[Congressional Record (Bound Edition), Volume 157 (2011), Part 7]
[Senate]
[Pages 9230-9233]
[From the U.S. Government Publishing Office, www.gpo.gov]




                             BUDGET REFORM

  Mr. THUNE. Mr. President, these past few weeks I have been coming to 
the floor to talk about the size and scope of our Nation's fiscal 
problems. It has been said often that this is the most predictable 
crisis we have ever faced, and I believe that is true.
  I have talked about how the tremendous growth of government has 
limited the ability of small businesses to create jobs. I have noted 
the severe and dramatic cuts Medicare and Medicaid and Social Security 
will face if we do not act now to reform those programs. I have also 
pointed out how the Draconian cuts would need to be paired with 
painful, job-crushing tax hikes.
  Simultaneously, the interest we pay on that debt will take up an 
ever-increasing share of our revenue. In fact, it has already been 
noted that in a few short years the interest on the debt alone would 
exceed the amount we spend on national security. In other words, we 
would spend more paying for the amount of money we borrow in the form 
of interest than we spend defending the country. At some point, 
bondholders are going to recognize that we don't have an ability to pay 
out these bonds, and they will demand increasingly higher interest 
rates. This in turn sends our interest rates even higher in a vicious 
spiral.
  However, what I would like to focus on today is to talk about how 
none of this is necessary. So how do we prevent this from happening? I 
believe the solutions we need fall into three broad categories: We need 
reforms to our budget processes, and that includes, one, a balanced 
budget amendment to the Constitution; we need caps on overall and 
discretionary spending; and we need entitlement reform.
  In the 1990s, the Senate was within just one vote of passing a 
balanced budget amendment to the Constitution. I can't help but think 
just how different our country's fiscal situation would be if that 
amendment had been approved.
  We now have two different balanced budget amendment proposals put 
forward this year. I cosponsored both of them. I had the opportunity to 
lead a working group of my fellow Republican Senators to discuss these 
proposals and to help find the best parts of each. From those 
discussions and others, we were able to come together with the Hatch-
Lee balanced budget amendment, of which every single member of the 
Republican conference is a cosponsor. This important amendment requires 
the budget to be balanced every year, except for when there is a 
declared war. A supermajority would be required to waive this 
provision. This amendment puts the emphasis on controlling spending, 
which is the real cause of our debt and deficits. It requires 
supermajorities to raise taxes, and it prevents spending from exceeding 
18 percent of our GDP, 18 percent of our entire national output, which 
has been the historical level of taxation for our country.
  Not only do we need to balance our budget but we need to ensure that 
every dollar is being spent in the most efficient way possible. We need 
to be honest about the cost of this spending

[[Page 9231]]

and to create processes that will prevent wasteful, unnecessary, and 
excessive spending. In order to do this, we need a number of budget 
reforms in addition to the balanced budget amendment.
  I have introduced the Deficit Reduction and Budget Reform Act, which 
has a number of reforms to the budget process we use today.
  The bill reforms the pay-go rules to prevent the double-counting 
gimmicks that get used around here all too frequently, and it makes the 
Federal budget a binding joint resolution signed into law by the 
President--something that doesn't happen today with our budget.
  It moves us into a biennial budget timeline, which leaves more time 
for oversight. As everybody knows, we are supposed to do a budget at 
least every year. We haven't done one now for 777 days. So the notion 
that we do a budget every year may be somewhat an antiquated one, but 
we are supposed to do a budget every single year. Because of that, we 
spend an awful lot of time going through the budget process, doing all 
the appropriations bills, and it doesn't allow very much time for 
oversight, which is a function that I think we have a responsibility to 
do. So if we went to a biennial budget--in other words, if we did a 
budget every other year--if we did the spending, the budget, and the 
appropriations bills in the odd-numbered years, then in the even-
numbered years when people have to go home to run for reelection, we 
could actually focus on oversight. We could look for ways not to spend 
money but to save money.
  I have been a big advocate of biennial budgeting--doing a budget 
every other year, 2-year budgeting--for some time. A number of States 
do it that way. I think it is important we make that reform so we have 
the appropriate time to do the level of oversight that is required and 
is so desperately missing around here today, which is why we end up 
having so many government agencies with so much duplication, so much 
redundancy, and so much overlap that leads to wasteful spending on 
behalf of the American taxpayers.
  My budget reform would also create a legislative line-item veto. My 
Governor in South Dakota has that, and I believe the President should 
too. In fact, I think most Governors across this country have some sort 
of mechanism that allows them to veto extraneous spending measures. I 
believe the President ought to have that power, and it needs to be done 
in a way, of course, that is consistent with the Constitution, and a 
legislative line-item veto would meet that test. It prevents the abuse 
of emergency spending designations which have been used to pass 
hundreds of billions of dollars in deficit spending since the last time 
we passed a budget resolution.
  It creates a new CLASS Act trigger to make sure that program is 
solvent over the 75-year timeframe.
  I think most of my colleagues know that the CLASS Act is a new long-
term care entitlement program that was enacted as part of the health 
care reform bill last year. It, similar to so many other government 
programs, relies upon premiums that will be paid in the early years, 
which actually show revenues coming into the Treasury which are then 
counted and used to pay for other things--in this case, the health care 
bill. But at some point in the future, when the demands come for those 
benefits that people have subscribed for, it becomes a liability 
because the funds, the revenues that have come into that program in the 
early years have already been spent. Again, it leads to more and more 
borrowing. That is what the Congressional Budget Office has said would 
happen with the CLASS Act.
  To make sure that program is going to stay on the books--and, by the 
way, I have a piece of legislation to repeal it because I think it is 
very bad policy and I think it is going to put our country into an even 
deeper fiscal hole. But that being said, if it is going to stay on the 
books, we ought to have a mechanism to ensure the program is solvent 
over the 75-year timeframe. My legislation would do that.
  Likewise, it modifies the Medicare cost containment trigger to have 
honest accounting with respect to revenues and savings in the new 
health care bill, and it updates the Credit Reform Act to score the 
purchases of debt, stock, equity, and capital using a discount rate 
that incorporates market risk. Whenever the Government gets into the 
business of acquiring debt, stock equity, those sorts of things--and 
that hasn't happened, as you know, in the last few years--it needs to 
be accounted for honestly by using real discount rates that make market 
risk part of that calculation. Today, that is not necessarily the case 
when those calculations are made.
  It also creates a new standing joint committee of Congress for budget 
deficit reduction. It might interest my colleagues to know--sometimes 
we forget about this around here--we have 26 committees and 
subcommittees in Congress that spend tax dollars. We do not have one 
that focuses on saving tax dollars. We need a committee that is 
exclusively committed to reducing the cost of spending, to saving tax 
dollars as opposed to spending them. With 26 committees and 
subcommittees around here that spend money, it is time we had one to 
save money.
  The joint committee would be responsible to produce a bill to cut the 
deficit by at least 10 percent every budget cycle and to do it without 
raising taxes. It would be a standing committee that would continue to 
fight government spending, would even issue recommendations to cut 
spending by at least 10 percent, even in years when the budget is 
balanced. It has been a long time since we have seen that around here. 
That probably is not going to happen in the foreseeable future. I 
certainly hope it does. But in any case, my legislation would require, 
even in years when the budget is balanced, that we be looking for ways 
to cut spending.
  Importantly, these recommendations would be assured of an up-or-down 
vote in Congress. This committee would make its recommendation each 
year, and my legislation would require expedited consideration on the 
Senate floor; in other words, to ensure it gets an up-or-down vote and 
doesn't languish somewhere similar to so many reports that come out of 
various committees. This committee would actually have the authority to 
put a product out on the floor of the Senate and to ensure it gets a 
vote.
  Finally, what my bill would do is freeze and cap spending, the third 
action we need to take in order to get spending under control. This 
bill would institute a 10-year spending freeze at 2008 levels adjusted 
for inflation. After all, between 2008 and 2010, nondefense 
discretionary spending increased by 24 percent while inflation in the 
overall economy was just over 2 percent. The Federal Government, in the 
last couple years, between 2008 and 2010, was spending literally over 
10 times the rate of inflation. How can you go to the American taxpayer 
with a straight face and explain that? We need to go back to those 2008 
levels and freeze it there, cap it there, and then allow for 
adjustments for inflation. But let's go back and negate this 24-percent 
increase we have seen just in the last couple years.
  The recent continuing resolution that was passed by Congress started 
to put downward pressure on these accounts, but more needs to be done. 
My colleagues, Senators Corker and McCaskill, have introduced what they 
call the CAP Act, which would put our spending on a downward glidepath 
so we do not spend more than our historical average of 20.6 percent of 
GDP. For the last 40 years, spending on the Federal Government has 
averaged 10.6 percent of our total economy. That represents all Federal 
spending. It doesn't represent State and local government spending, but 
Federal spending, percentagewise, on average, for the past 40 years has 
equaled 20.6 percent of our entire economic output.
  This year we are in the 24- to 25-percent range. Now we have gone 
from spending one-fifth of our entire economy on the Federal Government 
to spending about one-quarter of our entire economy on the Government. 
That, to me, is something that needs to be reined in. There has been a 
huge ramp-up of spending in terms of our economy.

[[Page 9232]]

  What that means is, the private economy, as a percentage of our 
entire economy, is getting smaller and the government component of that 
is getting larger. We need to get that back on a more historical and 
what should be a realistic course.
  There are at least three different possible proposals to cap 
spending: the 18 percent included in the constitutional amendment, the 
CAP Act, which I just mentioned, and my own proposal to cap 
discretionary spending. These caps are necessary to signal to the 
markets we are serious about cutting spending.
  Finally, we need entitlement reform. The CAP Act and the 18-percent 
cap would both force us to deal with entitlements. I am heartened by 
the budget working group that is being led by Vice President Biden, in 
that they are considering some entitlement reforms. I hope they can 
produce a product that actually will tackle entitlements. We need, at 
the end of the day, to have the President leading. As I said, I hope 
this group that has been put together will produce a result that will 
take us down a path toward tackling runaway entitlement programs.
  At the end of the day, for any of this to be signed or get enacted, 
we have to have the President stepping in and providing leadership. So 
far we have not seen that. The President, in his budget he submitted to 
Congress and a subsequent budget speech he made, has done little, if 
anything, to deal with the issue of entitlement reform.
  Frankly, you cannot deal with the fiscal problems this country faces, 
the challenges we face or the deep hole we are in when it comes to 
getting on a more sustainable course for the future without taking on 
entitlement reform. The President needs to be explaining to Americans 
the need for entitlement reform and showing us what his plan is to save 
Social Security, Medicare and Medicaid, not simply getting out and 
demagoguing Chairman Ryan's budget and kicking the can further down the 
road.
  We know these entitlements already represent $61.6 trillion in 
unfunded liabilities. There is no more road. We have kicked the can as 
far as possible. It is now time for us to face the reality that we have 
to deal with this and we cannot afford the luxury of waiting any 
longer.
  It is clear that action needs to be taken. If the President were to 
step to the plate, I think we would have a real chance to enact 
substantial entitlement reforms that could preserve the important role 
these programs play.
  Enacting these three different prongs or these three different 
approaches--one dealing with budget reforms that includes a balanced 
budget amendment being the first component, spending caps being the 
second component on both discretionary and overall spending, and 
entitlement reform--are not going to be easy to do. We have been on 
autopilot around here for a long time. What that has gotten us is 
deeper and deeper into the fiscal hole, to the point today we are at 
$14 trillion in debt--meaning we are going to have to raise the debt 
limit in the very near future--and growing by the day. The amount it 
grows by the day, interestingly, is $4 billion. Between this time and 
10:40 tomorrow, we will borrow another $4 billion that we will add to 
the debt of our children. That represents more than we spend in my home 
State of South Dakota for an entire year; $4 billion, the amount we 
borrow every single day at the Federal level exceeds the amount the 
State of South Dakota spends in an entire year. That is the dimension 
of the problem we were dealing with.
  There are three very important numbers people need to focus on to 
remind ourselves how critical it is that we act. One is forty-two. That 
is the cents out of every $1 we borrow. Forty-two cents out of every $1 
this government spends today is borrowed. That is a staggering 
statistic. The other number is 93. Ninety-three is the number now that 
represents the percentage of our entire economic output that is 
represented by our gross debt. In other words, our debt to GDP, our 
debt to total economic output ratio is 93 percent. That is the danger 
zone. Historical research has demonstrated, when you get a debt-to-GDP 
ratio that exceeds 90 percent, you are losing 1 percentage point of 
economic growth every single year. One percentage point of economic 
growth translates into 1 million lost jobs. So every year we continue 
on this path of sustaining this level of debt as a percentage of our 
entire economic output, we are bleeding 1 million jobs in our economy, 
costing us 1 percentage point of economic growth. That is a very real 
and immediate impact from the amount of spending and the amount of debt 
we have.
  The final number I think is important for people to understand too, a 
number I mentioned earlier, is the 777 number. That is the number of 
days that have passed since Congress passed a budget. I know it is very 
hard around here, particularly in the present circumstances, to find 
consensus on a path forward to pass a budget. But we have a 
responsibility to the American taxpayers, when we are spending 
literally $3.7 to $3.8 trillion every single year, to at least let them 
know how we are going to spend their money. We have not done a budget 
in 777 days.
  I serve on the Budget Committee. We have not had a markup. There is 
no indication we will have a markup. There is no indication we are 
going to do a budget. We have already blown past all the deadlines the 
law requires when it comes to doing a budget. We didn't do a budget in 
the last Congress. I think what that does is it makes it even more 
complicated to address these issues. If you do not have an overall 
framework, if you do not have a construct or understanding of what it 
is going to take to get our books back in order, then it is going to be 
very difficult.
  Sometimes around here we do not have enough teeth in the laws we pass 
when it comes to budgeting. We do not have enough enforcement 
mechanisms. I am proposing provisions in the budget reforms to add 
enforcement mechanisms to cure that. But even with that, you at least 
have to have a plan. You at least have to have a blueprint, a path for 
how you are going to spend $3.7 trillion of the American taxpayers' 
money.
  I urge my colleagues, the majority, to put forward a budget. At least 
let's debate it. Let's talk about priorities. Let's have a debate, 
debate amendments, but let's do a budget or reform the budget process 
along the lines I suggested so we get a process in place that enables 
us to make some headway, to make some progress toward dealing with this 
runaway debt and these runaway deficits that are going to not only 
crush our economy in the near term but put an unfair burden on future 
generations of Americans.
  Right now, the things most Americans are worried about are spending, 
debt, jobs, the economy, and they are all connected. The level of 
spending and debt is something that needs to be gotten under control to 
get the economy growing and prospering again, so you don't have the 
Federal Government out there competing with the private economy when it 
comes to capital. Small businesses need capital to invest to create 
jobs. When the government is crowding that out, it makes it more 
difficult. There are so many adverse economic implications from the 
debt levels we are sustaining today that are going to make it 
increasingly difficult, the longer we stay deeper and deeper in the 
red, for this economy to recover and grow. That is fundamental to all 
this.
  When it comes to jobs and the economy, we also have to have policies 
that encourage economic growth. I know the President talks a lot about 
jobs and the economy. He certainly is rhetorically, at least I believe, 
saying the right things out there. But you have to have actions that 
are consistent with the rhetoric. If you look at the President's 
record, we have not seen that. The reason we have not seen that is 
because the policies are all adverse to economic growth and job 
creation, whether it is regulations coming out of agencies, whether it 
is the new mandates imposed by the health care reform bill, whether it 
is the out-of-control spending and debt and no attempt to address the 
long-term challenges we face there, particularly entitlement reform, 
whether it is the new taxes that have been imposed through the 
legislation that has been enacted since this

[[Page 9233]]

President has come into office. But if you look at the economic record, 
if you look at unemployed Americans since this President took office, 
we have almost 2 million more unemployed Americans. The unemployment 
rate has gone up 17 percent. Fuel prices, which impact everybody's 
pocketbook in this country, since this President took office, have gone 
up by over 100 percent, over a 100-percent increase in the price per 
gallon of gasoline since this President took office. The debt has gone 
up 35 percent. The debt per person in this country has gone up $11,000 
per person. That is the amount the debt has increased since this 
President took office. Food stamp recipients are up 39 percent. Health 
insurance premiums--despite the promises of what health care reform 
would do to lower insurance premiums--health insurance premiums have 
gone up 19 percent since this President took office. The only thing 
that has gone down since he took office is home values. Home values are 
down 12 percent. That is the economic record. That is the composite 
record. Of course, we can all say things, but we have to be judged by 
what we do. We cannot judge people by what they say. We have to judge 
them by what they do.
  I hope the President will decide it is time for him and for his 
administration and for his leadership to focus on policies that will be 
conducive to economic growth, that will enable that, rather than make 
it more expensive and more difficult to create jobs, which are the 
policies that are being employed by this administration. That applies 
to so many areas. It is developing domestic energy resources, so we can 
get more American supply of energy and start driving that price down. 
So many areas are off-limits. Even more have gone off-limits since this 
President took office. It means getting trade bills enacted. We have 
heard now for several years the President talk about how we need to 
pass the Colombia, Panama, and South Korea Free Trade Agreements. Yet 
they languish. They have not been submitted to us. We are ready to act. 
We have said repeatedly these are important to our economy.
  I have used this example on the floor before, but just one brief data 
point for agriculture. I represent an agricultural State, so we are 
always looking for opportunities to export. In wheat, corn, and 
soybeans exports, we had an 81-percent share of the Colombia market in 
2008. In 2010, that had dropped to 27 percent. We have literally been 
locked out of that market because this free-trade agreement has 
languished in Congress and, as a consequence, other countries have 
stepped in to fill the void. Now you have the Canadians, the Europeans, 
the Australians stepping in and picking up the slack and we continue to 
lose more and more market share, which means more and more lost jobs in 
the American economy. So it is about trade policies, tax policies, 
energy policies, regulatory policies and spending and debt. Those are 
the things, in my view, that will get this economy back on track, start 
creating jobs, create a better and brighter and more prosperous future 
for future generations of Americans. Unfortunately, the policies being 
employed by this administration are making it worse, and at least 
according to this economic record, much worse. We can do better. We 
should do better by the American people, and I hope we will find the 
political will to do that.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Connecticut.

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