[Congressional Record (Bound Edition), Volume 155 (2009), Part 6]
[Senate]
[Pages 6885-6887]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           PRESIDENT'S BUDGET

  Mr. GREGG. Mr. President, I wish to address, again, the issue of the 
budget as proposed by the President of the United States, which is 
about to be taken up by the Budget Committees of the Senate and the 
House, and its implications for us as a nation because the implications 
of it are rather dramatic.
  Now, I understand--and all of us on our side of the aisle 
understand--the last election was won by the President and his party, 
that the Democratic Party now controls both the House and the Senate 
and the administration and, therefore, they have absolute 
responsibility and the right to send us a budget

[[Page 6886]]

which reflects their priorities. But I think we ought to have openness 
as to what the implications of that budget are relative to the future 
of our Nation, and they are dramatic.
  As you look at the budget that has been proposed by this 
administration, it represents the largest expansion of Government in 
our history. It is a proposal which is essentially moving the 
Government into arenas with an aggressiveness that has never been seen 
before. It has in it the largest tax increase in history, as well as 
the fastest increase in the debt of our Nation in history.
  The taxes go up by $1.4 trillion under this budget. Discretionary 
spending, which is spending that is not entitlement spending, goes up 
by $725 billion. Entitlement spending--which are things such as health 
care--goes up by $1.2 trillion. Yet there is no effort to save money in 
this budget to reduce the cost of spending and the cost of the 
Government. Instead, there is an expansion of the Government in this 
rather aggressive way.
  The practical effect of this is that within 5 years the debt of the 
United States held by the public will double. That means in the first 5 
years of this administration--presuming it is reelected--they will have 
increased the debt more than the debt was increased since the founding 
of the Republic all the way through the Presidency of George W. Bush; 
they will have doubled the debt of the country.
  In 10 years, because of this massive expansion in the size of the 
Government, they will triple the debt of the country.
  What does ``debt'' mean? What does tripling the debt from $5.8 
trillion to $15 trillion in 10 years mean? Well, basically, it means 
Americans coming into the workforce, Americans of the next generation, 
and the generation that follows that generation, will bear a burden 
from our generation--that the costs of today are being offloaded onto 
our children. The result of that is very simple. Our children and our 
grandchildren will have a country which will not give them as much 
opportunity as our country has given us because the burden from our 
generation will be weighing them down. The costs we have run up as a 
generation and passed on to them will set them behind the starting 
line. They will end up having less opportunity to buy a house, send 
their kids to college, live a quality of life we have lived because 
they will start out with a debt and a burden of a government which 
exceeds, in many instances, their ability to pay.
  We are, under this proposal, heading the Nation into an untenable 
situation. In the area of deficits, which translates into debt--a 
deficit is what happens at the end of the year when your bills come in. 
If you have more bills than you have income, you end up with a deficit. 
That, then, becomes debt.
  In the area of deficits, this budget takes us up dramatically in the 
next 2 years to an all-time high--a number that is hardly even 
contemplatable--a $1.7 trillion deficit this coming year. That is 28 
percent of gross national product being spent by the Federal 
Government.
  Now, I am willing to accept this number and not debate it because we 
are in a recession. It is necessary for the Government to step in and 
be aggressive, and the Government is the last source of liquidity. So 
one can argue that this number, although horribly large, is something 
we will simply have to live with. What one can't accept is what happens 
in the outyears--rather than bringing this deficit down to a reasonable 
number, a number which would be sustainable for our children to bear--
because the President is proposing to expand the Government 
dramatically, its size and its cost. He is proposing deficits as far as 
the eye can see of 3 to 4 percent of gross domestic product.
  What does that mean, 3 to 4 percent of gross domestic product? Well, 
historically, the deficit of the United States over the last 20 years 
has been 1.9 percent of gross domestic product. It means every year we 
are adding so much more debt than we can afford to our Nation that our 
children, again, will have less opportunity to succeed.
  To put it in numbers terms, historically, the debt of the Federal 
Government has been about 40 percent of gross domestic product. In 
these outyears--ignoring this situation which is driven by the very 
severe recession--in these outyears, the public debt compared to the 
gross domestic product will stay at about 67 percent of gross domestic 
product, not 40 percent, which is sustainable but 67 percent. Those are 
numbers which, if we were in another part of the world, would be 
described as a Banana Republic because they are not sustainable and 
they drive us up to a cost which is not affordable. Those are the 
numbers which are driving the tripling of the national debt in 10 
years.
  One may say, well, where does that all come from, all this expansion 
of debt that is going to be put on our children's backs? It comes, 
quite simply, from spending. This administration has proposed the 
largest increase in the size of the Federal Government in our history, 
a massive shift to the left of the Government.
  This is a chart which shows the historical spending of the Federal 
Government as a percent of GDP. Historically, this line right here 
reflects the mean, which has been somewhere around 20 percent of gross 
national product. That is a big chunk of the gross national product to 
be spending on the Federal Government, but that is what we have been 
doing. With the recession, obviously, it spikes up to 28 percent, but 
the point is that this administration doesn't plan to bring it down to 
historical levels; rather, they intend to keep spending at around 22 to 
23 percent of gross national product. That is not affordable. It is not 
sustainable.
  Why is it not sustainable? Because they don't increase taxes to that 
level. If they did, they would basically be creating a confiscatory 
situation for young people who are going into the workforce; rather, 
they simply run up debt to try to cover that difference at a 
catastrophically fast rate. We have to bring this spending line down if 
we are going to have a responsible budget.
  Now, why does this go up so much? Why does this spending level go up 
so much? Well, it goes up so much because essentially they are planning 
to nationalize large segments of the economy; to have the Government 
take over the responsibility for large segments of the economy. The 
most specific area they do this in is in educational loans, where today 
we have what is known as the public-private balance, where some people 
get their loans directly from the Federal Government and some people 
get their loans from the private sector. They are going to end that 
policy, and they are going to have the Federal Government take over all 
lending. That is the most specific. However, if you look at their 
health care policy, they are moving in that direction there too. They 
have suggested in this budget that we should increase health care 
spending as a downpayment for $634 billion. That is a downpayment. The 
actual number of the increase is closer to $1.2 trillion in new health 
care spending.
  What does that really mean? Well, essentially we as a government and 
we as a nation spend 17 percent of our gross national product on health 
care. That is much more than any other industrialized nation in the 
world spends. The next closest nation spends about 12 or 11 percent. So 
it isn't that we are not spending enough on health care in this 
country; it is that we don't use it very well--the money. We don't 
allocate it very well, and we don't use it efficiently.
  What the administration suggests is that we should expand that 
spending in the area of health care by another $1.2 trillion, as they 
move the Federal Government into the role of basically deciding how 
health care should be managed in this country, in a much more direct 
way. That is one of the reasons this spending line stays up so high.
  At the same time, they are suggesting massive new tax increases--
massive new tax increases--the largest tax increases in history. Now, 
this has been covered with the argument that, oh, this is just going to 
tax the wealthy; the rich among us are going to be the ones who pay 
these taxes. Well, that is a canard. That is a straw dog. When you 
start increasing taxes at the rate they are proposed to be increased in 
this budget--$1.4 trillion of

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new taxes--you are going to hit everybody. You are going to hit 
everybody pretty hard.
  There is in this budget proposal something that is euphemistically 
called a carbon tax. That is a term of art to cover up what it really 
is. It is a national sales tax on your electrical bill. It is estimated 
by MIT, a fairly objective institution, that this national sales tax on 
your electrical bill will raise around $300 billion a year. That is 
$300 billion a year that will be added to your electrical bill. The 
administration says it is $64 billion, but the same program they are 
talking about when looked at by an objective group at MIT, they 
concluded the real cost would be $300 billion. Whether it is $64 
billion or $300 billion, it is a huge tax that is going to affect every 
American when they get their electrical bill.
  In addition, they have this tax which they call the wealthy tax. 
People making over $250,000, they are essentially going to nationalize 
their income and say: If you make more than $250,000 we are going to 
raise your tax rate up to an effective rate of 42 percent. Well, I 
guess if you don't make that type of money, it probably doesn't bother 
you, but think about the people who are making $250,000. For the most 
part, they are small business people. They run a restaurant. They run a 
small software company. They run a small manufacturing firm. They are 
the people who create jobs in this country. Most small businesses are 
sole proprietorships or subchapter S corporations. The money they make 
is taxed to the individual who runs the small company. Whether it is a 
restaurant or a software company or a small manufacturer, it is taxed 
to them personally.
  What do they do with that money? They take it and they invest it in 
their small business. Where are jobs created in this Nation? They are 
created by small business. This is a tax on small business. Then, of 
course, they raise the capital gains rates. They raise the dividend 
rates. Aren't we in a recession? Why would you raise taxes on the 
productive side of the economy when you are in a recession? Is that 
constructive to getting out of the recession? No. In fact, the stock 
markets are saying exactly that. They are looking at this budget and 
saying: Wow, this is the largest increase in the Government ever 
proposed, and it is going to be borne by the people who are the 
entrepreneurs and the small business people.
  So do we really want to invest in America? Do we really want to put 
our money into the effort to try to make this country grow? Second 
thoughts. That is what is happening in the stock market. It is not 
constructive to economic growth.
  Tax policy has to be constructed in a way that creates an incentive 
for people to go out and take risks. It creates an incentive for people 
to be willing to take their money and invest in something that is going 
to create jobs. When it is said to someone we are going to take 40 
cents of the next dollar they make and throw State and local taxes on 
top of that--for example, in New York, it would amount to almost 60 
percent of the next dollar they make--people start to think: Well, why 
should I invest in something that is a taxable event? Let me invest in 
something that is not a taxable event.
  So instead of getting an efficient use of capital, people are running 
around investing their money to try to avoid taxes. As a result, we 
don't create more jobs; we just create more tax attorneys. Well, maybe 
that is jobs. I used to be a tax attorney, so I shouldn't pick on tax 
attorneys, but as a practical matter, it is not an efficient way to use 
capital.
  We saw over the last 7 years prior to this recession--and granted, 
this recession has created an aberration for everything that is 
economic--we had a tax policy which saw the largest increase in 
revenues for 4 straight years that this country has ever experienced. 
We saw a tax policy which basically stood on its head the idea that if 
we maintain a low tax burden in capital gains, we would collect less 
taxes. In fact, it did just the opposite. We collected much more taxes 
from capital gains. In fact, over the last 7 years, because of the tax 
policy that was in place, the Tax Code became more progressive. The top 
20 percent of income producers in this country ended up paying 85.7 
percent of the income taxes in the country. That was compared with the 
Clinton years when the top 20 percent of income producers in this 
country paid 82 percent of the taxes.
  At the same time, the bottom 40 percent of people receiving income in 
this country ended up getting twice as much back because they don't pay 
income taxes and they get a rebate in many instances through the EITC. 
They ended up getting twice as much back than during the Clinton years. 
So you actually had in the last 7 years a tax policy that encouraged 
growth, encouraged entrepreneurship, encouraged job creation, which was 
generating more revenues to the Federal Treasury, and yet being more 
progressive than during the period of the Clinton years.
  What the administration has suggested is, we should not only go back 
to the Clinton years, we should do even more by taking an effective 
rate that will even go above the rate of the Clinton years to 42 
percent, 41 percent. It makes no sense, especially in a time of 
recession, to basically have that sort of attack on small business and 
job producers in our Nation.
  So this budget is a statement of policy which is pretty definitive, 
and I don't believe it is very constructive. It is a statement of 
policy which says we are going to radically expand the spending in this 
country. We are going to radically expand the size of Government in 
this country. We are going to end up after 5 years with Government we 
can't afford, that is spending more than at any time in our history, 
and that is running up deficits which are going to compound the 
problems for our children. It is not constructive, in my opinion. I 
think we can do a lot better, and we can do it this year rather than 
wait.
  Mr. President, I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Georgia is 
recognized.

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