[Congressional Record (Bound Edition), Volume 157 (2011), Part 4]
[House]
[Pages 4728-4732]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              {time}  1800
                          THE AMERICAN DEFICIT

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 5, 2011, the gentleman from California (Mr. Garamendi) is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. GARAMENDI. Mr. Speaker, there is a lot of discussion here on the 
floor, around Washington, and across this Nation about the American 
financial situation.
  Some people say America is broke. There couldn't be anything further 
from the truth than that statement. America is a strong, vibrant 
economy that far and away is the largest economy in the world. We are 
nowhere near broke. We do have a problem. We are running at a current 
deficit, and that deficit is expected to grow. But to understand the 
deficit and to begin the process of addressing it, we need to 
understand from whence it came. And so I am going to start this 
discussion out with, hopefully, an opportunity to get a sense of how it 
is that the American deficit has risen to the point where it is today.

[[Page 4729]]

  Really, we need to look back to the Ronald Reagan period. During the 
Ronald Reagan period, he ended his Presidency with a projected $1.4 
trillion deficit for the 10 years beyond his Presidency. So we look at 
these things saying, okay, Ronald Reagan had 8 years. And then what was 
projected as a result of the policies during his Presidency? Well, what 
was projected was that the American deficit would grow by $1.4 
trillion.
  The first George Bush came into office, and at the end of his 
Presidency, 4 years, the projection for the 10 years after he left 
office, continuing the policies that were in place at the end of his 
Presidency, the deficit would grow to $3.3 trillion.
  Similarly, the Clinton administration was in office for 8 years, and 
the policies that were put in place during those 8 years were projected 
to literally wipe out the American deficit--literally gone. A $5.6 
trillion surplus as a result of the policies that were put in during 
the Clinton period. Those policies were tax policies. Those were the 
expenditure policies, a policy that we call today the PAYGO policy. 
That is, if you are going to start a new program, how are you going to 
pay for it? If you are going to cut taxes, what are you going to reduce 
in the expenditure pattern?
  So, Reagan, a $1.4 trillion deficit projected beyond his Presidency. 
Bush, add another $3.3 trillion. Clinton comes along, 8 years, deficits 
turn into a whopping surplus and literally paying off the American 
debt.
  George W. Bush comes in in 2001, and right off the bat, major tax 
cuts not associated with spending cuts but just major tax cuts. That 
was in 2001, followed up with a second round of major tax cuts in 2003, 
and in between a whole new Medicare entitlement adding a new 
expenditure at the same time that taxes were being reduced.
  And for those of you that remember that period in 2001, we did have 
9/11, and immediately we started the Afghanistan war. I think most of 
us would agree that that was the right thing to do, but it was not paid 
for. It was actually borrowed money that paid for the early Afghanistan 
war, followed a couple of years later, 18 months later, with the Iraq 
war, which once again was not paid for but, rather, borrowed money.
  The result of all of that and the total pullback of the American 
Government from regulating the financial industry, the housing markets, 
was the Great Recession. At the end of the George W. Bush period, it 
was projected by the CBO, nonpartisan Budget Office, that the deficit 
would grow by $11.5 trillion if the same policies were left in place.
  So where is today's deficit coming from? It is coming from the Reagan 
period, the first Bush period, the Clinton policies terminated, and the 
George W. Bush policies put in place, leaving us with a projected $11.5 
trillion deficit for the next 10 years.
  Now, the rest of the story is that, as a result of the Great 
Recession, the Obama administration came into office looking at this 
situation: An economy that was headed into not a recession but a 
depression and a huge deficit. That was put on Mr. Obama's plate the 
day he took office.
  To deal with the Great Recession that could have become a great 
depression, a stimulus program was put in place, and it was expensive. 
And a bailout of Wall Street was actually put in place during the last 
2 months of the Bush administration. A combination of those was 
somewhere about $1.5 trillion to $1.6 trillion, a huge whopping sum of 
money, but done for a good purpose.
  And I don't know many economists, in fact I know of none, who would 
say it was not necessary. It was necessary that we deal with the Wall 
Street collapse and successfully stabilized Wall Street, the financial 
industry. It could have been done differently. Most of that money has 
now been repaid.
  The money that was spent, about $750 billion, on stimulating the 
economy was similarly successful in stabilizing the economy and causing 
it to rebound slowly, but nonetheless rebound.
  Here we are today debating the best way to deal with the deficit. We 
have a proposal from the President that over the next 5 years to 6 
years would significantly reduce the annual deficit; not creating a 
situation such as ended the Clinton administration, but bringing the 
deficit back into a situation that is sustainable. That is the 
President's proposal, based upon holding steady, no growth in the 
Federal budget over the next 5 years, having the economy bounce back; 
ending one of the tax breaks that was put in place by George W. Bush 
back in 2003, that is, the high income, that is, the millionaire-
billionaire tax break which is still in place but would end under the 
President's proposal.

                              {time}  1810

  It is following along closely the recommendations of the Deficit 
Reduction Commission that was appointed.
  Now, that is the President's proposal. What we are debating on the 
floor beginning early this year with H.R. 1, H.R. 1, a continuing 
resolution to fund the government for the remainder of the year, was a 
$60 billion reduction in the discretionary expenditures of this 
government. No one believed that that would have a significant impact 
on the long-term deficit problem, but it would have a very significant 
impact on vital, vital programs that are necessary to continue the 
operations of this government.
  So what are we to do? H.R. 1 passed this House and was rejected by 
the Senate. For me, that was the right thing to do, because H.R. 1 was 
estimated by two different economists, not Democratic economists, but 
independent economists, that it would kill 700,000 jobs across this 
Nation; immediately increase unemployment in America, reducing tax 
revenues--unemployed people don't pay taxes--but simultaneously 
increasing the expenditures for unemployment insurance, welfare and the 
like.
  That is not a very wise thing to do, but that is what our colleagues 
on the Republican side suggested we should do. And it passed, with 
unanimous Republican support. I think there were three or four 
Democrats that voted for it. I think they were wrong. I think the 
Republicans were wrong.
  That doesn't solve the deficit. You cannot take 14 percent of the 
Federal budget, which happens to be the discretionary expenditures that 
were targeted by our Republican colleagues in H.R. 1, and expect to do 
anything meaningful about the deficit. The deficit has to be dealt with 
over a long period of time, and it has to be dealt with in such a way 
that we actually put in place the foundations for strong economic 
growth.
  What are those foundations? Well, in my view, there are six of them. 
If this economy is going to grow soon, mid-term and late, that is, in 
the years ahead, we have to have the best educated workforce in the 
world. So in the Republican proposal was an elimination of funding for 
higher education, funding for the Pell Grants that allow young men and 
women, and older men and women, to go into the university system. Not a 
wise thing to do.
  The second thing, if we are going to have a foundation of good, solid 
economic growth into the future, we need to have the best research in 
the world. Once again, the proposal, H.R. 1, and the two subsequent 
continuing resolutions that have funded the government cut, cut 
research, critical research at our national laboratories. Nearly $800 
million of funding for the Department of Energy research programs would 
be eliminated, laying off some 6,000 researchers, Ph.D.'s, scientists 
at the national laboratories that are working on research for energy 
production.
  No one in this Nation would argue that we do not have an energy 
crisis. Check out the price of gasoline. We have a serious energy 
crisis. Yet the proposal would go right at the heart of the research 
that we need in order to solve the energy problem. Conservation, 
nuclear, cleanup of nuclear, research into photovoltaic, geothermal, 
all of the renewable energy research largely reduced and in some cases 
totally eliminated.
  Health care. The fastest growing segment of our economy is health 
care. Research at the National Institutes of Health is wiped out, 
largely reduced. What kind of policy is that? If we are

[[Page 4730]]

going to have a strong economy, we need to have a well-educated 
workforce. We need the research.
  Thirdly, we need to take up the issue of manufacturing. We need to 
make the things that come out of research. Manufacturing really does 
matter. If we were to take the American manufacturing sector, as weak 
as it is today, it would still rank as the ninth biggest economy in the 
world. Manufacturing in the United States took an enormous hit during 
the Great Recession. About 25 percent of the jobs that were lost were 
in manufacturing. We hollowed out our manufacturing sector. If we are 
to grow this economy, if we are to have a serious reduction in the 
deficit, then we are going to have to make sure that manufacturing 
returns as a principal part of the American economy.
  I am going to move on with the other three elements and then come 
back to manufacturing.
  We need to have a very strong infrastructure. This is everything from 
water to sanitation to transportation, rail systems and air systems. 
One of the things that will be brought up on the floor has to do with 
the air transportation system in the United States. That infrastructure 
is critical. Yet in the proposal that we have had from our Republican 
colleagues, we are actually weakening the infrastructure system of this 
Nation. That is not a wise thing to do. But, nonetheless, our economy 
depends upon that infrastructure.
  International investments are necessary. We need to export. We cannot 
find our economy growing if we continue to rely on imports. They may be 
cheap, but in their cheapness, they destroy the American manufacturing 
sector. So we need to keep that in mind as a principal investment that 
we need to make. It doesn't come cheaply. It requires us to spend money 
on the Department of Commerce that is out there helping to open markets 
for America. It requires us to finance the Export-Import Bank and other 
Federal Government agencies that actually support the export of goods 
and services from America.
  And, of course, we have got to pay attention to the defense of this 
Nation. In the Defense Department, we need to always strive for 
efficiency. Now, I happen to oppose the war in Afghanistan. It is 
costing us about $120 billion a year. My view is we ought to end that 
quickly and spend some money focusing directly on the real threat, and 
that is the threat from al Qaeda and other terrorist organizations. We 
will come to that in a different discussion.
  But those are the six critical investments: education, research, 
manufacturing, infrastructure, international trade, and defense. Are we 
doing well at those? Not if my Republican colleagues get their way with 
regard to the discretionary budget cuts.
  There are some things that we can do that are not expensive. In fact, 
they actually will create jobs with no additional Federal expenditure. 
Let me turn to that at this moment.

                              {time}  1820

  My Democratic colleagues and I have developed a program that we call 
Make It in America. Make It in America. If America is going to make it, 
then we have to make it in America. What are we making? We need to make 
all of the things that this economy and this world needs for energy 
security--photovoltaic, geothermal, the new biofuels, the advanced 
biofuels--all of those things in the energy sector that allow us to 
prosper and to address the energy crisis, including--and I know the 
problem of Japan and the nuclear systems there. But 20 percent of our 
energy presently comes from nuclear. And that's going to be part of the 
future. So we need to make sure that we make it well, safely, and that 
those systems are made in America.
  Manufacturing matters, and we need to make sure that our 
manufacturing sector is up to speed and actually making things in 
America. We cannot count on the Chinese or the Indians or any other 
nation to provide us with our manufactured goods. And the reason is 
that's where the well-paying middle class jobs are. It's been hollowed 
out over the last decade by, I think, unwise policies; but nonetheless 
we can restore it.
  Let me tell you a couple of ways that we're proposing to do this in 
the Democratic Caucus. I love these charts. They seem to actually make 
a lot of sense and help display what we're talking about.
  If we're going to make it in America, we need to make sure that we 
are educating and researching; and so these are crucial investments 
that I've talked about before--research, the health sector, science, a 
well-educated workforce with teachers that are capable of doing what we 
call the STEM--the science, technology, engineering, and manufacturing 
kinds of education. And we need to make sure that our workers are 
prepared to take on these jobs. So that's the first step. That's the 
education and the research step of it. And these are investments, and 
we need to make those investments.
  Let me give you a couple of other examples of where public policy 
really becomes important. Photovoltaic, invented in America. Wind 
turbines, they have been around a long, long time, windmills and the 
like; but many of the modern technologies that are in the wind turbine 
system are American research. And, of course, transportation. It turns 
out that we don't really do much of this--or at least a year ago we 
didn't do much of this. We were importing the solar systems, the 
photovoltaic systems, importing many of the wind turbines that are out 
there in the wind farms providing us with energy and importing from 
other countries buses and trains and light rail systems.
  What we say in the Democratic Caucus is each of these are programs 
that are subsidized or paid for with your tax money. There are 
subsidies for solar, photovoltaic systems. Good. We've need to do these 
kind of things for energy security, and it's a good place to spend tax 
money to encourage the development of those kinds of systems. All well 
and good.
  But where are those solar panels made? Are they made in America, or 
are they made overseas? Our view and my own personal legislation is if 
you want to use American taxpayer moneys to help you buy a solar system 
either on your business or on your home, then you buy American-made 
solar systems. If your transit district wants to buy a bus using our 
tax dollars--this is the excise tax on gasoline--18\1/2\ cents for 
gasoline and 25-plus cents for diesel fuel--if you want to go buy a bus 
from your local transit district--good. We need public transportation. 
But if you're going to use the public's tax money to buy that bus, then 
you buy a bus that's made in America. Make it in America. If you're 
using our tax dollars as a transit district or as a business or as a 
homeowner with a solar panel or a bus, then you use that tax money to 
buy an American-made bus.
  Similarly, with wind turbines. This is a personal thing for me. In 
1978, I authored the first State legislation for wind solar tax credits 
to get that industry started. And it did start. Altamont Hills, 
California, which I currently represent, has the oldest wind farm in 
America. Good. We're rebuilding those turbines, putting in new modern 
turbines, and we're expanding the wind industry in this Nation. Good. 
We need to do that. And we're using our tax money to subsidize it. 
That's good, too. But where is that wind turbine built? Is it built in 
Europe--Spain, Germany, Belgium? Or is it built in America?
  Too many of these have been built in other countries using our tax 
money. And I'm saying with my legislation and the support of others 
that if you're going to use American taxpayer money to invest in wind 
turbines, then you buy American-made equipment, period. We don't need 
to buy Chinese wind turbines when we can make those in America.
  These are ways in which we can rebuild our manufacturing base. It 
turns out that in the San Francisco Bay Area there is the Alameda-
Contra Costa Transit District that has within that district one of the 
last remaining bus manufacturers in America. But until very recently 
that transit district refused to buy buses from a bus manufacturer in 
that district that was making buses that were every bit as good as 
buses made anywhere in the world.

[[Page 4731]]

They have recently changed that policy.
  Similarly, in the San Francisco Bay Area, the Bay Area Rapid Transit 
District, BART, was buying trains and wanted to continue to buy over 
$300 million of trains from foreign manufacturers. Many of us said 
whoa, whoa, whoa. Stop. Time out. Don't do that. Let's buy trains that 
are made in America.
  So Siemens, a German company, has established a manufacturing plant 
and is upgrading a long-existing manufacturing plant in Sacramento to 
prepare itself to successfully bid for the manufacture of high-speed 
trains in California and around the Nation, as well as light rail 
systems, which they are now and have been for some time producing in 
the Sacramento manufacturing plant. Good. That's how we can use our tax 
dollars to rebuild the American manufacturing base.
  As we do that, we rebuild a vital part of America's economy, that 
part of America's economy that was traditionally the heart and soul of 
middle America, the great American manufacturing sector. This is 
possible. Does it take new money? It takes a redirection of money that 
we have been spending for some time.
  Let me add one more thing to it. As we look at the renewable 
industry, let us think about where we can find additional money to 
enhance the renewable energy industry. For one century, America has 
subsidized through various tax breaks the oil industry. We did that for 
the purpose of creating a very strong, viable oil industry that 
provided us with energy. It was eminently successful. The oil industry 
is the most profitable industry in America, and probably around the 
world. Very, very successful.
  Do they need a continuation of tax breaks? Well, if you ask them, of 
course. Everybody wants a tax break. But do they need it? Not when 
they're running over the last 10 years just short of a trillion dollars 
of profit. The American oil industry in the last decade has earned $950 
billion of profit. Do they need a tax break anymore? I think not.
  I think we take that tax break, which, depending upon how much and 
whose estimate, is somewhere north of $10 billion, maybe as much as $20 
billion a year, and use that money to build our renewable energy 
sector, subsidizing these kinds of things--photovoltaic, advanced 
biofuels, algae fuels, wind turbines--and to enhance our transportation 
sector.

                              {time}  1830

  These are strategies that we ought to employ. However, as to what is 
happening today, instead of taking the long-term view and making 
critical investments that actually will give us the foundation and the 
start to rebuild the American economy, we are going the other 
direction. I should say, my Republican colleagues are going the other 
direction. Many of us think it is the wrong direction. We should not 
shortchange those investments that actually will create short-term and 
long-term economic growth. It's critical that we continue to invest in 
those six things: education, research, transportation, manufacturing--
obviously, we have to continue to invest in national defense, but we'd 
better be very, very wise.
  As we do these investments--and, in fact, in everything the 
government does--we must always strive for two goals: that every 
program be effective, which is that it actually achieves its stated 
purpose, and that it be done efficiently. I call these the two E's: 
efficient and effective. If it's not efficient, then change the program 
so that it would be efficient. If it's ineffective and inefficient, it 
should be terminated. It's very simple. But if it is effective and 
efficient, then maybe we ought to continue it.
  Now, in this recent week, we've had our Republican colleagues put 
forth four bills that literally terminate all of the Federal Government 
programs, save two, to rebuild the housing industry in America and, 
more importantly, to help those families that are in desperate trouble 
with their mortgages. Of those programs, some of them were ineffective, 
necessary but not yet effective and not up to the kind of efficiency 
that we would want. That doesn't mean they should be terminated; that 
means they should be modified because the problem continues to exist.
  There is a homeowner mortgage problem in America of enormous, 
enormous importance. Some 10 million American homes are underwater. 
It's a problem. We've got to find a way of dealing with that, not just 
ignore it and not just wipe out programs that we would need. We need to 
have efficiency, so we look for not a bill that would eliminate it but, 
rather, a bill that would modify, create more efficiency, and continue 
to address the problem.
  To this date, our Republican colleagues have only moved to terminate, 
not to replace, not to rebuild. Similarly, with health care, there has 
only been a bill to terminate, not a bill to improve when we know that 
we've got an ongoing problem.
  I'm going to just wrap this up and let it go where we are, but let me 
go back and review very, very quickly.
  There has been a raging debate here in Congress about the deficit. 
Where did it come from? How did we get to where we are? How do we solve 
this problem in the future?
  The deficit didn't start with the Obama administration. It started 
way back, actually, a little bit before the Reagan administration, the 
Reagan and the George Bush I administrations. It was dramatically 
altered by Clinton, which actually would have, if those policies had 
continued, created a surplus, almost wiping out the total debt of 
America. Then it was run up bigtime during the George W. Bush 
administration.
  These are projections 10 years following, if we'd continued the same 
policies, as to what would happen. That's where it started. Then there 
was the great recession and the effort now to deal with that.
  The Obama administration has put forth a proposal that follows 
closely, along with the recommendations of the deficit reduction 
commission, that says: Don't--don't--do anything that would harm the 
current recovery, like make an austerity program, like make massive 
cuts. Yet our Republican colleagues have done and proposed exactly 
that. Fortunately, the Senate has not gone along with that, but we are 
nickel and diming our way towards $30 billion of cuts that may, in 
fact, cause us to see a decline rather than a continued growth in the 
economy. We must watch that very carefully. So that's the deficit piece 
of it.
  Manufacturing matters. We need to be sure that we rebuild our 
manufacturing sector. There are many different pieces of legislation, 
of tax policy. I didn't mention this earlier, but one of the tax 
policies put forth by the Democrats last December--it actually went 
into law--was to encourage investment by private companies in capital 
equipment, allowing those companies in the first year to write off 
immediately 100 percent of the cost of capital equipment. A good idea. 
Unfortunately, very few of our Republican colleagues voted for that. In 
the manufacturing sector, let's make it in America. Let's use our tax 
dollars to make it in America. With all of the energy programs, 
transportation programs, let's use our tax dollars to buy American-made 
equipment.
  Finally, research and education. This is not where the cuts should 
occur. Yet our Republican colleagues are suggesting that that's exactly 
where it should happen: major cuts in research, energy, education, 
health care. You cannot make those cuts and expect this economy to be 
competitive.
  One little fact that I just heard about today is that it is expected 
in the coming year that the Chinese economy will produce more 
scientific advancements than will the American economy. This will be 
the first time in, perhaps, three-quarters of a century that the United 
States Government will give up its lead in scientific advancements. 
This is not the time for this Nation to make cuts in our science 
agenda, whether it's in the medical/health care area, the energy area, 
or in any of the other kinds of research in which we have always been 
the leader.

[[Page 4732]]

  Food for thought. Things for us to consider.
  I would like the American people to be aware of the real deficit 
story. You cannot solve it by making massive cuts in just 14 percent of 
the budget. Yet that's what our Republican colleagues are doing. We 
need a long-term plan, one that is 5 years, 10 years, to bring our 
budget back into balance. We can do it. It was done during the Clinton 
period.
  This little chart here gives you some idea of one half of how the 
Clinton period brought about a budget surplus. This is the spending 
side, and these are the expenditures of the American Government as a 
percentage of the economy.
  During the Reagan/Bush period, 22-23 percent of the American economy 
was for government expenditures. It dropped down to 21, but it 
basically bounced between 21 and 23 percent. During the Clinton period, 
as a result of policies that were put in place during his period--
PAYGO, reinventing government, and other governmental policies--we saw 
a steady decline in the percentage of the economy that was going to the 
Federal Government. At the same time, we had very strong economic 
growth. Those are two of the three things that operate together. There 
was also a Clinton tax increase that took place that basically added an 
additional tax burden at the very, very top of the income categories. 
So the combination of those reductions in the percentage of the economy 
that was used, good economic growth, and a tax increase that occurred 
in the very early period, particularly a tax increase on the very 
wealthy, led to a surplus. George W. Bush came in in 2001-2002, and 
things reversed.

                              {time}  1840

  First of all, there's an increase in the percentage of the economy 
that went to government, principally the Medicare drug program and the 
wars, and then this very, very steep rise that occurred right at the 
end of the Bush administration as a result of two things: one, a 
plummeting of the American economy as the Great Recession took hold in 
2008 and the effort to deal with the Great Recession with the stimulus; 
and right here at the end of the Bush 2, the financial bailout. And so 
that's why we saw this extremely high line.
  Now, you notice that in the last period, which is the 2010-11 period, 
we've begun to see a decline once again in the percentage of the 
government, of the economy that is government spending; and, if we 
follow carefully the budget that's been put together by the Obama 
administration, this line will continue to fall back into the 20 
percent, 21 percent range, bringing back into balance the Federal 
expenditure. It cannot and will not happen overnight. It's going to 
take us 5 years, maybe even longer, to bring this thing back into 
balance.
  Keep in mind the words that were used by the recommendation of the 
budget deficit commission: Don't do anything immediately to harm the 
American economy by making rapid, unnecessary, unwise cuts in the 
Federal expenditure. That will put people out of work. 700,000 people 
would lose their jobs immediately with the proposal that was put forth 
by the Republicans but fortunately stopped by the Senate. If that had 
become law, 700,000 jobs immediately lost and a spike once again in 
this ratio of government spending.
  So we've got work to do. We can do this, but we need to take the long 
vision, and we need to be very careful that we make the critical 
investments.

                          ____________________