we have their record, and their record is record 
deficits, record debt, record borrowing from abroad. That is their 
fiscal record. It is a fact. It can be checked. They are going to have 
a hard time running away from their record as we go into an election 
year.
  Madam President, I see my colleague, Senator Murray, is here. How 
much time does the Senator wish?
  Mrs. MURRAY. Ten minutes.
  Mr. CONRAD. I yield her 10 minutes.
  The PRESIDING OFFICER. The Senator from Washington is recognized for 
10 minutes.
  Mrs. MURRAY. Madam President, I thank my colleague, the chair of the 
Budget Committee. He has done an amazing job putting together a budget 
of which we can all be very proud.
  For the last 7\1/2\ years, the current administration has really 
mismanaged our economy and failed to make the kinds of investments that 
keep our country strong. We all know American families have really paid 
the price. We have gone from a budget surplus to a record deficit, our 
infrastructure is crumbling, and our economy is now nearing a 
recession, if we are not already there. So as we finalize this year's 
budget, we have to ensure that we are investing in our future and 
addressing our country's real priorities.
  It seems that every day the news we hear gets worse about job loss, 
about skyrocketing gas prices, about the number of families who risk 
losing their homes in the mortgage crisis. And in the eighth and final 
budget this President has sent to us, he has really sent us off on a 
fiscally irresponsible path. He has given us a dishonest budget that 
fails to own up to the true cost of the war, and it will require us to 
borrow billions of dollars from foreign governments to meet our 
expenses.
  I want to give a few examples of how out of touch President Bush's 
budget is.
  People today are struggling to pay for heat and rent. Yet President 
Bush sent us a budget that proposed to cut low-income heating 
assistance and housing and neighborhood revitalization programs, such 
as section 8 and CDBG, right when our constituents are fighting so hard 
to pay their mortgages to make sure they stay in their homes.
  The wars in Iraq and Afghanistan are creating thousands of new 
veterans every single year, many of them, as we know, with severe 
injuries and specialized needs. But President Bush sent us a budget 
that cut critical programs at the VA, including medical research and 
State extended-care facilities.
  More than 1 million people are going to lose their jobs this year. 
What did President Bush do in his budget proposal? He cut $484 million 
from critical workforce training programs.
  Health care continues to be out of reach for millions of Americans 
who don't have insurance or, in some cases, don't have access to 
doctors or nurses. Yet the President sent us a budget that freezes 
Medicare reimbursement levels for our hospitals and hospices, for our 
ambulance services, long-term care facilities, and he decimated funding 
for training programs for our health care professionals.
  It is past time that this administration joined with the majority in 
Congress and the majority of people in this country to make America's 
families, the working families, our first priority.
  The budget conference resolution makes responsible choices that will 
help get our economy rolling again and invest in our country's real 
priorities. With this budget which will be before the Senate shortly, 
Democrats are investing in programs that help families meet expenses 
and get ahead, things such as schools and health care and job training. 
Our budget makes up for President Bush's misguided proposals to flat 
line funding for education and rob students of the opportunities they 
need to get ahead.
  We are restoring the vital funding the President has slashed from our 
Nation's job training programs to help youth and adult and dislocated 
workers get the skills they need so they can succeed in our global 
economy.
  We are investing in health care by adding much needed funding for our 
health professions, the National Health Service Corps, our community 
health centers, and other programs that help to ensure Americans can 
see a doctor when they are sick.
  We are ensuring our communities at home are safe by funding the 
homeland security grants and restoring cuts to local law enforcement 
programs.
  Our budget fully funds the port security grants which the President 
proposed cutting in half. And it restores his dangerous proposal to cut 
almost $750 million from State homeland security programs and grants. 
Those are programs that help pay for security improvements, training, 
and equipment--all of the items that our first responders need so they 
can prepare for the worst in our communities at home.
  Democrats are making critical investments in infrastructure in this 
budget which will help boost spending and create jobs, while making 
much needed repairs to our roads and our bridges. We are also 
preventing a projected shortfall in the highway trust fund so we can 
keep our commitment to States and communities and ensure that our 
roads, bridges, and highways are safe and up to date.
  This budget ensures we are not turning our backs on the Hanford 
Nuclear Reservation in my home State or the many other States in our 
nuclear complex where workers sacrificed to help make nuclear material 
during the Cold War. Hanford and other sites like it are still home to 
millions of gallons of nuclear waste and other dangerous material, and 
the Federal Government has to live up to its promise to clean them up. 
The longer we stretch it out, the more the cleanup is going to cost 
over the long run. The budget that will be before us reverses the trend 
of failing to invest, and it is a big step toward getting us back on 
schedule.
  Finally, in this budget, we are doing the right thing for our 
veterans. The number of veterans is increasing every day, and the list 
of needed repairs and expanded facilities in the VA system is stacking 
up as well. But what does the administration send us? A budget that 
proposes new fees and increased copays that will essentially discourage 
millions of veterans from even accessing the VA. In his budget, the 
President also underfunded VA medical care, VA medical and prosthetic 
research, and he cut funding for major and minor construction by nearly 
50 percent.
  I have made it clear over the last several years that I believe 
denying access or discouraging veterans from seeking care because of 
their income is morally wrong, and I believe it will also make it 
harder in the long run for us to

[[Page 10160]]

maintain a strong voluntary military. Democrats are making sure that we 
keep our promise to the men and women who have served us so bravely.
  I thank our chairman, Senator Conrad, for his leadership and his 
tremendously hard work to get us to this point. I urge all of our 
colleagues to support this budget. This budget sets priorities and 
gives us critical direction as we begin the appropriations process. The 
American people desperately want us to take the steps that have been 
laid out in this budget. Our budget creates jobs, it rebuilds our roads 
and our bridges, it cares for our veterans, it invests in education, it 
helps our families meet their basic needs, and it gets us to surplus by 
2012. After years of this President's unrealistic policies, Democrats 
with this budget are making sure that working families are again 
priority No. 1.
  Madam President, I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. Madam President, I thank the Senator from Washington, who 
is an extraordinarily able member of the Budget Committee, someone upon 
who I rely for much of the very hard work of the committee. She is 
simply outstanding, and I thank her for her leadership and most of all 
for her friendship.
  Madam President, I ask unanimous consent that the gentleman from 
Iowa, Senator Grassley, be given 30 minutes on the bill.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
Senator from Iowa is recognized for 30 minutes.
  Mr. GRASSLEY. I thank the Senator for providing time for me.
  For 6 years, and those would be the years 2001 and 2003 through 2006, 
the budget resolutions provided the necessary resources that allowed 
the Finance Committee, the tax-writing committee, usually in a 
bipartisan manner, to realistically address the demands of tax policy. 
I am disappointed to say that this year, like last year, is different.
  The people spoke in November of 2006, and for this year--and last 
year--the Democrats are in the majority and in control of the 
congressional budget process. As ranking Republican on the Finance 
Committee, a committee I used to chair, like last year, I was not 
consulted at any point by our distinguished chairman on this budget 
resolution. Unfortunately, after reviewing the resolution conference 
agreement, it is clear it does not realistically address the tax policy 
needs the Finance Committee is very concerned about and has the 
responsibility to do something about.
  I am going to take a look at what the budget means to the American 
taxpayers in two timeframes, from now until January 20, 2009, and then 
for the period of time long term. Short term first; long term, the 
period of time after the new President is sworn in starting January 20, 
2009.
  Let's take a look, then, at what this budget says to the American 
taxpayer near term. For the hard-working American taxpayer, the news is 
not all bad. I complimented the distinguished chairman for preserving 
the ``unoffset'' AMT patch for this year in the budget. He had to 
concede a new point of order to the House, but my guess is there will 
be 60 votes to waive it when the AMT patch is brought up. The problem 
that 26 million families face is uncertainty of the action on the AMT 
patch this very year. In other words, right now.
  I have a chart here I wish to put up. It is the estimated tax 
voucher, a form that people fill out for making quarterly payments. 
Many of the 26 million families facing the AMT technically should be 
adjusting their withholding upward and filing the 1040-ES form with a 
check for a portion of the AMT they already owe because Congress hasn't 
acted yet to prevent the AMT from expanding to almost 25 million more 
Americans, which I don't think will happen, because I think we will 
take care of it in time, but who knows. But right now, those filing 
quarterly should have made this payment, filled this form out, on April 
15. That is when the first quarter's estimated tax is due, and that is 
what the tax law says right now.
  This is all a problem because the House Democratic leadership won't 
send us an ``unoffset'' AMT patch. Now, let's make it clear what the 
Constitution says, so people don't think I am only blaming the House of 
Representatives. The Constitution says tax laws must start in the House 
of Representatives. So why then won't the House Democratic leadership 
send us an ``unoffset'' AMT patch bill so we can get it to the 
President? Here is the problem. The House Blue Dog Democrats will not 
support an ``unoffset'' AMT patch bill.
  Now, why wouldn't the Blue Dogs do that? And I am not accusing them, 
I am stating what their position is. The answer is the Blue Dogs are a 
growing presence in the House of Representatives. Most of the seats 
that shifted from the Republican column to the Democratic column in the 
2006 election are occupied by Blue Dogs.
  The Democratic-leaning Washington punditry and the Democratic 
leadership have gloated recently about the trifecta that has happened 
because of the House special congressional elections this year. By 
trifecta, I am referring to the three House races that were switched 
from Republicans to Democrats this year, not something this Republican 
is proud about. All three of those Members have joined or intend to 
join the Blue Dog coalition in the other body.
  Lord knows we have heard a lot of gloating from the other side about 
these three new so-called conservative Democrats. We have also heard 
from a lot of Republicans crying in their favorite beverage about this 
outcome.
  The Blue Dogs have had a heavy hand in this budget and are the 
leading obstacle to getting the ``unoffset'' AMT patch bill done and to 
the Senate so we can send it to the House. So if the Blue Dogs are 
representing themselves as strict agents of fiscal responsibility, it 
is a fair question for every one of us to ask about their definition of 
fiscal responsibility.
  Let's take a look at it. I have another chart here. This chart 
contains a depiction of the most famous Blue Dog. Here he is, the most 
famous Blue Dog, Huckleberry Hound, showing us the definition of fiscal 
responsibility from his Blue Dog perspective. Now, here we have 
Huckleberry Hound barking ``fiscal responsibility.'' American taxpayers 
should beware. Huckleberry Hound's bite happens to be higher taxes. 
With respect to spending cuts, all we get is a whimper. No spending 
cuts.
  Maybe I am being too tough on Huckleberry Hound and his Blue Dog 
friends, but I have yet to see the empowered Blue Dogs propose spending 
cuts for deficit reduction. All I have seen is higher and higher taxes. 
Like their liberal brethren, Blue Dog Democrats only look to the 
American taxpayers to fund new spending. We are seeing it once again on 
the war supplemental bill. Why couldn't they find a spending cut here 
or there to pay for the popular veterans' benefit package? Why always 
go to tax increases?
  The reason I point this out is this group of House Members is holding 
up our ability to pass an AMT patch bill in a form that can pass the 
Senate and in a form that can be signed by the President. The Blue 
Dogs' bark of fiscal responsibility is stalling relief for 26 million 
AMT families. The Blue Dogs insist on getting their bite of $62 billion 
in new taxes as a condition to sparing these 26 million families from 
the AMT.
  I agree with the Blue Dogs on the importance of fiscal 
responsibility. And as I have stepped up to the plate over the years 
with plenty of revenue raisers, well, if you have any questions, ask 
the people downtown in what we call the K Street crowd who think of 
defending all these tax loopholes we are trying to close. But the Blue 
Dogs whimper when it comes to spending cuts. They only look at the 
taxpayers for fiscal responsibility. This obsession with raising taxes, 
most pointedly advanced by Blue Dogs, is a theme that runs through this 
budget.
  I am going to turn now to the short-term tax legislative agenda and 
examine how the budget squares with what we need to do.

[[Page 10161]]

  As a farmer, I would like to think we country folks can teach city 
folks a lesson or two. The first chart I am going to put up here 
involves the method a lot of us farmers use to get our water. You will 
see a well in this chart. You can see it as a long well. There is a 
little bit of water way down there at the bottom of the well, but most 
of the well is dry.
  Now, what we are told by those who drew up the budget is that the 
tax-writing committees will somehow plain find the money. Well, find 
the money. You have to have some sort of consensus to do that, because 
in the Senate, to get anything done, you have to have some 
bipartisanship. We will find the money, they say, to pay for this time-
sensitive tax business we have to deal with. Now, these are not just 
abstract things; these are pending matters. They are pieces of 
legislation on both sides that we say we want to get done before this 
session ends.
  The offset well here shows about $58 billion that is known, that is 
identified, and that is scored revenue raisers that the Senate 
Democratic caucus supports. I used this chart several months ago trying 
to make similar points. I have updated it to assume that the farm bill 
will become law, and I think that is going to happen within 48 hours.
  As a rule of thumb, the Finance Committee tax staff, in a bipartisan 
way, has developed about $1 billion per month in new offsets. That 
figure of $1 billion per month is in line with our historical average, 
the success we have had of gleaning money by closing loopholes. How 
reliable is that average, and can we count on it?
  As a farmer, I know something about the predictability of rainwater. 
You hope you will get rain and that will give you a decent level of 
well water. As a former chairman and now ranking member of the Finance 
Committee, I know something about revenue raisers. I have been there 
and done that. When I was chairman, I aggressively led efforts to 
identify and enacted sensible revenue raisers aimed at closing the tax 
gap and shutting down tax shelters. And as ranking member, I continue 
to look for ways to shut off unintended tax benefits. So I consider 
myself to be a credible authority on what is realistic when it comes to 
revenue raisers.
  From 2001 through 2006, Congress enacted over 100 offsets, with 
combined revenue scores of $1.7 billion over 1 year, $51\1/2\ billion 
over 5 years, and $157.9 billion over 10 years. So if you look at 
recent history, we can realistically figure the tax staff will find 
about $1 billion a month. Let taxpayers who are trying to avoid 
honestly paying taxes beware of that.
  Right now, however, all we can find that is specified, that is 
drafted and is scored, is that $58 billion. The revenue-raising well 
shows about $58 billion in available, defined, and scored offsets.
  Defenders of the resolution before the Senate will say a virtual 
cornucopia of revenue raisers is there from the tax gap and from 
shutting down offshore tax scams. I take a backseat to no one on 
reducing the tax gap or shutting down offshore tax shelters. I have 
scars to show from my efforts over the years. But the defined as well 
as the scored tax gap proposals are included.
  We have that here already.
  Likewise, we have a proposal targeted at tax haven countries and 
other off-shore activities on this chart. The well has, then, about $58 
billion of offset water. This budget anticipates Congress will be 
thirsty for this limited group of offsets. On the thirst or demand 
side, you will see the bucket will be busy bringing up that water. On 
the demand side, I have talked about next year's AMT patch--there is 
$74 billion for the patch for next year. There is $16 billion for tax 
provisions that ran out at the start of this year. That estimate, by 
the way, is probably low. Then there is $29 billion for next year's 
extenders, and there is $15 billion for the energy tax package we want 
to pass.
  If you add up those things--and we have to add the $5 billion we have 
there for the Federal Aviation Administration reauthorization bill, if 
we get to it--and I hope we get to it. So the pending, the time-
sensitive tax business totals what? It is $139 billion that we have to 
bring up in that bucket.
  You see $59 billion of real money is available. That is quite a 
difference. We are short about $80 billion. I have not even included 
the demands from the myriad of reserve funds that are mentioned in this 
resolution. Since we know from almost a decade of fiscal history that 
the Democratic leadership cannot propose spending cuts, we know the new 
reserve funding spending will be paid for with tax increases. It has 
been shown to be the case since the Democrats took power in January 
2007.
  As I said earlier, the Blue Dogs in the House of Representatives are 
leading proponents of this tax and this spending practice. You can see 
it doesn't add up. The budget plan for tax legislative business is very 
much out of balance. It is out of balance by at least $80 billion. Even 
if the Senate were to adopt some of the new tax hikes that the House 
has come up with, we would be substantially still out of balance.
  I might add I have included in the Senate offset accounting proposals 
the House has rejected. So I think on this chart is a fairly 
conservative estimate.
  What is going to happen? How do we then bridge that $80 billion gap? 
Either the tax relief is not going to happen or we will add that to the 
deficit. That is a frightening proposition. I had hoped that the 
shortfall would be confined to the short term, but that is not the 
case. Over the long term--and I said I had a short-term view and a 
long-term view of this budget resolution. So what does it look like 
after January 20, 2009? It gets much worse.
  Let's take a look at the budget's assumptions about revenues over 
that long term. Over the 5-year budget window going out to the year 
2012, keeping existing policy in place will have a revenue effect of 
over $1.2 trillion. This includes AMT relief, extension of bipartisan 
2001 and 2003 tax relief, and extending other broadly supported 
expiring provisions.
  In the aggregate, this budget appears to provide $340 billion in new 
resources for extending these policies over the 5-year window. Let's 
look further, and you will find a complicated obstacle course to making 
any of this tax relief happen. To me, the conditional tax relief 
language is almost bait and switch. Senator Gregg has described in 
great detail how this mechanism would work. To me, it is as convoluted 
as a Rube Goldberg type of invention. So I have another chart.
  The chart shows a Rube Goldberg potato peeler invention. If you want 
to peel potatoes, I would tell Rube Goldberg to use a simple potato 
peeler. If you really mean to deliver tax relief, I would tell the 
majority, the Democratic majority, write it into the resolution. Make 
it very clear. Don't use a Rube Goldberg mechanism.
  Suffice it to say, the supposed $340 billion in tax relief targeted 
to 2011 and beyond assumes it will not be used for future spending. 
Does anybody really believe this new majority will not spend future tax 
relief if given the chance? If your answer is yes, then I have a few 
bridges in Iowa that I will sell you.
  Under this budget, $1.3 trillion in expiring entitlement spending is 
assumed to continue. It is right in the CBO outlook. So, Mr. and Mrs. 
Taxpayers, that is right, your taxes will go up by almost $1.2 trillion 
unless Congress raises taxes to offset the revenue loss.
  When it comes to expiring entitlement spending, it is quite a 
different story. There is no requirement in this resolution for 
Congress to do any heavy lifting. This emphasis upon higher taxes and 
higher spending is reinforced by the pay-as-you-go rules, or we say 
pay-go around here. That is this budget's notion of fiscal 
responsibility--unrestrained spending is good, higher taxes are good.
  Over the 5 years of this budget resolution, it assumes a dramatic tax 
increase--at least $1.2 trillion. In 2011 the bipartisan tax relief 
plan will expire. Some folks will call these provisions the Bush tax 
cuts. I suppose that term, ``Bush tax cuts,'' arises from polling by 
campaign outfits on the other side. It is true President Bush signed 
both bills, but the bipartisan compromises occurred in the Senate 
Finance Committee. In 2011 President Bush will have been gone from 
office for a couple

[[Page 10162]]

of years. You can call this package of tax relief for virtually every 
American the Bush tax cuts, but for the taxpayers, if Congress does not 
intervene, it will be a tax increase and it will be the biggest tax 
increase in the history of the country and it is all going to happen 
without a vote of the Congress.
  So I would like to run through a couple of examples. The first would 
be a family of four. There is the husband, his wife, and their two 
children. This family makes $50,000 in income. That is right about the 
national median household income today. For example, the Census Bureau 
stated that for 2006 the national median household income was $48,200. 
Under the Democratic leadership's budget this family will face a tax 
increase of $2,300 per year. That is a loss in their paycheck of about 
$200 per month. It is a hit on their yearly budget of $2,300. Where I 
come from, that is real money.
  I will give another example, this one a single mom, two children. She 
earns $30,000 a year. In 2011, under this budget, she and her family 
run straight into a brick wall--that is a brick wall of $1,100-per-year 
taxes. That is $100 a month out of the family's budget.
  Some on the other side will say they only excluded top-rate taxpayers 
or other high-income folks from tax relief. I am going to tell you 
don't believe it. We have tax bills of the previous several decades to 
prove it, that you don't tax just the wealthy when you raise taxes. The 
facts are otherwise. Low-income folks, including millions of seniors, 
pay no tax on their dividends or their capital gains income. If this 
budget stands, even with the Baucus amendment, millions of these low-
income taxpayers, especially seniors, will pay a 10-percent rate on 
capital gains and could pay as high as a 15-percent rate on dividends.
  Nationally, over 24 million families and individuals reported 
dividend income. Let's say that again--24 million Americans reported 
dividend income--because you think it is just a few hundred thousand of 
very wealthy people--24 million families. In Iowa, for instance, we 
have 299,000 families and individuals claiming dividend income on their 
income tax returns. There are not 299,000 millionaire families and 
individuals in Iowa. Nationally, we are talking about over 9 million 
families and individuals reporting capital gains income. In Iowa we are 
talking about 127,000 families and individuals.
  There are many marginal rates other than the top rate that would rise 
if this budget stands, even with the amendment of Senator Baucus. The 
25-percent rate--which for 2007 starts at $31,850 for singles and 
$63,700 for married couples--would rise by 3 percent, to 28 percent. 
The 28-percent rate would go up 3 percentage points to 31 percent. The 
33-percent rate would go up 3 percentage points to 36 percent. The top 
rate would go up from its current 35 percent level to 39.6 percent.
  To sum up, even with the Baucus amendment added to this budget, there 
would be marginal rate increases on millions of taxpayers, and not just 
millionaires. Those marginal rate increases would reach taxpayers with 
taxable incomes as low as $31,850 for singles and as low as $63,700 for 
married couples.
  What I just described is accurate only if the Democratic leadership 
intends to follow the letter and the spirit of the Baucus amendment. If 
you look at last year's track record, the House neutered the effect of 
the amendment in the conference committee. They created a Rube Goldberg 
type of mechanism to impede the amendment.
  As I pointed out a few minutes ago, that mechanism is right back 
again. Of course, after the budget conference report was agreed to, all 
talk and action around the amendment then somehow ceased.
  I wouldn't put much stock on the followthrough on the Baucus 
amendment. The distinguished chairman and friend of mine points out 
that since last year's budget, we passed tax relief of $50 billion for 
last year's AMT patch. He will also point to the stimulus package 
passed earlier this year. The senior Senator from North Dakota is 
correct that those tax relief packages did pass. He used the assertion 
to counter the assertion on our side that there is a $1.2 trillion tax 
increase in the budget.
  The distinguished chairman omits a critical fact in his assertion, 
and that is the ``unoffset'' AMT patch passed only because Senate 
Republicans and the administration insisted that they would not use the 
AMT problem as a money machine for current and future spending. If the 
Democratic caucus had prevailed, the AMT patch would have been offset.
  Likewise, on the stimulus bill, there was bipartisan consensus that 
economic stimulus should not be a tax increase.
  When you step back from the differences across the aisle on this 
budget, you probably will not be surprised to find some differences 
among Presidential candidates. Generally, the candidates on the other 
side have proposed to take heavily from the taxpayers under the guise 
of fiscal responsibility. This is true when they are talking about 
ending the bipartisan tax relief plans of 2001 and 2003. It is true 
when they are talking about the same loophole closers for a myriad 
number of expansions of existing entitlements and creating new ones. 
Nowhere is there discussion of reining in spending.
  So the tax side of the Federal ledger is the only route to fiscal 
responsibility from the perspective of Presidential candidates on the 
other side of the aisle.
  I wanted to give you one telling example. One Democratic candidate 
has proposed to repeal the bipartisan tax relief plans for taxpayers 
earning above $250,000. This proposal raises $226 billion over 5 years 
and 10 years. A key fact is that the source of that revenue peters out 
over the next few years because under current tax law, the tax relief 
sunsets at the end of 2010.
  Madam President, I ask unanimous consent for an additional 4 minutes.
  Mr. CONRAD. I say to the Senator through the Chair that we would be 
happy to accede to the request if the Senator could say something nice 
about the chairman of the committee.
  Mr. GRASSLEY. Besides the work of Senator Harkin, we have an 
outstanding farm bill because of the hard work of the Senator from 
North Dakota.
  Mr. CONRAD. What a kind and gracious thing to say. We would be happy 
to agree to the request. The Senator would like 4 additional minutes.
  Mr. GRASSLEY. I think that is it.
  Mr. CONRAD. Why don't we give the Senator 5. You can give back any 
time.
  Mr. GRASSLEY. Sure.
  Mr. CONRAD. May I interrupt the Senator and ask unanimous consent 
when the Senator has concluded, we go to Senator Wyden?
  How much time would the Senator speak?
  Mr. WYDEN. I think it would range up to 10 minutes.
  Mr. CONRAD. Are we confident that 10 is sufficient?
  Mr. WYDEN. Yes.
  Mr. CONRAD. Then I ask unanimous consent to go to Senator Wyden for 
10 minutes after Senator Grassley.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRASSLEY. Well, I was talking about Presidential candidates and 
what their budget plans might do.
  Like the Democratic leadership's budget, the candidates on the other 
side oversubscribe the revenue sources from proposals that are popular 
with the Democratic base. The deficiency can only be made up in three 
ways: One, other undefined sources of revenue would need to be tapped. 
The taxpayers should rightly be worried about that avenue. Two, the 
proposed spending plan would need to be abandoned or curtailed. There 
is not much history on the Democratic side of this avenue being taken. 
Three, add to the deficit for the cost of the new programs. 
Unfortunately, this avenue has been taken too many times.
  We will hear a lot of criticism of the Republican candidate, Senator 
McCain, from those on the other side. They will argue, like the 
President's budget, a continuation of current-law levels of taxation 
somehow costs the Federal Government too much revenue, just like all 
the money every worker makes belongs to the Government and we let

[[Page 10163]]

the taxpayers keep a little bit of it. They will argue that the 
spending increases they propose are more important than the restrained 
levels of the President's budget, and they will argue that despite the 
record tax hikes in their budget, entitlement reform is a matter for 
another day. In fact, Senator McCain's plan intends to keep the revenue 
take where it is as a share of the economy. You see revenue averages of 
about 18.3 percent of the economy. That is 18.3 of the GDP.
  The state of the economy affects revenues more than anything else. 
There are dips when we have been in recession and peaks when growth is 
high. Our side cares about keeping the revenue line at a reasonable 
level, about 18 to 19 percent.
  We do not see the merits of an imperative behind a growing role for 
Government in the economy. The other side disagrees. That is their 
philosophy, they are entitled to it. I think they are wrong.
  They impliedly or explicitly reject our premise that the size of 
Government needs to be kept in check. That view has been best expressed 
in an editorial of October 22, 2007, in the New York Times. The lead 
paragraph says it best:

       President Bush considers himself a champion tax cutter, but 
     all the leading Republican presidential candidates are eager 
     to outdo him. Their zeal is misguided. This country's meager 
     tax take puts its economic prospects at risk and leaves the 
     Government ill equipped to face the challenges from 
     globalization.

  But the bottom line is the New York Times directly states the view 
behind this budget and the position of the Democratic candidates. From 
this perspective, the historical level of taxation is not somehow 
appropriate as a measure for the next decade.
  The New York Times implies that the Federal Government must grow as a 
percentage of our economy by at least 5 to 8 points. That is more than 
ever in the history of the country. If we were to follow the path 
suggested by the Times, the Government's share of our economy would 
grow by one-third. One-third. One-third is a great big increase in 
Government. The Democratic leadership budget takes some big steps on 
that path. So do the campaign proposals of the Democratic candidates. 
They go in the same direction.
  Our Republican conference takes a different view. America is a 
leading market economy. American prosperity and economic strength, in 
our view, is derived from a vigorous private sector that affords all 
Americans the opportunity to work hard, to save, and to invest more of 
their money.
  A growing economy is the best policy objective. It makes fiscal sense 
as well. Fiscal history shows that despite criticism to the contrary, 
the bipartisan tax relief plan drove revenues back up after the 
economic shocks we suffered earlier this decade. I am referring to the 
stock market bubble, corporate scandals, and the 9/11 terror attacks. 
Revenues bounced back when the economy bounced back. The revenue 
outperformed CBO's projections by a significant extent.
  I yield the floor.
  The PRESIDING OFFICER (Mr. PRYOR). Under the previous order, the 
Senator from Oregon is to be recognized for 10 minutes.

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