[Congressional Record (Bound Edition), Volume 155 (2009), Part 3]
[House]
[Pages 3375-3381]
[From the U.S. Government Publishing Office, www.gpo.gov]




                             BUDGET DEFICIT

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 2009, the gentleman from North Carolina (Mr. Spratt) is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. SPRATT. Mr. Speaker, we are here this afternoon to talk about a 
serious subject, something gravely facing our country, and that is the 
budget deficit for this fiscal year 2009 and for the years thereafter 
for as far as the eye can see.
  As we speak, the deficit for the year 2009, fiscal 2009, is soaring 
to record highs. CBO, the Congressional Budget Office, our budget shop, 
which is neutral and nonpartisan, has recently projected that the 
deficit for 2009 will be $1.2 trillion. And as high as this projection 
may be, our friends, it's probably a low-ball estimate.
  It omits, for example, the supplemental to pay for our deployment in 
Afghanistan and Iraq, which will be around $70 billion for the 
remainder of this fiscal year; it assumes that the alternative minimum 
tax will stay in full force and effect reaching 20 or so million-income 
tax payers for whom it was never intended. This increases the revenues 
by $70 billion though AMT has, in fact, been omitted year so that it 
does not apply for middle-income taxpayers for whom it was not 
intended.
  It also assumes that the tax cuts passed in 2001 and 2003, despite 
the fact that we have huge deficits, will expire on December 31, 2010, 
and as provided by the law which enacted them in the first place.
  When you add all of these into the equation--the Bush 
administration's last deficit, the deficit that we inherited from 
President Bush and must work our way out of--the deficit could easily 
top $1.4 trillion. It staggers the imagination.
  These are deficits that happened on the watch of the Bush 
administration and under their fiscal policies. But we, as Democrats, 
won the election, and it is our responsibility to decide what should we 
do about the deficits left us.
  Unfortunately, we've got forces converging on the budget which make 
it difficult to bring the deficit down to realistic terms. For example, 
we have the severest economic downturn in our economy since at least 
the first or second world war ended. So we have the mounting costs of 
counter-cyclical policies, TARP, the stimulus now pending in the 
Senate, the conservatorship of Freddie Mac and Fannie Mae. All of these 
things are hugely expensive. We have the rising costs of major 
entitlements--Social Security, Medicare, Medicaid--due to the 
retirement of the baby boomers.
  We have defense budgeted and funded at historically high levels and 
sustained for an historically long period of time. Funds funded to 
front-end accounts, accounts in the budget which need to be funded 
adequately but are not. Transportation is a good example. It will 
exhaust its reserve early next year and run close to zero unless we can 
get funds back into that particular account.
  Of course, as always there's education, which is not funded as 
robustly as many of us think it should be. And of course there are new 
topics--alternative energies and various incentives for increasing the 
energy supplies and making this country energy independent.

                              {time}  1645

  Then we have the renewal of existing tax cuts, which are slated to 
expire on December 31, 2010.
  When we add all of these things in, in addition to the price 
commitments we have to do something about the climate and something 
about universal health care coverage, it becomes very, very difficult 
to do anything to the bottom line of the budget, despite the fact that 
it is bigger than it has ever been before in peace time.
  The overarching question that faces this whole country as we incur 
these huge sums of debt is: How long will foreigners help us? How long 
will they keep buying our Treasury debt?
  We have, therefore, the worst budget since World War II and the worst 
economy in which to work out the problems of these budgets. Every 
recession has its own pattern to it. But it is clear that it is 
difficult in every recession, any recession, to work out of the 
recession when you're swimming upstream, when the economy is working 
against you; to work out of a budget deficit when the economy is 
working against you.
  Let me show you some charts, those who are listening. This is a 
simple bar graph. It shows that the Bush administration, when he came 
to office, had a phenomenal inheritance. A budgeting surplus over the 
next 10 years by $5.6 trillion. That was January, 2001.
  By January, 2004, that surplus of $236 billion was gone. Vanished. In 
4 year's time, we went from a $236 billion surplus to a $412 billion 
deficit. This happened under the policies and the watch of the Bush 
administration.
  This next chart portrays out over time the assets of this 
administration and the previous administration. This is the first 
George Bush administration. The first Mr. Bush. There was a significant 
decline in the budget at that point in time. But, when the Clinton 
administration came to office, President Clinton sent us a budget in 
February of 1993, on February 22, the first full significant action 
taken by his administration, and every year after the adoption of that 
budget by one vote in the House and one vote in the Senate, the bottom 
line is the budget got better and better and better, to point where we 
were at this point right here, 1997, 1998, the year 2000.
  The budget was, in those years, balanced for the first time in recent 
memory. Then, in 2001, the year 2000, we had a surplus of $236 billion. 
The second Mr. Bush came to office here. You can see the bottom line 
got worse and worse and worse until there was a slight pickup here. 
But, then in the out years 2004, 2005, 2006, 2007, the budget got worse 
and worse and worse, until the point it runs off the chart at the 
bottom of the page. That is the deficit we are now looking at, a 
deficit of as much as $1.4 trillion.
  Now, that would be a concern under any circumstances. But, in the 
present situation, the deficits that we have incurred over the last 10 
years have

[[Page 3376]]

largely been funded and financed by foreigners. Japan, China, Great 
Britain, Europe, and Pacific Rim countries. They have run trade 
surpluses with us and used the surplus dollars they hold to buy back 
our Treasury bills. It's a convenient short-term arrangement. But, over 
the long term, it means foreigners own more and more of our debt, and 
you find it hard to be totally independent as a country, certainly the 
world super power, when you're also the world's largest debtor.
  As of 2008, the total amount of foreign-held Treasury securities had 
tripled under the Bush administration. Starting out at $1 trillion, it 
rose to $3.1 trillion--over $2 trillion--during the period 2001 to 
2008. That is the accumulation of foreign-held Treasury bills and 
certificates.
  As for the total debt of the United States, this is where we began--
$5.7 trillion in 2001. That is where the total debt of the United 
States stood when Mr. Bush came to office. A substantial sum. But every 
year that number went up and up and up, to the point where, when he 
left office a couple of weeks ago, the amount of debt stood at $10.7 
trillion. Nearly doubled in an 8-year period of time--from $5.7 
trillion to $10.7 trillion. And, as a consequence of that, we are 
feeling the effects of it in all sectors of our economy.
  Would the gentlelady from Massachusetts care to make a comment or a 
statement? I gladly yield time to her.
  Ms. TSONGAS. I care deeply about the health of our Nation's cities. 
Cities, large and small, are our Nation's economic engines, and their 
well-being is critical to the prosperity and well-being of all 
Americans.
  Our cities generate wealth and economic development for entire 
regions; provide the foundation for an educated workforce; offer 
solutions to climate change and sustainable development; act as 
gateways for goods and knowledge; and serve on the front lines of 
homeland security.
  They are centers of our Nation's cultural activities and sports, and 
a repository of architectural and historic riches. They represent the 
diversity and strength of our country.
  When cities suffer, our Nation as a whole suffers. During the last 8 
years, our cities have suffered because we have failed to properly 
invest in them when economic times were good.
  Between 2001 and 2009, programs critical to ensuring the health and 
vitality of our cities, from social services to infrastructure, to 
economic development, have been cut or flat-funded, even as the Bush 
administration set records for deficits in debt.
  Instead of making continuous modest investments in the health of our 
cities when the economy was good, President Bush chose to shortchange 
them, bequeathing our country a significant shortfall in 
infrastructure, housing, services, and veterans' care.
  The debt exploded under the Bush administration, and we have little 
to show for it. As a result, in President Bush's 2009 budget request, 
interest payments alone were almost four times more than education 
funding, five times more than veterans' health care costs, and almost 
six times more than funding for homeland security for fiscal year 2009.
  I represent older industrial cities in the Merrimack Valley where for 
years the government failed to act, and the consequences were severe. 
It took decades to recover, and it was only after the Federal 
Government reengaged to the National Park System that we began to turn 
the corner.
  As we enter a severe economic crisis, we now face dual challenges 
left over from the last administration. We need to stimulate our 
economy by reinvesting in the health of our cities and towns, and we 
need to take smart, tough action to address our national debt.
  I thank the chairman, and I yield back my time.
  Mr. SPRATT. Going back to the topic before Ms. Tsongas spoke, here 
are just some highlights of the economy we also inherited, so that we 
have got, in effect, a dual negative double whammy--a budget deficit 
that is soaring out of sight and an economy which is contributing to 
that deficit--and it makes the effort to reduce and dispel and wipe out 
the deficit ever harder.
  For example, here's the unemployment rate. It stands at a 17-year 
high. Nearly 600,000 thousand jobs lost last month. Against a head wind 
like that, it's very, very difficult to bring the budget deficit down. 
In fact, you need to have countercyclical policies in effect that are 
actually adding to the demand of the economy in order to get the 
economy back on track, back on its feet, which is what we are doing 
right now.
  Here's another chart which shows what happens in an economy like 
ours, where unemployment is close to 8 percent. Revenues that were 
expected last September, when the Congressional Budget Office did its 
forecast of the budget, the revenues that were forecasted then are not 
obtained. We are $2.7 trillion short over that period of time, 2009 
through 2018, in the revenues that were assumed last September, which 
changes the basis for all of our policies when you simply don't have 
the funding that you're anticipating having only a few months before.
  It also shows you one of the frightening features of this current 
recession is how fast it's coming on. It lingered for some time. There 
were definite earmarks that we were headed toward a recession. But now 
that it's here, we are seeing, in 1 month, 500,000 to 600,000 jobs 
lost, as tragic evidence of what's befalling us. 3.6 million jobs lost 
since January of 2008. 3.6 million jobs lost since January of 2008.
  Mr. Moran, I gladly yield to you for any comment you would like to 
make on this topic.
  Mr. MORAN of Virginia. Thank you, Chairman Spratt. The number of jobs 
lost hits home--I think to all of us. Each of us probably have 
different experiences. I remember the day that a large corporation took 
over the corporation that my father was working for. And he had worked 
so hard. So he was called into the corporate offices and he was told--
well, he was just told to show up. We all assumed he was going to get a 
raise or a promotion because he had been working hard.
  This was during the 1950s. And they let him go because they said they 
were doing a corporate restructuring. We were waiting for him. He 
didn't come home until the middle of the night because he couldn't face 
us.
  Mr. Chairman, that is happening every single day, 20,000 times. 
That's the pace. 3.6 million jobs. Most of these are breadwinners. I 
suspect that over this Christmas vacation there are any number of 
parents who had to take their child aside and explain to them they were 
no longer going to be able to go back and finish out the last half of 
their academic year at college because they could no longer afford it.
  Or, imagine the mother and father sitting their children down and 
explaining that they had lost their home. They weren't sure where they 
were going to go. They would probably have to leave their school.
  We look at these numbers, and they are devastating. But I know that 
you are particularly sensitive, as Ms. Tsongas was as well, to the 
human face behind these tragic numbers. Worse, really, since the Great 
Depression, in many ways.
  It didn't have to happen. For 7 years of the Bush administration, we 
saw the largest corporate profit ever in American history. But it's 
interesting that 40 percent of that profit at one point went to the 
financial services industry alone, and 96 percent went to the 
wealthiest 10 percent of Americans. So that the Americans who have to 
defend our country, are called on to fight our wars, who pave our roads 
and build our bridges, who form the workforce that produced that 
corporate profit, were left with 4 percent of the income growth during 
the last 7 years to share.

                              {time}  1700

  So they relied upon borrowing from the increasing asset of their 
homes. The amount of money borrowed against home equity and credit 
cards is exactly equal to the increase in consumer spending. Americans 
did what their leadership asked them to do in 2001: they went out and 
spent at the mall, but they didn't have the commensurate income gains 
to afford that expenditure.
  As a result, now that the real estate market has crashed through 
people in

[[Page 3377]]

large part manipulating the market for their own gain and the disparity 
between the borrower and the lender and all these exotic derivatives 
that were meant to expand the leverage and increase the profit of the 
financial services industry, now we find ourselves in an economic 
crisis, Mr. Chairman. You are laying out the figures that this Congress 
must address on behalf of the American people.
  I will have more to say, but I very much appreciate the profundity of 
these numbers that you are sharing with us today.
  Mr. SPRATT. You said the key point when you said it didn't have to 
happen. In the year 2001 when President Bush first took office, we 
proposed at that time, since we had a surplus for the first time in 30 
years, to take the surplus in Social Security and use it only to buy 
down or buy up outstanding Treasury debt. That way we would have added 
to the net national savings of the United States, which is woefully 
deficient. We would have added to the capital availability in the 
United States and driven down to some extent the cost of capital. And 
by the year 2020, 2022 when the baby boomers began retiring in big 
numbers, Treasury would have seen much of its debt held by the public 
paid off.
  Now I am not so naive as to think that we would have religiously 
stuck with that proposal, but that is what the Blue Dogs were pushing 
and that is what many of us were pushing under the corny name 
``lockbox,'' but it had a serious, substantive idea beneath it, namely 
that we would increase the net national savings and we would at the 
same time clear up much of the debt owed by Treasury so that when the 
Social Security claimants came and presented their claims in 2020 and 
2022 in large numbers, Treasury would be more solvent to meet those 
claims and less in need of borrowing in order to satisfy those claims. 
That was a potential, very potential.
  The Bush administration came to our committee, you were on it at that 
time, and said we don't need to do that. We won't need to increase the 
debt ceiling of the United States for at least 7 or 8 years. And the 
next year they were back hat in hand asking for a huge increase, 
several hundred billion dollars, until finally the increases got to be 
nearly a trillion dollars a year, all because they spurned what was a 
genuine offer of a truly fiscal conservative policy on what to do with 
our surpluses in the year 2001.
  Mr. MORAN of Virginia. I do recall that very well. I was sitting on 
your committee, and you were almost begging the economic leadership of 
the Bush administration to follow the example that had been laid out by 
the 41st President of the United States, George H.W. Bush, when he 
began the system of PAYGO, that President Clinton then incorporated, 
raised taxes but balanced the budget, and as a result generated more 
after-tax profit for the wealthiest people of America than had ever 
been experienced, but provided the next President, George Bush, the 
43rd, with this $5.6 trillion projected surplus. A sunny horizon almost 
as far as the eye could see now has turned into deep deficits, deeper 
than anything we can imagine and which we see no end for, and it will 
bring us all of the way to the point you bring up, Mr. Chairman, when 
the baby boom generation retires and then puts an enormous additional 
burden on our budget.
  You asked Federal Reserve Chairman Greenspan if he would not impose 
some fiscal discipline on the administration and asked whether we could 
really afford the 2001 and 2003 tax cuts. As we look back, in 
retrospect we see the reason that $5.6 trillion surplus that was 
projected was gone in 3 years. By 2004, that surplus was gone.
  Mr. SPRATT. Four years.
  Mr. MORAN of Virginia. I thought it was until January of 2004, but 
you would know better, Mr. Chairman.
  The point is it was gone in a very short period of time. It was used 
on tax cuts. Tax cuts that the vast majority of which went to the 
people who needed them the least and who then invested them in hedge 
funds, invested them overseas, and put them into collateralized debt 
swaps and credit derivatives and every other kind of exotic investment, 
but they didn't go back into strengthening the economic foundation of 
the middle class.
  As a result, we look back now and we see that those tax cuts, putting 
aside what we were promised, those tax cuts generated about 13 cents on 
the dollar. In other words, about 87 cents of every dollar of tax cut 
never went back into strengthening the economy, it showed up in 
deficits. That is why this deficit situation is so difficult to deal 
with. We have to increase the deficit now to stimulate the economy 
because the private sector was given $350 billion out of $7 billion and 
they weren't willing to lend so the public sector has to come in, but 
it is all on borrowed money, as you emphasized, Mr. Chairman. And 
again, it did not have to happen.
  You were there sounding the warning. It is on the record if anyone 
would choose to check. And yet you were ignored and the members of your 
committee and the leadership, or at least on the Democratic side, was 
ignored. It seemed as though the policy was anything but the Clinton 
administration's economic policy. And now we find ourselves in as bad a 
situation as has existed almost for 75 years. I greatly thank you for 
raising that issue.
  Mr. SPRATT. Mr. Moran, in addition to what you just said, not only 
did the deficit come down in 1998, 1999, 2000 and 2001 as a result of 
the Clinton administration's policies, but employment went up also. 
Every year the bottom line of the budget got better and better and 
better for 8 straight years and so did the job market, to the point 
where the average job creation in the Clinton administration was 
230,000 a month. Twenty-two million jobs were created as opposed to 
this dismal picture here for the last year of the Bush administration. 
So 230,000 jobs a month on average, all together 22 million jobs 
created during the Clinton administration.
  And it was connected with, I think to some extent, the virtuous 
fiscal policy we were running at that time which shows you that it does 
pay to have sound fiscal policy.
  Mr. MORAN of Virginia. It was clearly connected to confidence in the 
economy and the people that were directing the economy and their 
reliance upon the private sector, but recognizing that the Federal 
Government had a role in terms of regulation and in terms of monetary 
policy and in terms of balancing the budget. The budget was balanced, 
and it was creating jobs, and now to think that we have gone from 
increasing jobs from 230,000 to losing 600,000 jobs a month, 20,000 a 
day, just an unbelievable reversal in terms of employment that 
parallels a fiscal reversal of $12 trillion from what the 
administration inherited to the situation we find ourselves in now.
  Mr. SPRATT. Let me turn to Mr. Melancon and yield to him, the 
gentleman from Louisiana.
  Mr. MELANCON. I apologize for being tardy in arriving on the floor. I 
seem to be spending an inordinate amount of time explaining to my 
constituents some of the false information that is getting put out 
there as though the deficits showed up yesterday at our doorstep 
unbeknownst to anyone before.
  Some 8 years ago we had an estimated $5.6 trillion surplus projected 
out over the next 10 years. As we stand here today, that surplus has 
turned to a deficit in excess of $10 trillion, and that is on budget. I 
know I don't need to explain that to you, but off budget I guess it is 
another several trillion dollars. Then if you go and use the accrual 
form of accounting, as businesses do, and people that are in the 
business world would understand, we are at $56 trillion and growing 
deficit, not talking about the number of jobs.
  So if we are out here in an economy, and of course a lot of what I 
hear from people is there is so much waste in the stimulus bill, the 
things that were there are a miniscule part that were made to sound 
like it was a whole package wrought with nothing but people's special 
projects. As we move to try and remove some of those things and get a 
viable bill that addresses stimulating the economy and putting people 
back to work and addresses the needs of trying to keep the United

[[Page 3378]]

States economy from collapsing, because if we don't do that, I think 
the irony is that people around the world are looking to the United 
States while each one of their governments are trying to figure out 
what it is that they need to do to stabilize their economy. They are 
watching the United States because we are the kingpin. If we fold, we 
are going to be the tail that wags this dog, and we are going to be the 
people who can hopefully keep our Nation afloat and keep the rest of 
the world hoping that we keep away from a depression as our 
forefathers, my parents and grandparents experienced, and a few who 
still live today remember.
  When we start looking at what has occurred in this Nation, the 
relevant parties that were running the government over the last 8 
years, borrowing money, spending money, right now the fourth largest 
item in our budget is the interest on the money that our government has 
borrowed, and 40 percent of our debt is held by foreign countries. We 
are already leveraged. We are a country that used to be a gross 
producer of agriculture. We used to be able to hold our own in 
manufacturing and energy independence. We are none of those any more.
  As we move forward, placed in our lap is not the opportunity, but 
placed in our lap is the disaster that has been laid at our doorstep, 
and now we have to figure out how to get us back, how to stabilize this 
economy, how to fill that gap of the trillions of dollars that has been 
robbed from it so that we can move forward so that my children, my 
constituents' children, and all of the constituents in this country's 
children and grandchildren can hope to have a better future. We 
shouldn't be the people that have to be the bearer of bad news.
  What we have facing us today, as you have shown, just in 1 year, 3.6 
million jobs lost, some 500,000-plus in the last month, that is not 
government working for the good of the people. So we have a lot that we 
need to do.
  I thank you for the opportunity to join you here on the floor here 
this afternoon.
  Mr. SPRATT. I now yield to the gentleman from Connecticut (Mr. 
Larson).
  Mr. LARSON of Connecticut. I want to thank the gentleman from South 
Carolina. I am glad to associate myself with his opening remarks and 
those of the gentleman from Louisiana (Mr. Melancon).
  Let me say that we were fortunate this past weekend at our issues 
conference to have the President of the United States address us. He 
said somewhat tongue-in-cheek, Look at what I have inherited.
  I think, Mr. Chairman, as you have done throughout your stellar 
career, you have outlined from a budgetary perspective the God-awful 
mess that President Obama has inherited. In fact, this is a cavernous 
hole that he finds himself in, as does our Nation.
  Mr. Melancon pointed out exactly how deep a hole has been dug and 
what this problem means to every American, not only from the standpoint 
of our national debt, but clearly from the number of jobs that have 
been lost, from the number of people who have lost their homes, and 
lost their health care.
  Now you have done a great job as chairman of our committee always 
bringing forward in detail. But, you know, Harper's magazine did an 
article just this past month called ``The $10 Trillion Hangover'' in 
which they specifically, almost but not as succinctly as your charts 
and graphs have indicated, but spell out how we got to this point.
  I think Americans all across this great country as our new President 
struggles to deal with the hole that this previous administration has 
left us, want to know how we got here and how we make this steady, 
determined ascent out of this cavernous hole.
  But the daunting task before this President is laid out before the 
American public with the 3.6 million jobs lost, with the projected 
recession in growth, and what we have heard from every single economist 
that has come before us is the difficult and uncharted waters that we 
are in. And that doesn't count what we anticipate might happen with the 
other shoe, credit default swaps and derivatives, and where the bottom 
is on that.

                              {time}  1715

  And yet this President, with the help of this Congress and under the 
leadership of Nancy Pelosi, strives to make that move, that steady, 
determined ascent by both providing economic investment and economic 
recovery and, as important, economic stability for all of our citizens. 
So I commend the gentleman for bringing forward what is at best a very 
bleak picture for America, but to be counterweighted by the 
determination of this Congress and Members who have come here to the 
floor this evening to make sure that there is a steady ascent from the 
depths of this cavernous hole, dug in unprecedented fashion, where 
people were asleep at the switch, not watching what was going on, and 
running up unprecedented debt, where two wars were unpaid for, a 
Medicare bill unpaid for, tax cuts unpaid for, all to come home to 
roost. But determined we are as a Nation and as a Congress to make a 
steady and determined ascent out of the depths of this cavernous hole 
dug by this previous administration.
  I thank the gentleman.
  Mr. SPRATT. I yield now to the gentleman from Florida (Mr. Boyd).
  Mr. BOYD. Thank you very much, Mr. Chairman.
  Mr. Speaker, I'm delighted to be here with you, Mr. Chairman. You 
have been a great leader for us on these fiscal issues and budget 
issues of the United States Government. You understand how our economic 
model works as well as anyone. And the fact that if we, as a 
government, as a people, if we're going to provide services which are 
normal government functions for our people, those services have to be 
paid for in some way.
  Mr. Speaker, I came to this Congress 12 years ago, 12 years ago last 
month, having campaigned much on the idea of fiscal responsibility. At 
that point in time, the Congress was controlled by Republicans, and the 
administration was in the hands of a Democrat. They were working very 
hard to solve a serious fiscal problem that was inherited in 1992 by 
the then-new Clinton administration. And this Congress and that 
administration worked hard. I came in in the middle of that and was 
happy to play some very minor role in moving this country toward fiscal 
responsibility, moving out of a period of 30-plus years of deficit 
spending toward recognizing the fact that we needed to pay our bills 
and that we should have enough money to do that, either by cutting 
spending or by making the revenue and the spending match in some way.
  In 4 short years, by 2001, when President Bush took office, this 
country had moved to a surplus situation, as you have heard described 
here, surpluses as far as the eye could see. We had our budgets in 
balance. And there were a group of us fiscal conservatives, and a group 
I work with, called the Blue Dogs.
  As President Bush came in and proceeded to advance his economic 
package, we told him there were three things he needed to do with that 
surplus. Number one is cut taxes, lower taxes. All of us want lower 
taxes. If you have a surplus, then you have room to do that. You should 
do it.
  Secondly, you should deal with the long-term problems that this 
country faces. We all knew back then, as we know now, that Social 
Security and Medicare, the entitlements, are going to be a serious, 
serious drain on this Nation as we move forward from this point. It is 
much more critical now than it was even back then. So let's take part 
of that surplus and deal with and fix the structural problems that 
existed in Social Security and Medicare so that those programs would 
continue to exist on into the 21st century and continue to create a 
lifestyle when people get into retirement that enables them to be 
productive rather than to be a drain on society.
  And thirdly, we should take the balance of the money and pay down 
debt. This country had been running deficits and creating debt for 30 
years running. And it was time to stop that and to begin to lower that 
debt bill, that side of the ledger, if you will. Why would

[[Page 3379]]

you want to do that? Number one, is you always prepare something for 
the downturn days. Those were good days economically. But we knew, all 
of us knew that wouldn't last forever, that you would eventually have a 
downturn in the economy, and you would need some cushion to make sure 
that you could survive those downturns. We also know that from time to 
time in the history of this Nation we have disasters, whether they be 
natural disasters or manmade disasters. And in this case, the 9/11 
disaster was a manmade disaster, but nevertheless one we that had to 
deal with. And so you look at things like that and you want to have a 
reserve. And this package that the then-President Bush pushed 
overlooked that and didn't accommodate that.
  The other thing you do by lowering debt is you lower your debt 
service, your interest costs that you have to pay annually, and you are 
able to spend more of your revenue base on the programs that are 
important to Americans, whether it be Medicare, Social Security, health 
care, education or national security or whatever it may be. Why would 
you want to take the money and pay debt service, interest, if you will, 
rather than put it in the programs that are important to people and 
help people? So we explained all this to the President and to his team, 
his OMB director and his Vice President. They kind of made fun of us 
and said, oh, no, no. We're going to have plenty of money. If you pay 
down debt, you pay it down too fast, and there would be prepayment 
penalty problems. And gosh knows, I wish we had that problem today.
  We are in a very serious situation now as a result of those policies. 
Even on the tax-cut side, we had an opportunity to fix some very 
serious problems in our Tax Code that we talk a lot about today. The 
AMT, the alternative minimum tax, could have been fixed permanently in 
2001. The estate tax, all of us know the problems that the estate tax 
causes our small business people, our ranchers and farmers. That could 
have been fixed permanently in 2001. How about the child tax credit? 
How about the marriage penalty? All of those problems that we face 
today could have very easily been permanently fixed in 2001. And it was 
passed on to jam the money into the marginal tax bracket categories.
  So, we find ourselves 8 years down the road, as Mr. Spratt and others 
have talked about, in a very serious, serious hole. America has found 
itself in this kind of place before. And we will buckle up. We will put 
our shoulder to the wheel. And Americans will, as they begin to 
understand this a little bit better, as our new, wonderful President 
Barack Obama takes this message out to the world, out to the country, 
then Americans will be asked to do the things that we have to do to 
restore our position in the world as the economic, the political and 
the military leader of the world.
  So, again, I want to say to you, Mr. Speaker, to my constituents and 
to the rest of the world out there, I stand ready to work with Mr. 
Spratt, Speaker Pelosi, Mr. Hoyer, our majority leader, and our new 
President, President Obama, to tackle these tough problems. Some tough 
decisions have to be made in the coming months as to how we blunt the 
effects of this economic downturn, how we soften the impact, how we 
shorten the length of the economic downturn. It's going to be a very 
difficult thing to do. And it's going to be painful. But we can do it.
  I want to thank Mr. Spratt for leading this Special Order.
  Mr. SPRATT. I now yield to the gentleman from Maryland, our 
distinguished majority leader, Mr. Hoyer.
  Mr. HOYER. I thank the gentleman for yielding. But much more than 
that, I thank him for the work he does as our chairman of the Budget 
Committee and for the work he has done over the years as ranking 
member, the minority member of the Budget Committee, for being 
consistent and, in my opinion, accurate in his observations as to what 
we would reap from the fiscal policies we have sowed over the last 8 
years.
  We are here today, in my opinion, to be honest with the American 
people. They need to know that this economic crisis will not end 
overnight. I think the chairman has made that pretty clear. And they 
need to know the reasons for the deep, deep, deep fiscal hole we have 
inherited after 8 years of fiscal recklessness. In fact, the projected 
deficit for fiscal year 2009 is $1.2 trillion. That is a figure 
difficult to comprehend. It's a figure particularly difficult to 
comprehend when President Bush and his economic advisers opined that 
they were worried about paying off the debt too early under the Clinton 
policies.
  One point two trillion dollars of deficits. Two factors have helped 
create that record-shattering number, the consistent irresponsibility 
of the past administration and our efforts to dig out of the economic 
mess he left us. It was not that long ago that you could hear on this 
floor heated debates about how to spend a projected $5.6 trillion, 10-
year surplus created under the Presidency of Bill Clinton. Who would 
have thought, who would have thought then that our surplus would be 
wiped out by one President's borrow-and-spend foolishness by five 
record-setting budget deficits in 7 years?
  I would remind my colleagues, who undoubtedly need no reminding, that 
there has been a hegemony of power, a monopoly of power, a singular 
control of policy over the last 8 years. Now I understand some of my 
Republican friends would say, well, the Democrats were installed 
because of the obvious need for change recognized by the American 
voters in 2006. They put you in charge in 2006 and 2008. That is true. 
But as I also point out, the President was not on the ballot, and two-
thirds of the United States Senate was not on the ballot, and 
therefore, it was impossible to make the change that America knew was 
needed. They have done that now. But they have done it after a very 
deep hole has been dug.
  While Democratic budgets were on pace to eliminate all of our public 
debt, today we are more indebted than ever. The national debt is now 
over $10 trillion from that projected $5.6 trillion of surplus. Who 
projected that? Not Bill Clinton. George Bush. President Bush's OMB 
projected that. Who told us that? President George Bush in 2001, 
speaking in this Chamber, told us that is the surplus that we could 
expect.
  Tragically, that was dissipated. That $10 trillion of debt now has 
replaced that $5.6 trillion of anticipated surplus.

                              {time}  1730

  We will be paying hundreds of billions of dollars in interest on that 
debt that we have incurred. That's just one more way in which the Bush 
legacy means large structural deficits for years to come.
  So what does that mean for our economy and for American families? 
It's easy to see a budget as nothing more than numbers on a page and 
it's just a short step from there to agreement with former Vice 
President Cheney's nostrum that deficits don't matter. In fact, he said 
that Ronald Reagan taught us that, that deficits didn't matter.
  Unfortunately, the Federal Government pursued that policy. 
Unfortunately, business pursued that policy, and unfortunately, and 
tragically, to their harm, too many consumers followed that policy. But 
deficits do matter. Mr. Speaker, they matter profoundly.
  Deficits and debt tie up huge amounts of capital, and when it comes 
to mitigating a financial emergency in the early stages, they tie our 
hands too.
  Republican fiscal policies have also made massive borrowing seem 
normal and acceptable, as I said, the five largest deficits in history 
over the last 8 years. They've set the disastrous example that it's 
just as acceptable for a household as for a government to live far 
beyond its means. And just as surely as unchecked borrowing can pay for 
unsustainable luxury today, the bill will come due.
  In 2006 Comptroller General David Walker told us that American 
irresponsibility, public and private, will gradually, and this is a 
quote, ``will gradually erode, if not suddenly damage, our standard of 
living and ultimately our national security.'' How true his words were.

[[Page 3380]]

  Mr. Speaker, there's nothing to gain from pointing fingers at the 
last 8 years, but there is much to learn and a great deal to gain from 
looking back honestly at the fiscal choices we've made in the past. We 
learned just how much this painful legacy will complicate our efforts 
to confront this crisis, and we strengthen our pledge to return this 
Nation to budgetary sanity.
  With your leadership, and with the courage on both sides of the 
aisle, on both sides of Capitol Hill, hopefully, we will accomplish 
that.
  While economists agree that getting out of this recession will 
require deficit spending, that spending would be deeply irresponsible 
without a long-term plan to restore fiscal health.
  I know, Mr. Chairman, you're focused on that objective. I am as well, 
and all the Congress needs to be, as well as the American people. 
Getting the budget under control is going to require hard choices, 
choices we're going to see reflected in President Obama's first budget, 
in my opinion. It will be a serious document for serious times because 
getting back on a sustainable fiscal path is going to take sacrifices 
from every one of us. But we can call confidently for those sacrifices 
for two reasons. First, because they will be truly shared from Members 
of Congress to every working family. And secondly, because if we put 
off our hard choices, they will grow harder and harder by the year, 
until they're absolutely crippling.
  Last month we heard our new President declare, and I quote, ``a new 
era of responsibility.'' This is what it looks like. This is where we 
are. Let's meet it with our eyes open and make the best of it together.
  Mr. Chairman, there's been much made of bipartisanship. I'm for 
bipartisanship. But I note, in 1990, there were really three reasons we 
created that $5.6 billion surplus. We made an agreement with President 
Bush I in 1990. In 1993 we passed a bill that set us on a fiscally 
responsible course, and in 1997, in a bipartisan way, we confirmed that 
course. Unfortunately, history shows us that we haven't had bipartisan 
support.
  In the 1990 Budget Act, one of the key three steps that got us to 
that $5.6 trillion budget surplus, when we passed it through the House, 
there were only 10 Republican yeses, only 10. That was one of the key 
steps in getting us to fiscal surplus. Not one of those 10 serves in 
the House of Representatives today.
  In 1993, of course, no Republicans voted for that bill. And in 1997, 
it was a bipartisan bill, which, Mr. Chairman, you and I both voted 
for. We then came on very hard times and we confronted the TARP bill.
  Let me go back to 1993, however, when I said no Republicans voted for 
that bill. When it came back from conference, excuse me, there were no 
Republicans that voted for that bill. But in 1990, when it came back 
from conference there were 47 Republicans ``ayes.'' One of them remains 
here today.
  Now, one could draw the conclusion that, well, they lost because of 
those votes. That would be the dead wrong conclusion. What they lost as 
a result of, I think, first of all, retiring, and secondly, feeling 
that perhaps their party was moving in a direction that they could not 
agree with. I hope that their party and this party comes together.
  On the TARP vote that we had to meet this crisis caused by this 
fiscal irresponsibility, the Democratic Party stood with President Bush 
in making very hard votes, and the majority of us did so. The minority 
of his party chose not to do so.
  It is time for the majority of both parties to stand with the 
American people and future generations to return fiscal responsibility 
to this Nation and to our people.
  I thank the chairman for his leadership.
  Mr. SPRATT. I thank the gentleman. And I yield the balance of our 
time to Dr. Schrader from the State of Oregon, a freshman Member, a 
veterinarian, I believe. Let me find out from the Speaker how much time 
is remaining.
  The SPEAKER pro tempore (Mr. Bright). The gentleman from South 
Carolina has 6 minutes remaining.
  Mr. SPRATT. Six minutes.
  Mr. SCHRADER. Thank you very much, Mr. Chairman. To be honest, I was 
not going to even speak today. I had thought that the legacy and the 
problems that we confront right now are such that I look forward to 
working with my Republican colleagues as well as my Democratic 
colleagues to help solve some of these problems. And so, as a result of 
that, I wanted to be building some bridges and look to build some 
bridges with some of my moderate colleagues across the aisle.
  But I've become very disturbed with the tendency, as we talk about 
some of the problems and solutions to some of those problems that are 
left behind by 8 years of fiscal mismanagement, that there's going to 
be an attempt to paint Democrats, as we come into control, as people 
seek fiscal responsibility with President Obama and the Congress of the 
United States of America, paint the fiscal picture as a Democratic 
problem. And I take great offense at that.
  I spent a few years in our State legislature in the great State of 
Oregon trying to balance our budget. No easy task. And I think this 
administration, with this Congress, with Speaker Pelosi and Senator 
Reid, deserve a great deal of credit for coming forward and talking 
about how to get us out from under.
  I'd like to just reiterate a few facts that I know have been 
discussed perhaps at length here, but I think it's important for 
Americans to understand clearly how we got into this mess. We now have 
a deficit of $1.2 trillion, at least, in 2009. That's a stark contrast 
to the budget surplus that many, including the good gentleman, majority 
leader from Maryland have talked about.
  The debt of the United States officially is $10.7 trillion. I'd like 
to make an argument in a couple of minutes that it's actually a great 
deal more than that. The interest payments now consume more than our 
major spending on education, veterans benefits and indeed non-mandatory 
health care programs. That's a travesty in an industrialized Nation 
like ours.
  Thirteen straight months of job losses, 22 straight months of 
declining home prices, the majority of stock indices down 37 percent. 
And the real income of the average American family hasn't gone up. If 
you're in the rich 10 percent of Americans, yeah, sure, you've done 
great. Your income's doubled. You've done very well.
  But 95 percent of Americans have seen their income fall, and in this 
day and age that's unconscionable. Right now, in the greatest 
industrialized Nation in the world, 7 million Americans without health 
care. That just shouldn't be happening.
  I would like to reference just a few key points here, Mr. Chairman, 
about our debt. Where are we really as we try and dig out? Our official 
national debt has doubled. We're at $10.7 trillion. We were at five 
plus not 8 years ago.
  But I would argue it's worse than that, unfortunately. Americans need 
to know that, and it's going to take probably the next 8 to 10 years of 
serious budget work, under your leadership, to create a path to getting 
back on a budget surplus, or at least no longer deficit spending with 
items off budget, like you've heard discussed here today.
  The projected deficit for 2009, yeah, probably at least $1.2 
trillion. We inherited that. I'd argue that Fannie Mae and Freddie Mac 
added about a $5 trillion increase to our debt, and even under the most 
conservative estimates, at least, have a tough time gaining $1.6 
trillion of that back, under best of circumstances. The debt from the 
other bailouts adds at least another half trillion dollars. We're 
talking about the AIG bailout and the numerous stock and bond 
portfolios that we've had to bail out at taxpayer expense.
  Future interest on the new debt. Historic. I mean, it's $1.2 
trillion. Americans need to understand that that interest is consuming 
a lot of our ability to spend on other great programs.
  Medicare Modernization Act, part D, heralded as a great improvement 
in drug benefits for a lot of Americans; while I'm not sure they'd 
agree they've

[[Page 3381]]

gotten those benefits with the doughnut hole and inability to negotiate 
best prices. But what they can be sure of is it costs another $800 
billion that we don't have.
  The last administration thought they could fight a war, they thought 
they could increase spending, and they thought they could give tax cuts 
all at the same time. I don't think there's a household in America that 
believes that's good policy, good financial policy or a path to 
success.
  Right now we're investing more in the war. We're not taking care of 
our veterans that come home. I think we need to be turning that around. 
It will cost some money to do that. And over the next 8, 10 years, as 
the administration, led by President Obama and you, Mr. Chairman, seek 
a path to fiscal responsibility, Americans need to know it's going to 
take time and it's going to take a little effort. We're going to have 
to watch what we do on the mandatory programs. We're going to have to 
watch what we do on defense spending, we're going to have to watch what 
we do on wealthy tax breaks.
  We need to get back to the sound budgeting principles that we had 
under the Clinton administration and previous democratic 
administrations. The fact that the last 8 years there was no PAYGO is a 
testament to the fiscal irresponsibility of the previous 
administration. I'm proud to be associated with a Congress that 
believes that is important, and that we will be doing great things in 
the future.
  Mr. Chairman, we are in a world of hurt here. The D word, the D word, 
not deficit, but depression is being mentioned in the corners of this 
building. I hope that is not the case. I look forward to your 
leadership and leadership of President Obama and the Congress to get us 
out from under. Thank you, sir.
  Mr. SPRATT. I thank the gentleman for his statement and yield back 
the balance of our time.

                          ____________________