Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. Mr. President, I ask unanimous consent that the use of calculators be permitted on the floor during…
Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
Mr. President, I ask unanimous consent that the use of calculators be permitted on the floor during consideration of the budget resolution.
Mr. President, I know my colleague, Senator Gregg, the ranking member, has a statement he would like to make, and so I will withhold for his statement.
Mr. President, I speak to the matter now before us on the floor of the Senate, the budget.
I would like to start by pointing out what this President has inherited because this President, who has only been in office a few months, has inherited a series of crises almost unparalleled in our country's history. You think about it. Not only does he have a fiscal crisis, he has a housing crisis, he has a financial crisis, he has two wars, and he has a legacy of debt that is truly stunning.
The debt more than doubled in the previous 8 years, the foreign holdings of U.S. debt tripled in the previous 8 years, and the President inherited an economy in recession for more than a year, an economy which contracted by more than 6 percent in the last quarter of last year. Of course, when that happens, deficit and debt soar. That is precisely what has happened. In the last years, the deficit and debt have skyrocketed. So this President walks into a very challenging situation.
This shows what happened to just the Federal debt in the past years. It went from $5.8 trillion to over $12 trillion. The way we do it, we don't hold Presidents responsible for their first year because they are inheriting a situation. We don't hold George Bush responsible for the first year he was in office. He was working off the previous President's budget. And we do not hold this President responsible for the first year because he inherits the previous President's budget. But this is what happened in the previous 8 years: more than doubling of the debt. Perhaps even more alarming, there was a tripling of foreign- held debt.
President Bush, as we can see by this chart--it took 42 Presidents 224 years to build up $1 trillion of foreign-held debt. President Bush, during his period, ran up more than $2 trillion of foreign holdings of U.S. debt. Last year alone when we went to finance our debt, 68 percent of the funding came from foreign entities.
Some say that is a sign of strength. I don't share that view. To have the Chinese be our biggest financier, to have Japan be No. 2, to have them financing 68 percent of our newly issued debt--I don't think that is a sign of strength. I think it is a sign of vulnerability.
Not only did President Obama inherit those very tough fiscal situations, he also inherited a country facing very dire economic conditions, with over 3.3 million private sector jobs lost in the last 6 months alone.
You can see, going back to September, 300,000 jobs were lost. That jumped up to almost 400,000 in October of 2008; in November of 2008, over 600,000 jobs lost. Then it approached almost 700,000 in December of 2008. In January of 2009 there were nearly 700,000 jobs lost; in February of 2009, another almost 700,000 jobs lost.
We see the unemployment rate rose very dramatically, starting back in March of 2007, when it was just at about 4.4 percent. Then it started skyrocketing back in March of 2008. You can see it took off at a very rapid rate to a level of 8.1 percent in February of 2009.
This is much more than numbers on a poster. These are real people losing their jobs--meaning their ability to hold on to their homes was threatened, meaning their ability to provide for their families was diminished. These people are wondering what comes next for them; what are we going to do that is going to make a difference in their lives.
We also see economic growth contracted very dramatically from the third quarter of 2008, when there was a negative one-half of 1 percent of growth, to the fourth quarter of 2008 where the economy contracted at a rate of over 6 percent. That is the worst economic performance in decades.
That is the situation this President inherited. But it is more than that. He is inheriting record deficits; a doubling of the national debt; the worst recession since the Great Depression; financial market and housing crises, as I indicated; 3.3 million jobs lost in the last 6 months; and on top of that, ongoing wars in Iraq and Afghanistan.
I have often thought of the crushing responsibility on the shoulders of this President, but he is equal to it. I can say, in meeting after meeting I have had with him, one of the things that has always appealed to me about Barack Obama, now President Obama--not only is he a very smart person, but he is remarkably calm.
Even in the face of great crisis, this President maintains a coolness under fire. I find it very appealing and very reassuring that with all of these crises he is absolutely calm and he is very clear thinking. That is what we need at this time.
So when the President came with major priorities in his budget, I think many across America thought, those are exactly the right priorities. He is talking about reducing our dependence on foreign energy, one of his three key priorities; excellence in education. If we do not have the best education in the world, we are not going to be the strongest country in the world; for very large major health care reform, because I think everyone understands that is the 800-pound gorilla. That is the thing that could swamp the boat, because we are spending $1 of every $6 in this economy on health care, and we are headed for more than $1 of every $3 in this economy going to health care if we stay on the current trend line. Clearly that is unsustainable and the President has called for major health care reform.
A continuation of middle-class tax cuts, the 2001 and 2003 tax cuts. The President added additional middle-class tax cuts in his budget. All the while the President called for these major initiatives, but to do it and cut the deficit in half over the 5 years. We have tried our level best to meet the President's major priorities, understanding that we were going to have to make some changes, because the Congressional Budget Office, who did their forecast of revenue available, had done their forecast several months after the President's forecast was done. In the meantime, the situation, as I have already shown, had deteriorated. So we were left with a circumstance in which we had $2.3 trillion less to write a budget than did the President when he wrote his.
When I say $2.3 trillion, I want to emphasize that. I am not talking about ``million,'' I am not talking about ``billion,'' I am talking about ``trillions'' of dollars. Trillions of dollars. A trillion dollars is 1,000 billion dollars; 1,000 billion dollars.
So when we say $2.3 trillion was lost in the forecast of revenue available, that is a big deal. I was given the responsibility of telling the President that we were faced with that very changed circumstance, because the Congressional Budget Office does not report to the President, it reports to the Congress. So when we learned of this very significant change, I and Chairman Spratt, the chairman of the Budget Committee in the House, were given the responsibility to meet with the President and to inform him of these very significant changes.
As you can imagine, the President was not very happy. But I can tell you he is a realist, and he understood immediately the implications. He understood immediately that we would have to make some changes in his budget. But he asked us to preserve his key priorities, and that is what we have attempted to do.
Again, we need to reduce our dependence on foreign energy. I think everyone knows, or nearly everyone, that this is one of the major fundamental threats to the United States. Our dependence on foreign energy, back in 1985, we imported 27 percent of the oil we use. By 2008, that had increased to 57 percent of the oil we are using being imported from abroad, much of it from unstable parts of the world, some of them not very friendly to the United States.
So this poses a fundamental long-term economic and security threat to our country. The President has rightly identified, even though the pressure is off right now because oil prices are way down, that this is something we have got to face up to if we are going to have a strong America in the future.
So in this budget we have responded with a reserve fund that reduces dependence on foreign energy, creates green jobs, helps preserve the environment, and helps with high home energy costs. We do it through a reserve fund to accommodate legislation, to invest in clean energy, and address global climate change.
We also provide the President's level of discretionary funding for the Department of Energy for the year. We
build on the economic recovery package investments in renewable energy, efficiency, and conservation, low-carbon coal technology, and modernizing the electric grid. That process had been started in the economic recovery package. It is in the budget; critically important to the economic future of the country.
In terms of a focus on excellence in education, there are lots of warning signs out there that we are starting to lose the battle to be the best educated people in the world. But what are the indications? Here is just one. We are now dramatically lagging China in producing engineers. You can see, in 1985, each of our countries produced about the same number of engineers. We produced, each of us, about 75,000 engineers.
But look at what has happened since in the United States. The number of engineers we are producing has declined to about 65,000. Look at what has happened in China. They have increased from about 75,000 to more than 440,000 engineers. Now, why is that important? I think we know it is important because you have got to have engineers if you are going to be building a strong infrastructure. If you do not have a strong infrastructure, you do not have a strong base for competition in this globalized world economy.
We have done everything we can to capture the President's priority of emphasizing excellence in education. We generate economic growth and jobs, prepare the workforce to meet the global economy, make college more affordable, and improve student achievement. We do it with a higher education reserve fund.
To facilitate the President's student aid increases, we extend the simplified college tax credit providing up to $2,500 a year, and we also focus on the President's requested level of $5,550 for Pell grants and fully fund his education priorities, such as early education.
Now, I was raised by my grandparents. My grandmother was a schoolteacher. She was five feet tall. We called her Little Chief. We called her Little Chief because she commanded respect. And in our family, she would tell us there are three priorities: Education is No. 1. Education is No. 2. And education is No. 3.
I tell you, we got the message, my generation. I have 13 cousins. Every one got advanced degrees. We were not a family of any special means, a middle-class family. But we understood that education was the way to secure a better future. She made it very clear to us that was the expectation. We need to reemphasize excellence in education in this country.
But we also face an enormous challenge in health care. As I indicated in my opening remarks, $1 in every $6 in this economy is going for health care. This chart shows 16 percent of our GDP, and we have just gotten updated numbers that show now we are over 17 percent of our gross domestic product going to health care. If we stay on the current trend line, by 2050, 37 percent of our gross domestic product will be going for health care. That is utterly unsustainable. It is the biggest threat to our long-term deficits and debt. It is the biggest threat to our economic competitive position. It is the biggest threat to the economic viabilities of families and companies and communities. So this is something that must be addressed.
President Obama has called for major health care reform, and we have sought to preserve that priority in the budget resolution. We invest in health care in an attempt to bend the health care cost curve to save money, reduce long-term costs, reduce the buildup of deficits and debt, also to improve health, to expand coverage, to increase research, and promote food and drug safety.
We do it in three fundamental ways. First, a reserve fund to accommodate the President's initiative to reform the health care system. What does a reserve fund mean? It means simply this: The committees of jurisdiction are given full flexibility to write legislation to accomplish the President's goals. But they have certain requirements, and the requirement is that they pay for what they produce, that it be deficit neutral.
The administration has said all along, that is their intention, and we try to match that intention in this budget. The reserve fund also addresses Medicare physician payments. It is already scheduled in law that doctors will take very significant reductions. We do not want to see that happen. So, again, we are saying to the committees of jurisdiction: Fix it and pay for it. Fix it and pay for it, because we cannot add to the deficit and debt to do it.
Finally, we continue to invest in key health care programs such as the National Institutes of Health and the Food and Drug Administration.
On defense, which is always of great interest in terms of a budget resolution, we actually provided $45 billion more in funding for defense than President Bush's final defense plan. You can see the final defense plan of President Bush is this red block. The hatch lines here are the additional funding we have provided over the years 2010 to 2013, because that is as far as the Bush defense plan goes. We provided $45 billion more. Frankly, President Obama came forward and said: Look, let us more honestly account for war costs than has previously been done. In the previous administration, all too often they did not put in the budget funding for war. This President did, and we do in the budget resolution.
Now, the President also gave us a charge to cut the deficit by more than half over the 5 years of the budget resolution. You can see that we have done, that this year we project the deficit at $1.7 trillion under this budget resolution, and we step it down every year. We will reduce it by $500 billion the first year, by $300 billion the second year, by another $300 billion the third year, by a little bit the fourth year, and by another about $60 billion the final year, to get down to $508 billion. That is a reduction of more than two-thirds over the 5 years, as a share of gross domestic product, which is what the economists like to look at, because that takes out the effect of inflation.
You can see we are reducing the deficits from 12.2 percent of gross domestic product in 2009, down to less than 3 percent in 2014. That is the magic goal, less than 3 percent of gross domestic product. Because at that level the economists tell us you stabilize the growth of the debt. That is the goal the President set, getting down to 3 percent of GDP or less in a deficit in the fifth year, and we beat that goal by a little bit.
There has been a lot of talk about the spending in this budget resolution. I want to make clear here is what happens. The spending again is a share of gross domestic product. Again the economists say that is the most fair comparison over time because it takes out the effect of inflation. You can see in 2009, we are spending 27.6 percent of GDP in this budget. That is a very high level historically. And, of course, the reason for it is the tremendous economic downturn, the need to provide stimulus to the economy, to provide lift. So spending is at a high level as a share of the gross domestic product in 2009.
You can see each and every year we step it down until 2012, and then basically it stays at that level for 2013, 2014, at about 22 percent of GDP. So we are going from 27.6 percent of GDP this year to 24.5 percent in 2010, down to 23.3 in 2011, and then basically stabilize at 22 percent of GDP through 2014, again getting down to our target of a deficit of less than 3 percent of GDP in the fifth year.
Again, on spending, to go into some additional detail, breaking down discretionary spending, as you know, in the budget we have mandatory spending, things such as Social Security and Medicare. Those are mandatory programs, mandatory in the sense that if you qualify, the Federal Government pays for what you have coming. Discretionary programs are programs that are open for the Appropriations Committee to adjust every year. If we look at the discretionary side of our budget, we can see, on defense, we are providing the full request by the President, a 3.8-percent increase. Internationally, we are not providing the President's full request because of the diminished resources available to us. So we cut the President's request by $4 billion. We are still providing an increase of almost 18 percent. Why are we giving such a large increase to international accounts? The reason is quite simple. We are engaged in two wars.
The Secretary of State called me the weekend before this weekend at home. The Secretary of Defense called me at
home. Both delivered the same message. They were a little unhappy, disappointed that I was cutting international accounts by $4 billion from the President's request. They emphasized the importance of these increases because what has been done before is to make supplemental requests outside the budget. This President said no more of that. We are going to be direct. We are going to be open in the money we are requesting. These funds are needed to deal with Iraq and Afghanistan and Pakistan and other threats we are facing around the world.
Interestingly, I have never before, in my 22 years in the Budget Committee, had the Secretary of Defense call me to support the budget for the State Department. Why would the Secretary of Defense call me and ask me to increase what I have provided for in the international accounts? He told me: There is a lot that is being spent out of the Defense Department budget that should be spent out of the State Department budget for activities in Afghanistan and Iraq. President Obama has put those categories of spending where they belong, and it ought to be supported. Of course, I have great respect for them both. I had to tell them: When you lose $2.3 trillion, you have to make a lot of changes to make it add up. So I felt compelled to reduce these accounts from the President's request.
Domestic spending, we increase by 6 percent. The President asked for more in that category. Again, we simply could not make the numbers work without making reductions.
So the total in this area, $1.03 trillion, is from last year. This year it is $1.08 trillion, for a combined increase in discretionary spending of 5.3 percent. We can see on nondefense discretionary, that combines international and domestic, we are giving a 7-percent increase. The President asked for over 10 percent. Again, I know there are people who are disappointed. I am sorry, but my responsibility is to deal with the reality with which I am presented. The reality I was presented with was $2.3 trillion less in revenue. I have had to make reductions in the discretionary accounts. I have had to make reductions in mandatory accounts. I have had to make changes on the tax side of the ledger in order to get the deficit down to a sustainable level.
Revenue changes in the budget resolution: I have heard some say we have all these tax increases. That is not what the Congressional Budget Office says, when they look at my budget and look at all the proposals and compare it to current law. They conclude that I am providing $825 billion of tax reduction. That is a different story than we hear coming from some quarters. That is not my claim. This is what the Congressional Budget Office finds when they look at my budget and compare it to current law. Why the difference? First, we have extended all the middle-class tax relief provided in 2001 and 2003; specifically, the 10-percent bracket, the child tax credit, the marriage penalty relief. All that is continued in this budget, as well as education incentives. On top of that, alternative minimum tax reform costs $216 billion to prevent 24 million Americans from being subjected to the alternative minimum tax. We also have estate tax reform; estate tax reform at $3.5 million an individual, $7 million a couple. Those people who have estates of less than that amount will pay zero in estate tax. Over 99 percent of the estates in America will pay zero, nothing, not a penny. That is a reform that needed to be made. It is included in this budget. The President called for it, and we have adopted it.
We also have a series of business provisions and the so-called tax extenders, things that need to be adjusted every year. We do it in this budget for a subtotal of tax relief of $958 billion. We have an offset to that, certain loophole closures, shutting down abusive tax havens, abusive tax shelters, offshore tax dodges that will raise $133 billion for total tax cuts of $825 billion.
In the President's budget, he has recommended that we not continue all the tax relief contained in the 2001 and 2003 acts for people earning over $250,000 a year. We have adopted that recommendation in this budget. All of the middle-class tax relief from 2001 and 2003 is here. It is funded. It is provided for.
In addition, the President called for additional tax reductions for middle-class people, the so-called make work pay provisions. Two years of that is already funded in the economic recovery package. So that will continue for the next 2 years. The President wanted to make that program permanent. Again, we could not do that in light of the new forecast. So we have provided that those make work pay provisions can be extended, if they are paid for. They will continue for the next 2 years, but after that, if they were to be extended, they would have to be paid for.
We also provide for important budget enforcement in the budget resolution. We have discretionary caps for 2009 and 2010. We maintain a strong pay-go rule. We have a point of order against long-term deficit increases, a point of order against short-term deficit increases. We allow reconciliation for deficit reduction only, which was the original purpose of reconciliation. We provide a point of order against mandatory spending on an appropriations bill; no backdoor stuff that used to go on, people raiding the Federal Treasury by coming in here and changing mandatory spending on an appropriations bill.
The budget resolution also addresses our long-term fiscal challenges in these ways. No. 1, we have the health reform reserve fund. That is absolutely the key element to dealing with our long-term buildup of deficits and debt. That is the part of our spending that is absolutely out of control. The only way to get it back under control is fundamental health care reform which is provided for in this budget on a deficit-neutral basis. We also have program integrity initiatives to crack down on waste, fraud and abuse and a long-term deficit increase point of order to require 60 votes to increase the deficit long term.
President Obama has said this about the need for further work on our long-term fiscal situation. Let me be clear: The first 5 years--this budget is a 5-year budget--we do quite a good job, a credible job of getting the deficit down. We reduce it by more than two-thirds. We get it down to less than 3 percent of GDP. But the second 5 years of the President's plan, even if we extended our budget for 5 years, is going to require much more effort. We are on an unsustainable course for the long term. In the next 5 years, I think we have done a credible job of moving in the right direction, reducing the deficit by two-thirds. But beyond the 5 years, we have big problems on the horizon.
The start in this budget to deal with it is health care reform because it is the 800-pound gorilla. But it is going to take more than that. It is also going to take tax reform because we have a tax system that is hemorrhaging to these offshore tax havens, abusive tax shelters and, frankly, a system that is very inefficient at collecting the revenue that is due. If we collected the money that is due under the current Tax Code, we would have no structural deficit. We wouldn't need any tax increase. If we just collected the money that is due under the current tax levels, we would have no structural deficit. The problem is, we aren't collecting the money that is due under the current code. We are only collecting about 75 percent of what is due. A big reason for that is the explosion of offshore tax havens, abusive tax shelters, the tax gap. All those things are rendering the tax system very ineffective.
The President recognizes the need for further action to address the long-term fiscal imbalance as well. He said:
Now, I want to be very clear. While we are making important
progress towards fiscal responsibility this year, in this
budget, this is just the beginning. In the coming years,
we'll be forced to make more tough choices, and do much more
to address our long-term challenges.
That is the truth. We are going to have to do much more in those years beyond the 5 years of this budget.
Finally, I would like to address the question of a 5-year budget versus a 10-year budget. The President sent us a 10-year budget. We have written a 5-year budget. Some have said that is an attempt to conceal the effect of the second 5 years. The President sent us a 10- year budget. It has been fully scored by the Congressional Budget Office. There is no hiding of anything. The President provided us a 10- year budget. I was critical of the previous administration for not providing a 10-year budget because I was concerned they
were hiding the effect of their tax cuts in the second 5 years. This President has made no attempt to conceal his 10-year plan. He sent it to us. It has been scored by the Congressional Budget Office. We know what it is.
But Congress, when it writes budgets, has almost always written a 5- year budget. In fact, of the 34 budgets Congress has written under the Budget Act, 30 have been 5-year budgets. Why? Because the projections for year 6 through year 10, the projections for revenues and expenditures for years 6 through 10, have been woefully inaccurate. They have been notoriously unreliable. But never have I seen them more unreliable than right now. That's because of the extraordinary uncertainty we're facing in the near term. Inaccuracies in the forecasts for the next several years will compound into huge differences in years 6 through 10.
So we wrote a 5-year budget that fully discloses the spending and revenue for the 5 years. We did not write a 10-year budget. Congress almost never has. But the President did. And the President's 10-year plan is fully disclosed.
We have done our level best to make changes that were necessary in what the President sent us in order to address his key priorities and at the same time to reduce the deficit in the way that he called for and to reach a deficit that was less than 3 percent of GDP in the fifth year.
I am proud of what we have done. Is it a perfect document? The work of men and women is never perfect. We are flawed. I will confess to that. To me, the greatest flaw is we still have not fully coped with the long-term deficit and debt challenge to this country. Much more will have to be done.
Senator Gregg and I have one proposal. We have a proposal for a task force that would require Members of Congress and the administration--16 of them--to be given a responsibility to come up with a plan to get our long-term deficit and debt condition in order. If 12 of the 16 could agree, that plan would come to Congress for a vote.
I believe it is going to take some special effort, some special structure to deal with these long-term deficits and debt threats. I want to say for myself, I do believe the long-term debt accumulation does fundamentally threaten the economic security of America. While we have a good start in this first 5 years, much more must be done.
Mr. President, I thank you for this time.
I will yield the floor.
Before I do it, I thank Senator Gregg, the ranking member of the Budget Committee. There are many policy issues that divide us. There are some where we are joined at the hip. But Senator Gregg has been a thorough professional in all of the work of the Budget Committee this year. His staff is outstanding as well. I recognize Senator Gregg as somebody who has credibility. He may say some things that are somewhat uncharitable about the budget I am presenting today. I understand that. That is his job. He has strong feelings, and I applaud him for them because that is what we need. If everybody in the room thinks the same thing, nobody is thinking very much. I will tell you one thing, Senator Gregg is thinking. He cares deeply about the economic future of this country, and he is doing his level best to get us on a path that makes more sense. I applaud him for it. But I would be remiss if I did not recognize the professionalism and leadership he has exhibited in the work of the Budget Committee this year. In no way does that mean he endorses this plan. He will make very clear he does not. He strongly disagrees, as is his right. But I do want to recognize the very good working relationship we enjoy.
I thank the Chair and yield the floor.
Mr. President, if I could say, our hockey team lost to his hockey team in the last one-tenth of 1 second. I say to the Senator, our Congressman in North Dakota said: We don't want the flood fight to have the same outcome.
We don't want to have won this right to the end and then lose it at the end. So even the hockey game has provided inspiration for the flood fight. We wish we had won the hockey game, but it is most important that we win the flood fight.
Mr. President, I would like to come back to the argument I continue to hear advanced--that because we have gone from the 10-year budget the President proposed to a 5-year budget, something is being hidden. I don't believe anything is being hidden from anyone.
Of the 34 budgets the Congress of the United States has done since the Budget Act, 30 of them were 5-year budgets--30 of the 34. Only four were 10-year budgets. The reason Congress has tended to do 5-year budgets--not just tended to but overwhelmingly has done 5-year budgets--is that the outyear forecasts are notoriously unreliable; notoriously.
Some have said I criticized the previous administration for not doing a 10-year budget. Indeed, I did--because I believed they were trying to hide the effect of their tax cuts in the second 5 years. But this administration did not do a 5-year budget. This administration did a 10-year budget. There is nothing hidden. It is all out there for anybody to see. The Congressional Budget Office has scored the President's 10-year budget. Some of us have expressed concern about the second 5 years.
People get in a habit around here and they get used to doing something a certain way, they get used to criticizing budgets a certain way so they keep doing it. It was legitimate to criticize the previous administration for not doing a 10-year budget. It was legitimate to suggest they might have something to hide. But this administration did a 10-year budget. We in Congress--remember, ultimately the budget is a congressional act. The President does not have to sign it. It does not become law. Congress has almost always done a 5-year budget; 30 of the 34 budgets written under the Budget Act have been 5-year budgets, including the last 5, including 2 in which Senator Gregg was the chairman. Again, it has been done that way, number one, because the outyear forecasts have been notoriously unreliable and, number two, because we do a budget every year.
In fact, there is some question whether a 5-year budget is required because we are going to do a new budget every year. So what matters the most in any budget is the first year.
But I did wish to address that because I see this criticism. I saw it in the David Broder column. I have immense respect for him. I saw it in the David Rogers column. I have immense respect for him. But I don't think the criticism applies in this particular situation. Nobody has been more clear, publicly or privately, than I have that the second 5 years of the Obama budget raises a real concern about the sustainability of our fiscal direction.
Let me just say, if you took my budget, which is a 5-year budget, the budget that came out of the Budget Committee, and extended it for 10 years, you would see dramatically lower deficits and debt than in the President's budget. In fact, I believe the first 5 years we have saved $600 billion from the President's proposal. In the second 5 years the total savings--for the 10 years, if we extended our budget 5 years, would be over $2 trillion. That is just in the nature of the beast. You know, the savings grow over time. We have put in $600 billion of savings in the first 5 years.
With respect to the question of spending, we are only increasing domestic spending--and that includes defense, that includes international, and that includes domestic spending in the appropriated accounts--5.3 percent. That is a modest number. Some of our friends on the other side want to absolutely freeze spending. I say to them I think that would be a serious mistake in an economic downturn, to absolutely freeze spending. In this situation, where the economy is contracting sharply, consumers cannot fill in the gap. They are tapped out, and they are worrying about losing their jobs. Companies cannot fill in the gap because they, too, are threatened. The only entity with resources to step in, to fill the breach, is the Federal Government.
One of the things we learned in the Great Depression was that profound mistake that was made was not necessarily on the fiscal policy side--although that didn't help--but the biggest mistake was on the monetary policy side controlled by the Federal Reserve. They did not expand the money supply. They did not provide liquidity to prevent the contraction from deepening, from growing, and from becoming far more destructive.
Thank goodness we have learned. That is not what is happening here. The Federal Reserve is providing liquidity, and that is on the monetary side. On the fiscal policy side, we did pass a large stimulus package-- as imperfect as it was. We provided a large stimulus package to help fill in some of the gap between where the economy should be and where it is, the gap that was exacerbated by a more than 6-percent contraction in the economy in the fourth quarter of last year.
I believe we are doing many of the right things--again, however imperfectly. If I were able to design the stimulus package, I must say it would have been much different. I would have put much more money into infrastructure. I believe that would have been a better way to stimulate the economy. Even so, there was substantial infrastructure in the stimulus package. Not as much as I would have preferred but, nonetheless, a significant amount. Additionally, I think the Federal Reserve is going in the right direction with respect to the policies it is pursuing in terms of providing liquidity and credit.
When we talk about Hoover economics that our colleagues on the other side of the aisle embraced back in the 1930s, the fundamental assumption was that markets were self correcting. That is what Hoover economics was founded upon, the notion that the Federal Reserve did not need to take countercyclical action and that the Federal Government did not need to take countercyclical actions in terms of helping people who were unemployed. Hoover opposed providing that kind of Federal Government assistance.
Today we know that such assistance actually one of the most stimulative things you can do because that money gets into the economic bloodstream very quickly. It gives lift to the economy, it reduces the size of the contraction, it reduces job loss, it reduces
more and more homes going into foreclosure because people can't pay their mortgage, it reduces the vicious cycle that can suck down an economy.
I just wish to be clear. When we have been critical of their stance against stimulus, their stance against doing the things that are being done by the Fed, they have this mantra they chant. Too much spending-- let me look at our budget in terms of spending. In the short term, yes, spending increases because you are countering the cycle of the economy, so we are up to 27 percent of GDP in spending this year. But then we step it down to 22 percent of GDP, of gross domestic product, by the fifth year. So that is going in the right direction--even for our friends on the other side.
They say too much taxes. Let me remind them, in the President's proposal, on a net basis, according to the Congressional Budget Office, his budget cuts taxes $2.2 trillion. That is a 10-year budget. Our budget on a 5-year basis cuts taxes $825 billion, on a net basis. Yes, there are some tax increases on those of us who are high-income earners. Yes, we have our taxes increased somewhat. But on an overall basis, the President's budget has significant tax cuts from current law, as does the budget that is before us now.
Third, they say too much debt. Look, I am in agreement with them. But where were they in the good times during the Bush administration, when they doubled the debt of this country? They doubled the debt of this country when economic times were relatively good--until the end of the Bush administration when the economy collapsed. That is what this President inherited. He inherited an economy that was in full collapse: It declined 6 percent in the last quarter of last year; an economy that was in free fall; an economy with a housing crisis, a financial crisis, a banking crisis, and a fiscal crisis.
I say to my friends on the other side, it was their policies that put us in the soup. It was their policies of doubling the debt, of tripling foreign holdings of U.S. debt, that put us in this ditch. Now this President has to try to clean up the mess and part of cleaning up the mess is higher deficits and debt in the short term. That is unavoidable. That was already happening in a very dramatic way before this President ever took office. He inherited a deficit. If he had done nothing, he would have inherited a deficit this year of $1.3 trillion. That is after our friends on other side had already doubled the debt over the previous 8 years, and, worse, tripled foreign holdings of U.S. debt. Now we have China as the biggest creditor and our friends here say: Gee, China might not continue to finance our debt.
My friends, where were you? I warned about that starting in 2001. Anybody can review the record. You can go back and look at what I said on the public record over and over and over, that we were headed for big problems financing our debt. The party on the other side did not seem to respond.
Now, all of a sudden, they are concerned about the debt they have passed on to this President. That is not fair. I am plenty willing to say, as I have said publicly, the second 5 years of the Obama budget needs a lot more work. We are going to have to do a lot more to keep the deficit going down. But the first 5 years is a good start for the President's budget and ours is even somewhat better. In fairness to him, we had to make additional adjustments in his budget because the Congressional Budget Office said we lost $2.3 trillion in revenue--$2.3 trillion from the forecast the President was working off of that was made some time earlier.
I hope, in this debate, we do not try to lay at the desk of this President, who has been in office less than 3 months, disasters he inherited. No. No, we are not going to let that happen. That is not going to go unconfronted because that is not fair. This President walked into more crises than I can think of confronting any President, going back to Franklin Delano Roosevelt--a housing crisis deeply underway before he ever took office, a banking crisis deeply underway before he ever took office, a financial crisis deeply underway before he ever took office. So let us be fair in this debate and discussion about where responsibility lies.
Barack Obama, President Obama did not create any of these problems. He has been asked to clean up the mess and an incredible mess it is.
One other point I wish to make, and a place where I do strongly agree with Senator Gregg, is the need to do much more for the long term. That is why he and I have proposed a 16-member task force given the responsibility and the authority to come up with a plan. If 12 of the 16 could agree, that plan would come to the floor for a vote because I do not believe we are going to get through this without special measures and special procedures and a process to take on this long-term debt bomb that overhangs our country. But let's be fair about who is responsible for building the foundation of this mess. It does not lie at the feet of President Obama.
I see the Senator from Alaska. Is the Senator seeking time?
This would be a perfect time. I would be happy to yield the floor and give her an opportunity. While the Senator is getting ready, she has, as the Chair knows, has had a skiing accident. We are glad to see she is up and ambulatory and here at work. We are delighted she is back.
I yield the floor.
I ask unanimous consent that the order for the quorum call be rescinded.
Mr. President, I wish to go back for a moment to the question of a 10-year budget versus a 5-year budget, because I have heard so many questions raised about why we did a 5-year budget rather than a 10.
Again, the Congress has done 34 budgets under the Budget Act, 30 of which have been 5-year budgets. A key reason has been that the longer term forecasts are notoriously unreliable. CBO said the current forecast ``has greater than normal uncertainty.''
CBO'S current forecast, particularly for the near term, is
subject to a greater than normal degree of uncertainty . . .
Both the magnitude of the contractionary forces operating in
the economy and the magnitude of the government's actions to
stabilize the financial system and stimulate economic growth
are outside the range of recent experience.
The Federal Reserve Chairman, Mr. Bernanke, said the economic outlook is subject to considerable uncertainty.
This outlook for economic activity is subject to
considerable uncertainty . . . One risk arises from the
global nature of the slowdown.
He went on to say:
If actions taken by the Administration, the Congress, and
the Federal Reserve are successful in restoring some measure
of financial stability--and only if that is the case--there
is a reasonable prospect the current recession will end in
2009 and that 2010 will be a year of recovery.
Again, very small differences have very big effects over time.
Senator Gregg himself said in March of this year:
Ten-year forecasts are very much a guess . . .
That is why almost every time the Congress does a 5-year budget rather than a 10-year budget. In fact, the last five budgets done by Congress, including three under Republican chairmen, have been 5-year budgets.
Now, there has been some suggestion by columnists that doing a 5-year budget suggests you are hiding something. Again, I want to emphasize, President Obama came forward with a 10-year budget that has been fully scored. Nothing is being hidden from anybody. That score is out there. It is available. It is public. So there is nothing being hidden. And Congress has almost always done 5-year budgets just because of the extraordinary uncertainty of those outyears.
I also want to say, for a moment, those who argue that this budget has too much spending are up against the factual record. The factual record is that in this year, the spending will be 28 percent of gross domestic product. We bring that down very sharply in the first 3 years. We get it down to 22 percent of GDP by 2012. Again, there is a deficit in the fifth year of less than 3 percent of GDP, which the economists tell us is critical to having a sustainable debt.
Let me say my own view. I believe we have to do better than that. I believe we have to do better than that. I believe the outyears under any of the budgets are unsustainable. I believe we have to have some special process such as the one Senator Gregg and I have proposed, and I am completely open to other suggestions about how we deal with the entitlement reform and the tax reform we so badly need.
I see our colleague, Senator McCain, is now in the Chamber. We advised his office we would like to get him in at about this hour, so I would be happy to take a break and give Senator McCain a shot at this.
I yield the floor.
Mr. President, I thank the Senator for his observations on the budget. I do wish to indicate the budget before us is different than the budget the President sent us. First of all, the Senator mentioned reconciliation instructions. We have no reconciliation instructions in this budget--not on health care, not on climate change, not on education. My own belief is that was never the purpose of reconciliation. Reconciliation was really designed to be for deficit-- --
I am happy to yield.
Well, I would say this to the Senator: I don't know, but I know it is not part of this resolution, and that was rather intense debate, as my colleague can imagine. I have said publicly and privately what I believe. I don't believe reconciliation was ever intended for the purpose of writing this kind of substantive reform legislation such as health care reform, such as climate change.
As people get into how reconciliation actually works, I think they are going to be a lot less eager to pursue it. If I could just give two examples.
I thank the Senator. I would just say I am going to argue strenuously against it in conference committee. The Senator asked me what will be the result. I don't know. Am I going to be able to prevail in the conference committee on this matter? I don't know. But I really do think--I hope colleagues who think reconciliation is the answer will think very carefully about how it actually works.
Anything in reconciliation, first of all, is subject to the Byrd rule. The Byrd rule says any legislative proposal that does not score, that doesn't cost money or save money, is subject to automatic strike. Any provision that the score is only incidental to the policy change is subject to automatic strike.
Our distinguished Parliamentarian has said, if you try to write major legislation in reconciliation, you will be left with Swiss cheese. So I hope people are thinking about that. I know there are attractive features of reconciliation, and it is true I think Republicans abused it in writing the tax reductions because I deeply believe reconciliation was only intended for deficit reduction. So I think it was wrong to have been applied solely for tax reduction during the years the Republicans were in control. I don't think two wrongs make a right. I don't think we should do it for substantive legislation that is really not deficit reduction legislation.
One other thing I wish to say--and I hope people are thinking very carefully about this. The way reconciliation works is there is only one instruction for revenue, one instruction for spending, one instruction for debt in a year. So if you are going to put all of these provisions together, you are going to have education, you are going to have health care reform. You may well have to do those in one bill--in one bill. Now, are we really going to do that? Are we going to have education reform and health care reform put in one legislative vehicle? I think we better think very carefully about that. So I thank the Senator from Arizona for his observations.
I do wish to stress that the budget we have before us is substantially different than the budget the President sent, and there is a simple reason for that. We have $2.3 trillion less over 10 years to write this budget. This is a 5-year budget, so we made $608 billion in changes. In spending alone on the discretionary side, we have reduced discretionary spending over 5 years by $160 billion--$160 billion. We have changed the mandatory side of the equation by $240 billion. We have changed the revenue line by almost $160 billion. So I hope as people look at this budget, they will recognize substantial changes have been made in light of the new forecast. We have attempted to be responsible, and we have gotten the deficit down by two-thirds by the fifth year and less than 3 percent of GDP, which is what all the economists say is necessary to stabilize the debt.
My own strong belief is we need to do even better than that in the second 5 years in light of the retirement of the baby boomers and in light of this enormous debt that has been stacked up. Again, that did not happen--it was not the fault of President Barack Obama. He inherited a colossal debt. He inherited a colossal fiscal crisis, financial crisis, housing crisis. It wasn't his fault. He didn't create it. He is in on the cleanup crew.
I thank the Chair and yield the floor.
Madam President, I ask unanimous consent that the order for the quorum call be rescinded.
Madam President, we have heard a lot of concern this afternoon about deficits and debt and spending from our colleagues on the other side. I wish to remind them of a little of the history of what brought us here. This is what happened with spending when they were in charge--spending about doubled in the Bush administration. Of course, we know the debt more than doubled, and we are left with an ocean of red ink.
That is what this administration inherited. This wasn't President Obama's doing. This is what he walked into. Here is what happened to the debt and the deficit under the previous administration. They actually inherited substantial surpluses, which they rapidly turned into record deficits and then plunged the thing right off the cliff. If we are going to be fair about how we got here, I think the other side is going to have to accept an awful lot of responsibility. Here is what happened to the debt--it more than doubled, from $5.8 trillion in 2001 to $12.1 trillion in 2009.
Senator Gregg, the ranking Republican on the committee, said: I am willing to accept this short-term deficit number, not debate it, because we are in a recession and it is necessary for the Government to step in and be aggressive, and the Government is the last source of liquidity. So you can argue that this number, although horribly large, is something we will simply have to live with.
That is the ranking member of the Budget Committee. Look, I think he is entirely right. The hard reality is we have no choice but to accept, in the short-term, these large deficits as the Government seeks to provide liquidity to prevent an all-out collapse. But over time, this budget brings the spending down. I am not talking about the President's budget now. I am talking about the budget I have presented here. We take the budget--total discretionary spending--from 9.5 percent of GDP in 2010 down to 7.3 percent of GDP in the fifth year.
When you distinguish between defense and nondefense discretionary, what you see is that I am bringing them both down at about an equivalent rate. So defense, in 2010, will be 4.8 percent of GDP; at the end of the 5 years of this budget, it will be down to 3.7 percent of GDP. Similarly, nondefense discretionary will be 4.7 percent of GDP in 2010, and we take that to 3.6 percent of GDP in 2014.
On the discretionary accounts, which is about one-third of all Federal spending, on the discretionary accounts, both defense and nondefense, I am bringing them both down as a share of our national income and doing it in about the same proportion.
We are doing that because, look, we don't have a lot of options. When the President wrote his budget, he had $2.3 trillion more in revenue than we have. Now, he did his budget some time earlier, and the forecasts were more robust. Once CBO did their more recent forecast, $2.3 trillion was gone. That requires a response, if we are also going to answer the President's charge to dramatically bring down the deficit, and we have also done that--from $1.7 trillion in 2009 to just over $500 billion in 2014. That is a reduction of more than two-thirds in the deficit of the United States.
Of course, economists like to measure it in terms of a percentage of gross domestic product rather than dollar terms because that adjusts for inflation. But look what we have done in that way: We have gone from 12.2 percent of GDP in 2009 to less than 3 percent as a deficit and share of the economy in 2014--again, more than a two-thirds reduction--and we get below the magic 3 percent, which is where most economists say we stabilize the growth of the debt.
I am quite proud of what this budget has accomplished in the 5 years of its term. I am the first to acknowledge that when Senator Gregg stands and says we are not doing enough about the second 5 years, sign me up. I agree with him entirely. Certainly, the President's budget has far more debt and deficit in the second 5 years than ours, if you extended our policies. But I would say that either one of them doesn't do enough for the second 5 years. We have to do much more. That is why Senator Gregg and I have proposed a special procedure to give 16 Members the responsibility to come up with a plan, and if 12 of the 16 agree, then that plan would come to Congress for a vote.
Now, we changed the President's budget over the first 5 years by $608 billion. That is a lot of money. Madam President, 30 percent of it is on the revenue side, 31 percent on the discretionary spending. In other words, we reduced the President's spending by $167 billion over the next 5 years. Anybody who doesn't think that is a big deal, come to my office and listen to the phone calls.
The mandatory spending we reduced by 39 percent of the total $608 billion we changed from the President's budget. So we distributed the pain about equally. We did it on a proportionate basis.
Mandatory spending is the biggest part of the budget, so they took more of the reduction. Discretionary spending and revenue were done of about equal proportion. We tried to be fair. We didn't go to just one committee of jurisdiction, or two committees, and say: You take the whole burden of making these changes. We went to everybody, and we said, you know, we have to share the pain and we have to share it equally.
Again, on the question of spending in the budget that is before us--I am not talking about the President's budget. The President's budget is not before us; the budget the Budget Committee has is before this body, the budget that we are going to vote on, which nobody, it seems, wants to talk about. They want to talk about some other budget. But they don't have a budget of their own.
If our budget is so bad, where is their budget? They don't even have a budget. So if our budget is so bad, where is their budget? We don't see their budget. I just say this: On nondefense discretionary the average annual increase under the budget resolution is 2.5 percent. Some say we ought to just freeze it. I don't think that would be very wise to do. That wouldn't even offset inflation. But this is a pretty tough budget that is before us. I want my colleagues to know, nondefense discretionary spending is increased over the life of this budget on average 2.5 percent.
Let's go to that final slide, if we could.
Where are the increases in the nondefense discretionary accounts under this budget resolution? You can see, here is where they are. The biggest chunk is defense. More than one-third of the increase is in national defense. That is in part because the President, instead of hiding the costs of the war, has put the costs of the war in the budget. That is what we have done. So if you look at the nondefense discretionary increase under the budget resolution, one-third is defense.
Madam President, 14 percent is international and 10 percent is for our veterans. We have given the biggest increase for veterans health care ever--and deservedly so. They have suffered the wounds of war and they deserve to have those wounds treated and they deserve to be treated with respect when they come home. So 10 percent of the increase is there. Ten percent is education, 10 percent is income security, 8 percent is the census.
One-twelfth of the increase is the census that has to be done every 10 years. That is an extraordinary expense, but here it is. We have to deal with it and we do. Natural resources and environment are 6 percent, transportation is 3 percent, and ``other'' is 2 percent.
The discretionary increase comes in those categories. I hope my colleagues, as they discuss the budget, deal with the budget that is before us. It is substantially different than the budget the President sent us because, again, when the President wrote his budget he had $2.3 trillion more in revenue over 10 years than we do under the new scoring that was done just before we concluded work on this budget.
I think the American people would expect us to make changes when the facts change. When the revenue changes dramatically I think they would expect us to make adjustments, and that is what we have tried to do.
I am quite proud of this budget document that we have produced, this outline for the country, because we have done our level best to keep faith with the priorities established by the President. He said to me, when I told him we were going to lose $2 trillion--he said: Look, do everything you can to preserve my priorities. He said, No. 1: Please do everything you can to make sure we can reduce our dependence on foreign energy. That is not just the President's priority, that is the priority of the American people.
No. 2, he said: Do your level best to preserve my priority by focusing on excellence in education because if we are not the best educated, we are not going to be the strongest country on Earth very long--and we have done that in this budget.
No. 3, he said: Please preserve my priority on major health care reform because that is the place that is going to take us over the cliff, in terms of our long-term economic future. That is the thing that is burdening families and businesses and taxpayers, so please do everything you can to preserve my key priorities, and do it in the context of dramatically reducing the budget deficit.
We have done that in this budget. We have preserved his priorities on reducing dependence on foreign energy, on excellence in education, on major health care reform. We provided reserve funds, deficit neutral reserve funds for each one of those categories, and we have reduced the deficit by two-thirds. We have gotten it down to 3 percent of GDP, which was his charge to us. We have done it all, even though we faced a dramatic reduction in revenue available to us.
Does that mean we could just copy the President's budget? Obviously not. We had to make adjustments, and we made $608 billion of adjustments over the first 5 years. I believe that was necessary and appropriate and prudent, and I hope we can hold onto those changes as we go through the markup. I am already hearing there are people who want to come here and increase the spending. I have already heard people are going to offer amendments to take away some of these adjustments. I am told Republicans and Democrats are meeting right now, this afternoon, to figure out how to come in and change this budget, to raise the spending. I am told there are a lot of Members represented at this meeting.
Let me send a word to them: Change this at your peril. We have carefully crafted this package to be able to win majority support. I think you better think very carefully about changing what we have brought to the floor because you might move it in your direction--more spending--only to wind up with a defeat on final passage of this budget. I hope those who are meeting will think very carefully about coming to the floor and trying to increase the spending in this resolution.
I yield the floor.
Madam President, let me be very clear. I absolutely reject the notion that the budget the Budget Committee has brought before this body has gimmicks or is misleading in any way.
I tell you what we do. We say things have to be paid for. Let's talk about the reserve funds that were just criticized. The reserve funds for health care, for energy, and education have a condition attached. The condition is, if the committees of jurisdiction come forward with legislation, they have to pay for them. That is the gimmick.
In Washington, things are so screwed up they think if you require something to be paid for, it is a gimmick. I do not think it is a gimmick to require things to be paid for. We should have been doing that a long time ago.
No. 2, he referenced the docs fix. The docs fix is this. Under current law, doctors who treat Medicare patients are going to have a cut. The President said: No, they are not going to have a cut. We will put it in the budget. But he had no offset for it. We are saying: No, we do not want the docs who treat Medicare patients to get a cut either. But, committees, if you produce the savings necessary to do that, we will not have the docs cut. You know what. That is what we have been doing.
I am on the Finance Committee. We have been assuring that the doctors who treat Medicare patients do not take the cuts that are in the law. But we have paid for it. That is what this budget does. It says to the Finance Committee: Do not cut the docs, but pay for it. Do not just put it on the budget, and do not worry about sticking it on the debt.
I am proud of that. That is exactly what we should have done.
On the alternative minimum tax, we say, for the next 3 years, when we are in a time of economic weakness and vulnerability, you can fix the alternative minimum tax that will otherwise affect 24 million Americans up from 4 million today. We say: No, do not let them get hit with more taxes at a time of economic weakness. But beyond the 3 years, if we are going to fix the alternative minimum tax--and indeed we should--pay for it. Pay for it.
That is what this budget says. That is no gimmick. That is being responsible.
On health care, the reserve fund says: Yes, we should have major health care reform. But pay for it. So the administration has said, it is their intention to pay for it. That is the intention in this budget, that it be paid for.
Let me be clear. These reserve funds, the ones triggered in the legislation are paid for. They call that a gimmick. I call it responsible. I know it is a new concept in this town.
Most people here, I have to tell you, our friends on the other side, their record is not pretty. When they were in charge, they doubled the debt. They were for every tax cut and every spending initiative. The result is they exploded the debt, doubled the debt of this country, tripled foreign holdings of debt. We are saying: No, we are not going to continue on that path. We insist on a trajectory that dramatically brings down the deficit. That means we have to insist that all these good things get offset, get paid for.
Now, the argument on the other side is, it will not happen. Not going to happen. We are not going to pay for things. Well, shame on us. Shame on us if we do not. Shame on us if we do not pay for the doc fix. We have been paying for it. Why all of a sudden do we say we cannot?
The alternative minimum tax. I will be the first one to say we have not been
paying for that, against my votes, because I do not want the alternative minimum tax to be imposed. But it ought to be offset so it does not add to the deficit.
The same is true on energy. We should have significant energy legislation to reduce our dependence on foreign oil. But we ought to pay for it. I was part of a group called the Gang of 10--5 Democrats, 5 Republicans--who became the Group of 20--10 Democrats and 10 Republicans.
We came forward with major energy legislation to reduce our dependence on foreign energy, but we paid for it. We provided the offsets so it did not add to the deficit or the debt. I hope very much that is the principle we adopt.
I yield the floor and look forward to my able colleague's rejoinder.
Madam President, again, there are not gimmicks here. There are requirements to pay for things. I know that seems like a gimmick to some because they are not used to paying for anything in this town. But that is what this budget says ought to be the operative principle: You start paying for things. If you want to have the doc fix, and I do, you pay for it.
That is what we have been doing in the Finance Committee. We have been paying for it. The President sent a budget that says you don't have to. But then we lost $2.3 trillion. So we are back to saying: Yes, you have to pay for it.
The alternative minimum tax for 3 years, when the economy is down, we say: No, do not raise revenues some other place to offset that because that would not make good economic sense at a time of weakness.
But when the economy recovers, offset the costs. That is exactly what we are going to have to do to get the books back in balance around here. The President put into his budget over $200 billion for disasters over the next 10 years.
The Congressional Budget Office would not score it. They say it is too speculative. Nobody at this point can tell you what the disasters are going to be. Look, I am especially sensitive to this. I have a major disaster going on in my State right now. I would love to put the money in. But there is not a soul on Earth who can tell you how much it is going to be at this point in time. We do not know if the levees are going to hold or if they are going to break.
To put in a number that has no relationship to any reality, that is honest accounting? I appreciate the President's attempt, but the Congressional Budget Office would not score one thin dime of it because they said it is too speculative.
I find it so curious. The other side complains all the time about ``too
much spending, too much debt.'' You do something to reduce spending in the budget I have offered--we cut the President's budget on domestic discretionary spending by over $160 billion--and now they complain about that.
I do not know how you ever get to the end without insisting that things get paid for and reducing spending and trying to get in place an overall fiscal condition that puts you on the right glidepath.
Now, the gentleman says you do not get to 3 percent of GDP because you have these reserve funds.
The reserve funds require, before anything happens, that the reserve funds be deficit neutral. That is a condition, a requirement. So, yes, you do get to 3 percent of GDP on the deficit, because we are not going to release those reserve funds, and I am the one who has been given the responsibility to decide whether they are released. We have put in a condition, and I can't release them if they are not paid for. Hallelujah, let's start paying for things around here.
I yield the floor.
Madam President, I yield 5 minutes to the Senator from New Mexico.
Madam President, from Senator Gregg's time, I yield 15 minutes to the distinguished Senator from Utah, Mr. Hatch.
Madam President, just one part of what the Senator has said do I wish to seek to clarify, and that is that while the United States does have
the second highest stated corporate rate, we have one of the lowest effective corporate rates in the industrialized world. The reason for the difference is all the exemptions and exclusions that exist in our code for corporate rates. So while we do have the second highest published or nominal rate for corporate taxes, if you look at all of the industrialized countries in the world and what their effective corporate tax rate is, you find that ours is well below average.
Now, that doesn't mean we shouldn't have tax reform because many of us believe we need thoroughgoing tax reform, but I think there is a certain amount of confusion about the difference between our statutory rates and our effective rates.
I am happy to.
Madam President, the Senator is correct. I am on the Finance Committee, and I have this responsibility on the Budget Committee. It is very clear, while we do have a high nominal rate--I think we are second highest in the industrialized world--the effective rate that companies actually pay, we are near the bottom.
At this point, I wish to yield 25 minutes to my colleague from North Dakota.
On a number of previous speakers, I am afraid I had to be away from the floor to deal with some of the challenges back home with flooding. Some of the previous speakers have referenced tax increases as part of the budget I have offered my colleagues in the Senate.
Let me indicate very clearly, the budget resolution that is before us has net tax cuts, net tax cuts of $825 billion. The other assertions directed at the President's budget about tax increases--and there are tax increases in the President's budget and in my budget, but they are completely dwarfed by the tax cuts that are in our budget.
In the President's budget, over 10 years, he has $2.4 trillion of net tax cuts. In other words, if you take the tax raises that are in the President's budget and you stack them up against the tax cuts in the President's budget, he has a net of $2.4 trillion of tax cuts over 10 years.
In the budget I have offered my colleagues that has come from the Budget Committee, that is a 5-year budget instead of a 10-year budget of the President, we have net tax cuts of $825 billion.
Here is why that is so. Middle-class tax relief from 2001 and 2003 is all extended in this budget. That means the 10-percent tax, the child tax credit, the marriage penalty relief, the education incentives, all those things are extended in this budget for those earning less than $250,000 a year.
The net effect of that change alone is $601 billion tax relief. In addition, we provided relief from the alternative minimum tax for 3 years. That costs $216 billion. We have estate tax reform that takes the level of exemption to $3.5 million per person, $7 million per family. That means 99.8 percent of the people in this country will pay no estate tax. None. Zero. That costs $72 billion.
We have business tax provisions and extenders, those provisions that periodically have to be extended. They are incentives to the business community. That costs $69 billion. That is a total of $958 billion of tax reductions over 5 years. And then if you look at the offsets, the loophole closers, going after the offshore tax havens, the abusive tax shelters, that raises $133 billion for net tax reduction over 5 years of $825 billion, most of it for the middle class.
I see Senator Thune here now. If he is ready to go, we would be ready for him to go. How much time does the Senator seek?
I yield 15 minutes of Senator Gregg's time to Senator Thune.
I thank the Senator from South Dakota for his amendment and indicate clearly that this budget resolution does not prejudge in any way the climate change debate. It does not assume that there will be cap and trade or that there will not be. It leaves to the committees of jurisdiction the responsibility to come up with the best possible plan and to do it in a deficit-neutral way. That is the trigger. That is the condition. Whatever plan they devise must be deficit neutral and will have to go through the legislative process.
I yield 7 minutes from Senator Gregg's time to Senator Johanns.
We have no objection.
Mr. President, I thank Senator Johanns for offering his amendment early on like this. I think this is the way we ought to function on a budget resolution. Let's get these amendments up and debate them and have a chance for people to get votes early in the process.
Mr. President, on our list, Senator Bond was to be next.
I ask the Senator, how much time does he need?
Mr. President, I thank Senator Bond for the time he has given to the budget discussion tonight.
I ask Senator Sessions, how much time would he like?
All right.
Mr. President, I yield from Senator Gregg's time 7 minutes to the Senator, who is a member of the Budget Committee, and a very active and valued member of the committee, Senator Sessions.
Mr. President, I ask unanimous consent that on Tuesday, March 31, when the Senate resumes consideration of the budget resolution, the statutory time remaining be 40 hours, each side controlling 20 hours.
Mr. President, I further ask unanimous consent that we come in at 10 a.m. and go to the budget resolution, with Senator Patty Murray being recognized for 15 minutes; at the conclusion of her remarks, that Senator Gregg or his designee be recognized for the purpose of offering an amendment with 1 hour equally divided; that at the conclusion of that debate, Senator Boxer be recognized to offer an amendment in relationship to the Thune amendment and that there be 1 hour equally divided; also, at the end of that period, that I be recognized, or my designee, for a possible side-by-side to the Johanns amendment. We may not need that, but we may, and so I ask unanimous consent that that time be reserved as well.
With that, we are ready to stand in recess for the day. I think we are ready to go to closing.
