[Congressional Record (Bound Edition), Volume 156 (2010), Part 9]
[Senate]
[Pages 13023-13027]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            BUDGET DEFICITS

  Mr. FRANKEN. Mr. President, I rise today to discuss an incredibly 
important subject--our Nation's budget deficits. The deficit for fiscal 
year 2009 was about $1.4 trillion. The total national debt is now just 
under $13.2 trillion. These numbers are staggering and represent a 
tremendous threat to our Nation.
  We have been hearing a lot about these numbers over the last few 
months from Members on both sides of the aisle. We heard about the 
economic dangers of running these deficits--the dangers to us, to our 
children, and to the very future of this Nation.
  I share these concerns over the direction of our budget deficits and 
our rapidly growing debt. I have held these concerns for some time, as 
a matter of fact. In a New York Times op-ed way back in 1988--22 years 
ago--I expressed my alarm that we had gone from being the world's 
largest creditor Nation to its largest debtor Nation. I noted then that 
the accumulated trade and budget deficits of the Reagan years worked 
out to about $20,000 per American family.
  What frustrates me is that I have heard these deficit and debt 
numbers serve as an excuse for not passing an extension of unemployment 
benefits. We have been unable to get cloture on these extensions, 
despite spending weeks of the Senate's time on this matter and despite 
numerous attempts.
  Opponents say our deficits must be addressed, our debt cannot grow 
any larger, we have to draw a line in the sand and insist these 
benefits be fully paid for.
  This is troubling to me for two reasons. First, because these 
deficits are not new. Many of my colleagues seem to have suddenly 
become aware of them only a year and a half ago.
  More importantly, I am troubled because one of the biggest threats to 
our long-term deficits is a double-dip recession and the stunting of 
our Nation's economic growth. This shortsightedness is not only 
jeopardizing our short-term economic recovery and our future economic 
health, it is causing us to abandon the real and urgent needs of 
families at home and in our States.
  Please indulge me as I take a few minutes to take stock of exactly 
where we find ourselves.
  We all know that our unemployment rate has been hovering at about 10 
percent, its highest level in over a quarter of a century. There are 
14.6 million Americans looking for jobs but unable to find them. Nearly 
half of these are friends, family, and neighbors who have been out of 
work for over 6 months, despite sustained efforts to find jobs.
  Long-term unemployment is the worst it has been in the 60 years that 
these statistics have been kept. We have to go back to 1983 to find 
numbers even half this bad.
  The competition for each job is fierce. It is not uncommon for 
hundreds of people to be fighting for a single job. This chart shows 
just how hard it is to find work right now. In 2006, there were about 
1.5 unemployed workers for each job opening. That number has exploded 
to five unemployed workers for every opening.
  It does not surprise me that countless Americans have given up 
looking and are not even counted in the bleak unemployment statistics I 
have been quoting. They have just given up.
  I can't imagine many things more demoralizing than not being able to 
find work, not being able to take care of your family. I have heard the 
claim from one of my colleagues that unemployment insurance provides an 
incentive for the millions of unemployed to just sit on their duffs and 
not look for work. I couldn't disagree more strongly. Unemployment 
insurance doesn't keep people from working. The lack of jobs keeps 
people from working.
  I have traveled all over Minnesota talking to people who are out of 
work. I have gone to the Anoka County Workforce Center; I have gone to 
union halls in Duluth, in Bemidji, in Rochester, and I have met with 
folks who are literally depressed. These are people who have worked 
their whole life--guys who started their first paper route when they 
were 9 years old, who took pride in doing their job, even when it meant 
going out on a 30-below-zero winter morning in Minnesota, and they have 
been working ever since. Work is an enormous part of their identity. 
These Minnesotans don't want an

[[Page 13024]]

unemployment check, they want work. Still, I have had a number of them 
come and say to me: You know, if it weren't for my unemployment 
insurance, I wouldn't be in my house.
  One of my constituents wrote to me and said:

       I was employed for 23 years since college graduation and 
     now am in need of extended unemployment benefits as the 
     economy slowly recovers via a ``jobless recovery.'' As a 
     college graduate with an MBA and 23 years of continuous 
     employment at ``good jobs,'' I never imagined even needing 
     basic unemployment. As an active job seeker, I have met 
     hundreds of other job seekers and virtually every one of them 
     wants a job and wants to work.

  Now this constituent and thousands of others like him have to hear 
this junk about how unemployment insurance incentivizes people not to 
work. I don't know where the Senators who are saying that are going in 
their States, but from what I have heard from my other colleagues, it 
is like this all over the country.
  But even if we ignore the human side of our economic crisis, even if 
we are to look only at what is best for our Nation's economy, both in 
the short term and the long term, it is still the right answer to 
extend unemployment benefits and to do so without offsetting them by 
cutting other important programs. I am not an economist--not many of us 
here are--but there happens to be a pretty convincing record for us to 
draw from.
  According to Mark Zandi, chief economist of Moody's economy.com, and 
a senior adviser to Senator McCain's Presidential campaign, extending 
unemployment insurance benefits creates $1.63 in demand for every 
dollar spent. That is pretty simple, and it makes sense. Unemployment 
benefits are likely to be spent quickly and in local communities. 
Unemployed workers no longer get a paycheck, but they still have to pay 
their mortgages and they still have to put food on the table and pay 
their electric bills.
  Throughout this crisis we have all heard from economist after 
economist who is closely watching the strength of consumer spending--
our economy rises and falls on it. Unemployment benefits support 
consumer spending and stimulate the economy. Like other automatic 
stabilizers--programs for which eligibility is triggered when the 
economy sinks and are used less as the economy recovers--unemployment 
benefits are effective and appropriate stimulus measures.
  Do you know what else has proven to work? Food stamps, with $1.73 
yield for every dollar spent. Generally, the State governments return 
$1.38 on every dollar spent. That is why I have cosponsored a bill with 
my friend from Ohio, Senator Brown, to deliver aid to States. The Local 
Jobs for America Act could save 1 million public sector jobs--the jobs 
of teachers, firefighters, police officers, childcare workers.
  Of course, increased investment in our Nation's infrastructure yields 
$1.59 for every dollar spent. Infrastructure spending repairs our 
crumbling bridges and roads to keep us competitive in the global 
marketplace. We could build our way out of this crisis just as we did 
after World War II with our interstate highway system. The 21st-century 
version of the interstate highway system is our broadband network. 
Commerce is now highly dependent not just on bridges and roads but on 
efficient communications.
  There is no small irony in the fact that we have fallen behind other 
countries in our access to the Internet, a technology created by U.S. 
Government research dollars, and one which itself created so much 
wealth in the United States and around the world. The Recovery Act has 
already invested $85 million in grants and $32 million in loans to 
expand broadband coverage in Minnesota. That is a good thing because 
the more parts of this country we can reach with the broadband network, 
the more people in our country who will be engaged in trade and in our 
economy.
  This expansion can also help reduce our Nation's other deficit--the 
trade deficit. The President's export initiative, along with improving 
exchange rates and local economic growth, can contribute to boosting 
our exports, and that means more jobs, more growth, and reduced budget 
deficits. Our country has plenty to offer, especially as countries 
throughout the world transition to green economies.
  In my home State, a National Science Foundation grant helped the 
University of Minnesota develop a technological breakthrough that will 
lead to an ultra-efficient solar cell. These cells can produce 60 
percent more energy. We shouldn't be importing Chinese solar panels. We 
should be using this technology to develop our own, for our own use and 
for export.
  But all these things--unemployment benefits, infrastructure, 
research--cost money. They all require spending. Some of my colleagues 
seem to think that long-term deficit reduction and short-term spending 
are somehow incompatible. Take for example the Recovery Act. Yes, it 
added to our short-term deficit--perhaps. But imagine where our economy 
would be now if we hadn't enacted it.
  I know some of my colleagues will say: Well, the stimulus package was 
a failure. The President said unemployment would hit 8 percent if we 
didn't enact the stimulus package, and unemployment has been nearly 10 
percent for months. Well, yes, but there are a couple of possibilities. 
Either the stimulus package was a failure or the recession left by the 
Bush administration was even worse than his advisers thought it was 
when President Obama said that.
  When President Bush left office, we were bleeding jobs. We lost about 
800,000 jobs in that last month of the Bush administration, about 
750,000 the first month of President Obama's administration. We lost 
4.4 million jobs in Bush's final year in office. Yet with the Recovery 
Act, the President has been able to turn the economy around and 
immediately stem the growing losses. The numbers of jobs lost got 
smaller and smaller each month. This year we have had 5 straight months 
of growth, and we have created 882,000 net jobs this year. Does anybody 
see a trend line?
  Some may note this little negative bar at the end. That is primarily 
the result of losing some temporary census jobs. But if we look at only 
the private sector, we actually saw a net increase of jobs in June. 
Imagine what this would look like without the Recovery Act. Last month, 
the CBO estimated that the Recovery Act has increased the number of 
people employed from 1.2 to 2.8 million. It is the view of many 
economists that but for the Recovery Act we would have slipped into a 
depression. In that case, our deficit would actually be a lot higher 
than it is today because that is what happens during a depression.
  Let's remember what was in the Recovery Act. Roughly one-third went 
to State governments, roughly one-third went to tax cuts for 95 percent 
of Americans, and roughly one-third went for infrastructure. Many of 
these projects are now coming online.
  I travel all over my State, and I talk to mayors and city planners 
and county commissioners--as I know the Presiding Officer does in his 
State of Alaska--and I talk to small business owners. Usually, I don't 
know, nor do I particularly care, which political party they belong to. 
Almost invariably they thank me for stimulus funds that financed the 
repair of an aging wastewater plant or some officers or teachers or 
funding for worker training or a home foreclosure counseling program 
that prevented homes from going into foreclosure, saving their 
communities money. Yes, local and State Republican officeholders and 
small businessmen thank me for the Recovery Act, a lot, and I wasn't 
even here to vote for it. Still, they thank me. And you know what. 
After they thank me, they say: More. They ask for more.
  We have an economic crisis on our hands. Congress should be making 
investments that provide the highest returns on investment that can be 
at the same time stimulative to our economy. Now is not the time to 
stop investing. Short-term shocks to the system will impair our 
economic recovery. We should simultaneously be looking for long-term 
budgetary solutions while continuing to invest in our recovering 
economy. These are not incompatible. In fact, I believe it is necessary 
to do both.

[[Page 13025]]

  If we don't, we risk seeing a repeat of what happened in 1937. Our 
country had been making great strides toward a full economic recovery. 
Production was up, wages were up, unemployment had come down from over 
25 percent when Roosevelt took office to 14 percent in 1937. So after 
his landslide election in 1936, President Roosevelt, upon the advice of 
his Treasury Secretary, declared the depression over.
  His Treasury Secretary, Henry Morganthau, was getting uneasy about 
the long stream of deficits they had been running. To reverse course, 
they cut Federal recovery program spending and raised taxes. This 
decision proved to be premature. The economy's impressive growth rate 
of the previous 4 years--it grew 11 percent in 1934, 9 percent in 1935, 
13 percent in 1936, 5 percent in 1937--came to a screeching halt, and 
the economy took another dive. The unemployment rolls increased by 5 
million people, up to 19 percent. The economy shrank by 3.4 percent in 
1938, and the country's remaining economic indicators remained low 
until the beginning of World War II.
  We shouldn't make the same mistake twice. We should continue 
investing in our future instead. But some colleagues are skeptical of 
this approach and talk about the United States as if we were Greece.
  Let me be clear: We are not Greece. If we were to take a look at 
interest rates on the U.S. Treasury bonds, we would see that a 10-year 
Treasury bond is yielding just about 3 percent in interest. That is the 
market's pricing. If the market really thought U.S. Treasurys were 
risky, the market would demand more than 3.09 percent interest on a 10-
year Treasury.
  The market says we are not Greece. Yet the threat from taking some of 
the measures Greece has recently taken is very real. Cutting back on 
spending now will jeopardize our economy and could push us into a 
double-dip recession. That would drive up unemployment even more, drive 
small businesses under, and stop us from growing out of the deficits we 
all want to eliminate.
  Growing our economy is how we have come out of far worse deficits in 
the past. At the end of World War II, our budget deficits had reached 
over 30 percent of our GDP, but we grew out of it. Today, it is just 
over 10 percent of our GDP. After World War II, the publicly held debt 
was 109 percent of GDP, compared to OMB's projection that we will be at 
64 percent by the end of this year. We grew ourselves out of it, and we 
can do it again.
  Destimulating our economy at this fragile moment is simply not wise. 
Don't take my word for it. Burton Malkiel, a member of President Ford's 
Council of Economic Advisers, said in 2003:

       If there is any time in which one ought to have a deficit 
     it is a time where there is economic slack and a job market 
     that is not recovering.

  Manuel Johnson, one of President Reagan's Assistant Treasury 
Secretaries, said he didn't think short-term deficits have much to do 
with the economy's performance. And Reagan's Chief Economic Adviser, 
Martin Feldstein, who was also one of our most distinguished 
conservative academics, was one of the strongest voices for robust 
stimulus legislation last year.
  Let's keep going. Michael Boskin, adviser to President George H.W. 
Bush, said:

       The notion that deficits are bad is way too narrow. 
     Deficits can be a serious problem over the medium and long 
     term. There are times it is good to see the deficit worsen or 
     the surplus turn into a deficit.

  And he means those times--he means during an economic downturn.
  The chair of President George W. Bush's Council of Economic Advisers, 
Gregory Mankiw, said:

       It is a textbook principle of prudent fiscal policy that 
     deficits are an appropriate response in times of war and 
     recession.

  Earlier, I mentioned one of Senator McCain's campaign advisers, Mark 
Zandi. He said that it is typical to run large deficits during a 
recession and the true problem is persistent large deficits.
  To my colleagues who refuse to enact anything that adds a penny to 
the deficit, what else can I say to convince you? Short-term deficits 
during a recession are acceptable. In fact, many of the conservative 
economists advising Republican Presidents or Presidential candidates 
have said they are prudent and even good. When we distinguish between 
short- and long-term deficits, we start to paint a very different 
picture.
  I don't want anyone to hear me as saying we should just spend, spend, 
spend. Everyone agrees we are on a track that is unsustainable. Without 
significant changes to policy, the Center on Policy and Budget 
Priorities projects that our national debt could grow to 300 percent of 
GDP over the next 40 years. That is almost three times as large as the 
post-World War II level. The problem must be addressed with a careful, 
measured, and multifaceted approach, the same approach that balanced 
our budget just 10 years ago.
  As you can see, here in 2000 we were running a surplus of $200 
billion and we were headed down the path to eliminating completely the 
publicly held debt. In fact, our debt could have been paid off today, 
by today, if no changes had been made to Federal spending policy. But 
President Bush and Congress did make changes when they took over in 
2001, such as passing massive tax cuts for the wealthy. As a result, 
our national debt more than doubled under President Bush.
  In January 2009, when President Obama was just taking office, CBO 
estimated that he was left with a $1.2 trillion deficit for the fiscal 
year and the residual effects of ill-advised economic policies.
  Let's take a look at this chart which shows our current 10-year 
budget outlook. As you can see, the Center on Budget and Policy 
Priorities projects there will be five major contributors to the 
deficit in 2019. The one that is obviously least under our control is 
the economic downturn. It is the red. Then there are the wars in Iraq 
and Afghanistan. That is the green. That proportion is pretty 
substantial. But here is this little blue, kind of turquois line. That 
little thing is the Recovery Act. This is legislation that is targeted 
over and over for being such a huge contributor to our deficit. This 
sliver is what so many of our colleagues complain about, that one. Most 
of its contribution to the deficit is clustered right here in the first 
2 years when the economy most needed a boost, but its longer term 
budget effects are tiny when compared to its effectiveness in keeping 
us from falling into another Great Depression. And when compared to 
this yellowish-orange block, the block responsible for over $7 trillion 
in debt over this 10-year period, these are the Bush-era tax cuts which 
were passed without being paid for. This block is the result of an 
experiment in economic theory. I think the record is clear that the 
experiment failed. But no matter what you think of the effect of that 
policy choice on our economy, you cannot deny the effect of that policy 
choice on our deficit because here it is, in yellowish-orange.
  So when my colleagues come down here to rail against the Recovery 
Act, to blame the Recovery Act for increasing the deficit, I guess it 
can be technically accurate--a little bit of the blame, this much, 
maybe a centimeter, that goes to the Recovery Act, even though it very 
possibly kept us from slipping into a second Great Depression, in which 
case deficits would have been much larger. But I also want the American 
people to have a sense of how much of the blame should go to the 
Recovery Act and how much of it belongs elsewhere, and I think you see 
it.
  This chart gives you a good idea of where all the debt came from. As 
you can see, the debt accelerates upward with President Reagan and 
President George H.W. Bush. It smooths out under Bill Clinton. And then 
it spikes, it skyrockets under George W. Bush, as I mentioned before. 
President Obama was left with a projected $1.2 trillion deficit in his 
first year in office. However, even though this massive debt was handed 
over to us by our last President, it does not diminish our 
responsibility to address it.
  I am glad to see that so many of my colleagues also appreciate the 
seriousness of this responsibility and some are proposing commonsense 
solutions to

[[Page 13026]]

bring these long-term deficits under control. We took a major step 
earlier this year by passing comprehensive health care reform. Health 
care costs were the No. 1 factor contributing to long-term government 
deficits. The cost curve on those were out of control. Under previous 
policies, the costs of Medicare and Medicaid would have gobbled up a 
third of the total Federal budget by 2030. But health care reform 
included reforms such as the value index that will finally provide 
incentives for providing high-quality care at a lower cost, as we do in 
Minnesota, instead of providing the most expensive care possible 
without regard to outcomes.
  This legislation alone will have an enormous impact on the long-term 
deficit. The CBO estimates it will bring down the deficit by $143 
billion in the first 10 years and even more in the following decade. 
That is hundreds of billions of dollars, and that doesn't even include 
the reduction of private costs to families that will result from the 
improvements in the overall efficiency in our health care system. These 
are CBO numbers, the same CBO whose numbers I quoted earlier about the 
alarming size of projected future deficits if we take no action; the 
exact same alarming numbers my friends on the other side of the aisle 
quoted. They are quoting CBO. If you want to rely on those CBO numbers, 
then CBO numbers are what we must rely on to score health reform.
  I strongly support the health care reform bill we passed and am 
optimistic about the positive changes it will bring to the lives of 
millions of Americans, including bringing down our deficit.
  Let's look at our tax policy. As recently as 1980, the top bracket 
for the very wealthy in this country was 70 percent, and for two 
decades prior to that, the wealthiest Americans had income tax rates 
between 70 and 90-some percent. Today, it is 35 percent. These 
declining rates on the wealthiest Americans mean that more tax revenue 
is coming from middle-income earners. This is during a period when the 
gap between those at the top and those in the middle has grown 
substantially.
  On top of that, we have allowed the estate tax to expire completely 
in 2010. This is a tax that affects less than one-half of 1 percent of 
all Americans. My colleagues across the aisle will argue that the 
estate tax punishes the most productive members of our society, the 
children of the extremely wealthy. This gift to our most fortunate sons 
and daughters cost the rest of us $14 billion this year alone. That tab 
for that $14 billion in lost revenues from America's multimillionaires 
and billionaires will be passed to all of our kids--not just the $14 
billion but the interest on it as well.
  I think Teddy Roosevelt put it the best. He said:

       The man of great wealth owes a particular obligation to the 
     state because he derives special advantages from the mere 
     existence of government.

  Those who want to eliminate the estate tax understandably don't put 
the children of the incredibly wealthy in their campaign literature. 
Instead, they talk about family farmers, as if family farms have been 
lost to the estate tax. Yet according to the New York Times, the 
American Farm Bureau Federation was unable to name one family farm lost 
because of the estate tax.
  Opponents of the tax insinuate that it is impossible to design a 
policy that continues to protect the family farms that might be even 
slightly affected. Yet it is, of course, quite possible to do that. I 
cosponsored a reasonable approach to estate tax reform offered by 
Senator Sanders, Harkin, and Whitehouse. It retains the 2009 exemption 
limits--$3.5 million per person and $7 million per couple--with a 
progressive, tiered structure so that the ultrawealthy pay more. And, 
yes, it makes provisions for family farms.
  This proposal will help ease the burden of middle-class families who 
are now expected to close the budget gap.
  Working families are also on the hook for the corporate welfare that 
is compounding the national debt. Our tax system is riddled with 
loopholes so corporations can escape liability by shifting operations 
overseas. In fact, corporations are often actually rewarded for sending 
jobs overseas by our tax system. That has to stop.
  There is something even more offensive. If BP is taken to court 
because of their negligence in this oilspill and a judge finds they owe 
punitive damages, those punitive damages can be deducted as a business 
expense. Why do we allow these oil giants that earned hundreds of 
billions of dollars in profits in the past decade to deduct punitive 
damages from the taxes they should pay? And that is if they pay taxes 
at all. ExxonMobil did not pay any taxes last year. Despite its $45 
billion profit, it paid no income tax.
  I do not bring this up to inspire anger at corporations. I bring it 
up because these loopholes and allowances create revenue shortfalls. 
Revenue shortfalls equal deficits, unless they are shifted onto the 
backs of middle-class families.
  But we would be remiss to go after these big oil companies without 
also tackling our own spending problems. Secretary Gates has led the 
way in explaining how we can, and must, achieve savings in the defense 
budget. While nothing is more important than the defense of our Nation, 
national security is not well-served by unnecessary, incredibly 
expensive weapons programs. Nor are we well-served by programs that 
come in late, and way over budget.
  Secretary of Defense Gates recently quoted his predecessor, Secretary 
Rumsfeld, who said it best: ``A person employed in a redundant task is 
one who could be countering terrorism or nuclear proliferation. Every 
dollar squandered on waste is one denied to the warfighter.'' That was 
Secretary Rumsfeld on September 10, 2001.
  Our national security priorities must be matched to our real defense 
priorities in the 21 century, not dictated by expensive weapons systems 
that are only benefiting the bottom line of big defense contractors.
  These are all things that we can do to bring down long-term deficits.
  We urgently need bipartisan solutions. One idea that I have 
supported, a deficit reduction commission, was proposed by Senators 
Conrad and Gregg. This commission would make recommendations that would 
then come up for an up-or-down vote by Congress. That proposal failed, 
despite its broad bipartisan support. The commission was ultimately 
supported by more on this side of the aisle than by those across it, 
including those who cosponsored the original bill and then voted 
against it when it came up as an amendment. I am curious what changes 
could be made to such a proposal for it to attract more support. I 
welcome working with my colleagues across the aisle to find such an 
approach.
  We are all agreed that the current path forward is unsustainable. But 
we differ on what changes need to be made. It is economically unsound, 
and potentially dangerous, to require that all spending be offset while 
we are still recovering from a recession, reeling from nearly 10 
percent unemployment rates, and looking for ways to temper the jobs 
deficit of 12 million workers.
  We are putting our economy back at risk just when it is finally 
turning a corner. Nobel Prize-winning economist Joseph Stiglitz has 
warned that the upcoming phase-out of Recovery Act spending and State 
and local spending cutbacks are likely to exert further downward 
pressure on the economy.
  Our working and middle classes are still struggling, and they 
continue to need our help. We can help them by extending unemployment 
insurance and COBRA subsidies for those who lost a job through no fault 
of their own. We can retain vital nutrition assistance programs in the 
Recovery Act to make sure kids do not go hungry. And we can make 
investments in renewing our Nation's infrastructure.
  These are not government hand-outs, these are the most effective ways 
to get our economy going again and contributing to our economic 
recovery. Without these measures, we risk slipping back into a 
recession. And as I have noted, recessions directly contribute to long-
term deficits.
  I encourage my colleagues to join with me in standing up to the 
rhetoric that all spending is created equal. I encourage my colleagues 
to show compassion toward those still out of work. I

[[Page 13027]]

encourage my colleagues to support spending programs that will help us 
emerge from this downturn. And I encourage my colleagues to join forces 
in coming up with new ways to tackle our long-term deficits because 
they matter.
  We face enormous economic problems: the short-term economic crisis 
and the long-term deficit. But we also face a seemingly intractable 
political problem. As long as this body refuses to face up to the 
simple facts about where our deficits came from and what we need to do 
to solve them, as long as we turn a blind eye to the simple facts about 
what will get us out of this major downturn we will be unable to reach 
the solutions demanded by these problems and deserved by the American 
people.
  Simply put, if we do not face facts, we can not do our jobs. And that 
would leave this country in serious trouble.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Michigan.

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