[Congressional Record (Bound Edition), Volume 155 (2009), Part 19]
[Senate]
[Pages 25134-25137]
[From the U.S. Government Publishing Office, www.gpo.gov]




                             FISCAL POLICY

  Mr. DORGAN. Mr. President, in recent weeks, and especially in more 
recent days, we have had a lot of discussions on the floor of the 
Senate by Members about the Federal budget deficit and about fiscal 
policy. It is a serious issue in my judgment, one to which we have to 
pay a lot of attention. But some of the discussion on the floor of the 
Senate has been wrapped in partisan wrapping. The suggestion is the 
fingers are all pointing to the new President--new because he has been 
in office only 10 months. Somehow this very deep fiscal policy hole, 
these very large and growing Federal budget deficits, should be laid at 
his feet.
  The fact is, in my judgment, there is plenty of responsibility to go 
around on all parts. I am going to talk a little about that. This 
administration knows it. They have some responsibility. This Congress 
certainly has major responsibility. The past administration has 
significant responsibility.
  The American people are a lot less interested in who wants to own up 
to that responsibility than they are about who is going to try to do 
something to fix our deficit problems. We cannot have deficits that are 
growing far out into the future. We cannot continue to deliver a level 
of government the American people are unable or unwilling to pay for 
without very serious consequences to the American way of life. I want 
to talk just a bit about that.
  First and foremost, the deficits are growing and have been very 
serious. It is not unusual that in the middle of the deepest recession 
since the Great Depression we would have growing Federal budget 
deficits. Why? Because more people are unemployed, out of work. More 
people need the kind of social services and the stabilizing payments 
that we do. When people are in trouble and we are in a recession, that 
increases the spending.
  It is also the case that the amount of revenue we expected this year 
is down about $400 billion because people are making less money, 
corporations are making less money, less is coming in in tax revenue. 
So it is not unusual, in the middle of the most significant economic 
trouble since the 1930s that we have higher spending, less revenue, and 
therefore deficits that are ratcheting up.
  Deficits just by themselves would not necessarily be something that 
we would object to if the deficits purchase something of great value 
that was necessary at this moment. Ask this question and I expect the 
answer is self-evident. What if someone said: You need to spend $1 
trillion that you do not have, $1 trillion of deficits right now, but 
if you do that, if you spend that $1 trillion, you will cure cancer. Do 
you think anyone would say: No, that is not a smart thing to do. Of 
course we would do that, because it would promote dramatic dividends 
for a long time.
  But regrettably that is not what this deficit is about. This is not 
about having done something of significant merit. This is largely a 
structural deficit in which we have an expenditure base that is 
growing, and a revenue base that has not kept up, and now it has been 
aggravated, especially in a very deep recession. When I see the folks 
on the other side of this aisle come to the Senate to talk about 
generational theft, and to point fingers at the administration, let me 
be quick to point out, there is a long history to how we got to where 
we are, a very long history that does not start at 1600 Pennsylvania 
Avenue in January of this year. Let me revisit a little bit of that 
history, if I might. I am not doing

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it to suggest that one side is all right and the other side is all 
wrong. I am doing it because there are people who come to the floor of 
the Senate seeming to act as if they were exploring the surface of Mars 
while all of this was going on. In fact, they were not. Many of them 
were here in this Chamber.
  When President Clinton left office in the year 2000, we had a $236 
billion budget surplus. That was called the ``unified surplus.'' The 
actual ``on-budget surplus'' which does not count the Social Security 
revenues--and I do not think you should count Social Security 
revenues--was $86 billion. So when President Clinton left office that 
year, for the first time in decades we had a real budget surplus, and 
the expectation was that the on-budget surplus was going to grow to 
more than $3 trillion in the coming 10 years. That was the expectation. 
And as all of us know, President Bush came to town. And George W. Bush 
said: My first priority is to do very large tax cuts for the American 
people.
  I stood here on the floor of this Senate and said: You know what. 
Let's be a little conservative about this. What if something should 
happen and we do not have these surpluses? These are only estimates. 
They are not in our hands. They are only estimates. Why don't we be a 
bit careful?
  The President said: No, we are not going to do that. And most of my 
colleagues--by the way, the majority of my colleagues--said: No, we are 
not going to do that. We are going to enact a piece of legislation that 
will substantially cut taxes, the majority of which went to upper 
income people in this country.
  The benefits to the upper income people in this country--somewhere 
around 5 percent of the taxpayers--will total almost $1 trillion over 
the 10 years. The households in the top 1 percent, with incomes over 
$450,000 in 2008, will on average get a $489,000 tax break over ten 
years. Think of that. You say: Those of you who are fortunate to earn 
nearly half a million dollars in this 10-year period, we are going to 
give you close to $500,000, half a million dollars in tax breaks.
  Should that have been a priority? I don't think so. I did not support 
that. But it was for the President and the majority of the Congress. So 
the Congress cut the revenue very substantially to benefit the highest 
income Americans. Then what happened? Well, what happened was we 
discovered very quickly we were in a recession. In 2001, when President 
George W. Bush took over, at the end of March, we discovered we had a 
struggling economy. Then on 9/11 of that year we were attacked by 
terrorists, and very quickly we were in a war in Afghanistan, and soon 
thereafter in a war in Iraq.
  The President said: Despite the fact that we now are in recession, 
and had a terrorist attack, and two wars, we are not going to pay for 
the cost of these wars. We are going to send emergency supplemental 
requests that are not paid for, and we expect you to support our 
soldiers in the field.
  So nearly $1 trillion was spent on the two wars in the last 9 years. 
And not a penny of it was paid for. Right onto the debt. Then in the 
year 2008, our economy fell off a cliff in October. And not 
surprisingly, having built up a substantial amount of deficits over 
this period of time fighting two wars, having had a recession, without 
paying for any of it, having built up these unbelievable deficits, when 
we fell off the cliff last October into a very significant recession, 
very deep hole, the Federal budget deficit skyrocketed.
  Let me put up a chart of Federal budget deficits. I do this because 
we are on an unsustainable path. The President knows that. In fact, 
today the Wall Street Journal talks about the President's plan to 
tackle the Federal budget deficit. The President understands and I 
understand, in the middle of a deep recession, as we have got our foot 
on the accelerator to try to get this economy moving again, you cannot 
decide to take a lot of money out of the economy. So you could not at 
this moment decide: You know what. We are just going to collapse all of 
this red ink immediately. It would be devastating and throw this 
country into a deep economic tailspin. I understand that.
  But here is what we face. We face growing deficits fighting wars. 
When the President took over, had he done nothing in fiscal year 2009, 
we would have had a budget deficit, it is estimated, of about $1.3 
trillion.
  Last fall it was the Troubled Asset Relief Fund, $700 billion. Then 
when he took over, this President wanted an economic recovery fund. I 
supported that because I believed it was better to pump some money into 
the economy rather than risk the economy going into a much deeper 
economic hole.
  But all of that, in my judgment, has put us on an unsustainable path. 
You see, out in 10 years, this is not sustainable. The President knows 
that. I have talked to the President personally about it. As I 
indicated, a story today talks about the President's determination, as 
the economy strengthens in the coming months, next year to turn to this 
issue and deal with it and solve it. We do not have a choice.
  But what brings me to the floor is this discussion by some of our 
colleagues to say: Aha. Now we have got these big budget deficits. That 
belongs to the person in the White House. That is President Obama's 
fiscal policy. It is not. It just is not. This has a long history. It 
started when this country fought a war without paying for a penny of 
it, while at the same time enacting massive tax breaks primarily for 
the richest Americans.
  By the way, it is the first time, I believe, in the history of this 
country that that has happened. And then steering this country into a 
circumstance where the previous administration hired regulators who 
were content to be willfully blind and say: You know what. I would like 
a job. I would like a salary. But count on me to be willfully blind. I 
will not regulate a thing.
  As a result, we had unbelievable things happening in this country. 
Greed. Unbelievable things. I have given speech after speech about what 
happened with the subprime mortgage scandal, the Wall Street credit 
default swaps, CDOs, you name it.
  The result was this economy was taken right into the ditch by a bunch 
of shysters who were making a lot of money. A lot of them left their 
firms with a lot of money and stuck this country with a big bill, and 
now we see today they are the ones getting the big bonuses.
  By the way, the investment banks that are supposed to be lending 
money are not lending money. They are trading in securities, making 
money for themselves. Meanwhile, we have got a lot of small and medium 
businesses out there that are in desperate need of credit. It still has 
not all stopped. But the point is, to suggest somehow that this has all 
happened on the watch of a new President in his first 10 months is 
ridiculous. We all have a stake in this, and we all have responsibility 
for it. We are all going to have to start working on it together.
  This morning in a meeting I quoted Ogden Nash, who had a little four-
line poem about a guy who drinks and his wife who nagged him about it: 
She scolds because he drinks, she thinks. He drinks because she scolds, 
he thinks. Neither will admit what is really true, he is a drunk and 
she is a shrew.
  Responsibility on both sides. Responsibility on both sides here for 
fiscal policy. We all have a stake in this. We all have a 
responsibility. The question is not having people come to the floor and 
point fingers at a new President who has been in office for just 10 
months. The question is, who is going to come to the floor of the 
Senate and decide together--together--to try to pull this economy up 
and out of this desperate condition?
  I think we are finally starting to see some improvement here. I 
understand that we do need to steer toward a fiscal policy that 
reconciles our revenues and expenditures. Yes, to do that we are going 
to have to cut some spending. We are. I understand that. I am prepared 
to do that. However, I do not think we have to do it right this moment 
while we are still trying to crawl out of an economic hole. But we need 
to do that.
  We also need some additional revenue. I would say to some of my 
friends

[[Page 25136]]

here in the Senate who continue to vote against commonsense proposals 
to get the revenue we need: Help us. When we see U.S. companies that 
want all the benefits America has to offer them so they can run their 
income through the Cayman Islands and avoid paying taxes to this 
government, help us recover those funds.
  I have shown the photograph on the floor of the Senate about the 
Ugland House. I am guessing I have shown it at least a dozen times. 
When I first showed the picture of this white house in the Grand Cayman 
Islands on Church Street, a four-story little house, I said it is home 
to 12,748 corporations. Oh, they are not all there. It is just a lawyer 
who created a legal address for them at the Ugland House so they can 
avoid paying taxes.
  When I first talked about that, it was 12,748 corporations. I am told 
now there are 18,857 entities that call that white stucco house in the 
Grand Cayman Islands home. Many of these companies have set up 
mailboxes in a tax haven country to avoid paying their fair share of 
taxes.
  What about a bank such as Wachovia Bank that buys a sewer system in 
Germany from a German city? Is it because a bank in America should own 
a sewer system that they could pick up and bring back home? It is a 
complex sale-leaseback transaction in which an American bank buys a 
German city's sewer system, leases it back, and then they get to 
depreciate it on their American income taxes and save a couple of 
hundred million dollars in U.S. income taxes. The Wachovia Bank did 
that.
  I have spoken of other corporations that have done exactly the same 
thing. We are going to have to cut spending, but we are going to have 
to increase some revenue. How about some help from all of our 
colleagues who say that sort of thing should stop. If you want 
everything that America has to offer you, how about paying your fair 
share of taxes? Most people do. They do not have a choice. They get a 
W-2, a W-4 form, get a wage, work hard and are exhausted at the end of 
the day. They have got a job. By the way, in April of each year, they 
understand they owe something. Yes, to build roads, to build schools, 
provide for defense, to make sure there are police on the beat, 
firefighters spending the night in a fire house. They owe something 
because the cost of government requires all of us to pay something. But 
some are paying nothing and some of them are the largest enterprises in 
the country, finding ways to slip through the cracks.
  So we need to do a lot of things to fix these Federal budget 
deficits, a lot of things. It is going to require some courage and we 
need to start relatively soon.
  I wanted to quote Franklin Delano Roosevelt in one of his fireside 
chats, because there is such a description sometimes of selfishness in 
our country today, only by some, not the majority. But here is what 
Franklin Delano Roosevelt said about our country during war:
  He said:

       Not all of us can have the privilege of fighting our 
     enemies in distant parts of the world. Not all of us can have 
     the privilege of working in a munitions factory or a ship 
     yard, or on the farms or in the oil fields or mines, 
     producing weapons or raw materials that are needed by our 
     armed forces. But there is one front and one battle where 
     everyone in the United States--every man, woman, and child--
     is in action. . . . That front is here at home, in our daily 
     lives, and in our daily tasks. Here at home everyone will 
     have the privilege of making whatever self-denial is 
     necessary, not only to supply our fighting men [or women], 
     but to keep the economic structure of our country fortified 
     and secure . . .

  He is talking about common purpose, the need for our country to come 
together, to work together. Our history is a long history of supporting 
the men and women who wear a military uniform. When the Civil War 
erupted, Congress passed the Revenue Act of 1861 to try to raise money 
for soldiers. The War Revenue Act of 1899 raised funds to pay for the 
Spanish-American War. The entry into World War I increased the need for 
revenue, and Congress responded by raising the funds for that war. Even 
before the United States entered the Second World War, defense spending 
and the need for money to support the allies led to passage of two tax 
laws in 1940. In the Vietnam war, there was a surcharge to help pay for 
it.
  I don't come suggesting there is a great appetite to raise revenues. 
I understand that. I am saying those who come and talk about fiscal 
policy being a very serious problem are absolutely right. It is one of 
the most significant problems we face. We are on an unsustainable 
course. The President knows that. So does the Congress. The President 
has told me, as he said today in the Wall Street Journal, that he takes 
this seriously, and it will be at the top of his agenda as we turn this 
calendar year. I take him at his word. I believe he means that and 
knows that because we have talked about it. We are going to need help 
to try to fix this fiscal policy. We cannot continue to see increasing 
deficits far out into the future. It will weaken the country. 
Ultimately, it will cause a run on the dollar, with unbelievable 
consequences for the economy.
  This is not rocket science. We understand the consequences of these 
issues. You go to war and you provide tax cuts for the wealthiest 
citizens? I don't think so. That doesn't make any sense. Ultimately, 
you will pay for that with consequences, and we have begun to see it. 
What I want for our country is to address these issues.
  A couple issues that are significant are Social Security and 
Medicare. We can deal with those issues. We can deal with success. Why 
does Social Security and Medicare cost us more? It is called success. 
People are living longer and better lives so it costs us more in Social 
Security and Medicare. But a country that can't handle success is a 
country that can't handle difficult problems, let alone the easy ones. 
I believe we can do that. I believe we can address the big issues of 
Social Security and Medicare in a thoughtful way. Then we can also 
decide that budget deficits such as these are unsustainable and have to 
be dealt with. This is the President's priority. It is our priority. It 
ought to be a Republican priority and a Democratic priority. Instead of 
pointing fingers at each other, let's decide to link arms and see if we 
can find a way to bring fiscal policy under some control.
  First and foremost, let's lift the economy out of this hole. I 
believe we are beginning to see progress there. This was not some 
natural disaster. This was not a hurricane or tornado or flood that 
visited America. This was a very serious problem at a time in which 
regulators did not regulate. They decided not to watch. This country 
was stolen blind by a bunch of folks who made a lot of money doing it. 
Now we have to begin to repair and pick up the pieces. That requires 
financial reform in order to restore confidence in the economy going 
forward. It also requires, in this Chamber, a fiscal policy that 
relates to fiscal discipline, to say: We understand we have to deal 
with spending, and there are some areas where spending is out of 
control. We have to deal with revenues. There are some areas where 
additional revenues are needed and some areas where most of the 
American people pay up while others get by time after time, deciding to 
have all the benefits America is willing to offer but to pay none of 
the requirements to be an American citizen. Part of those requirements 
is for that which we do together to build a great country.
  We had a discussion with Warren Buffett some while ago. I have known 
Warren Buffett for a long while. He is a very wealthy man. I have great 
admiration for him. He is the first or second most richest man in the 
world. He has no pretenses at all. He doesn't look like it. One of the 
most interesting things he did was take a survey in his office with 40 
employees. Voluntarily, his employees described for him what they paid 
in income taxes and payroll taxes. The combined tax burden of all the 
employees in the office showed he actually paid the lowest percentage. 
The world's richest man paid the lowest percentage. His income all came 
from capital gains, which pays the lowest rate of 15 percent. I believe 
he said his receptionist pays a higher rate than he does. He said to 
us: That is wrong. You all ought to fix it.

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  Good for him. He is a role model in many ways for being able to speak 
up on these issues. But one of the things he was asked was: What do you 
think will happen to the economy in the next 6 months? His response was 
interesting. He said: I don't have the foggiest idea. I don't know what 
is going to happen in the next 6 months. I don't know what is going to 
happen in the next 16 months. But I know what is going to happen 6 
years from now. Within the next 6 years, you will have an America that 
is growing and vibrant and healthy, expanding jobs, lifting the middle 
class. Why do I know that? Because that is what America does. It has 
always done that. It has created incentives for the hard-working nature 
of the American people.
  Yes, we go through difficult times and troughs and trouble, but this 
country always picks itself up. I am convinced, while I don't know what 
is going to go on 6 months from now, I am absolutely convinced that 6 
years from now this country will be right back on track and doing just 
fine, probably well before that.
  I have his same faith in the future. I am convinced there isn't 
anything we can't do. In terms of inventing, we don't have to invent 
something to find a way to fix what I have described, a fiscal policy 
that needs fixing. We can do that. That only requires common sense.
  The next time one of my colleagues comes out and says: We are in a 
deep economic hole, and we have all these deficit issues, we would like 
to point to a President who has been in office less than 10 months as 
the root cause of the problem, the fact is, this President knows there 
is a fiscal policy problem. But this problem has been building for a 
long time. The bubbling up of this fiscal policy dilemma has been with 
us a long time, and some of the same people who come to point their 
fingers have a significant hand in creating it.
  I will talk about Afghanistan in the next day or two. But those who 
come to the floor and say: Let's send 40,000 more troops to 
Afghanistan, set aside for a moment the merits of that. I am not 
talking about the merits. But let me say, we are told that sending 
1,000 troops abroad for a year costs $1 billion. So the proposition is, 
if you are coming to say that, you are saying: Let's spend another $40 
billion in the coming year. I ask those who do that to tell us how we 
will spend the $40 billion and how they propose we raise the funding. 
Because I think it is time, long past time that we decide to fund some 
of these things. Sending soldiers into the winds of war and deciding we 
are going to put whatever it costs on top of the deficit is hardly a 
courageous act.
  This country deserves better from all of us, from me, from the 
President, from both sides in this Congress. All of us have to work 
together to put this back on track. I am convinced we will. I am 
convinced we will, in part, with the leadership of this President and, 
in part, because there are a lot of people of good will in this 
Congress who understand that this is a serious problem and we need to 
fix it.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Tester). The majority whip.

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