Mr. President, I rise to share with the Senate my concerns and frustrations with S. Con. Res. 21, the fiscal year 2008 budget resolution, and to discuss two amendments I will offer tomorrow to try to improve the resolution. Frankly, the…
Mr. President, I rise to share with the Senate my concerns and frustrations with S. Con. Res. 21, the fiscal year 2008 budget resolution, and to discuss two amendments I will offer tomorrow to try to improve the resolution.
Frankly, the resolution before this body ignores the dire state of our financial future and uses smoke and mirrors to mask our long-term fiscal challenges. I have come to the Senate floor numerous times over the past 8 years to express my concern that the Federal Government continues to spend more money than it brings in and that this Congress is running a credit card for today's needs and shamelessly leaving the bill for future generations. We all know this recklessness threatens our economic stability, our competitiveness in the global marketplace, and our future way of life.
Since I arrived in the Senate, the national debt has increased from $5.6 trillion to $8.6 trillion. That is an increase of more than 50 percent in 8 years. This amounts to $29,000 of debt for every American. Can my colleagues believe that? What is of even more concern, however, is that 55 percent of the privately owned national debt is held by foreign creditors, including the Chinese Government. That is up from 35 percent only 6 years ago. Yet these numbers, which represent our past behavior, pale in comparison with the budget problems looming in our future as the baby boom generation begins to retire over 9 months from now.
Forty years ago, Social Security, Medicare, and Medicaid accounted for 3 percent of our GDP. Today, they are up to 9 percent. In another 40 years, they will be up to 18 percent, equal to total Federal revenues and crowding out all other spending. In other words, all of the money the Federal Government spends currently will be used up for Medicare, Medicaid and Social Security. There won't be any money for anything else.
Looking forward, we face a long-term fiscal imbalance of $55 trillion. That is hard to even grasp, but it translates into $440,000 of future Government debt for every American household, up from a mere $175,000 only 6 years ago. This is all documented. If we listen to David Walker, who is the Comptroller General, he is going all over the country--he was in my State in Cincinnati for a fiscal wake-up--working with the Concord Coalition to let Americans know. He is like the Paul Revere out there telling Americans we better be concerned about this. I remember Ross Perot, who ran for the President of the United States, and all of his charts. His charts looked like nothing compared to the charts we would use to show how bad things are.
Imposing a crushing debt burden such as this on future generations at the same time they are going to have to compete with rising powers such as China and India is unacceptable. All of us have a responsibility to try to guarantee that they enjoy the same standard of living and quality of life we have enjoyed, if not better. This young page here in front of me--I am worried about him. What kind of a life is he going to have? What kind of an opportunity is he going to have in terms of his standard of living and quality of life? We are concerned about him. What kind of a legacy are we going to leave him? What about my seven grandchildren? What kind of a world are they going to live in? That is why the chairman of the Budget Committee and I have spoken over the past few years about the growing debt and the impact it will have on future generations.
Yet we are here today with the majority's budget resolution that increases the national debt by $2.4 trillion over the next 5 years. That is assuming Congress doesn't take advantage of all of the loopholes that are in the budget. We are back at square one. Neither Republicans nor Democrats have offered a budget that even comes close to reestablishing our fiscal sanity. The administration's budget is unrealistic, and the Democratic budget is even worse.
I am going to vote against the Democratic budget. If this were the Republican budget, I would vote against that budget, too. Both of them. Once again, we have pulled the wool over our own eyes. That is what is going on.
Some of my colleagues, especially my new colleagues, may wonder why I take such offense at the budget. Unfortunately I am a product of my experiences. The Bible says the Lord never gives you a challenge you cannot overcome. Well, he has tested me before, and he is testing all of us right now.
As mayor of Cleveland, I inherited the first city in the country to go bankrupt since the Great Depression. We made cuts, we raised taxes, and we
righted the ship. When I took the helm as Governor of Ohio, I inherited a $1.5 billion budget shortfall that can only be described as a financial crisis. During the first biennial budget, we had to make four rounds of cuts. These were dire economic times which required honesty, leadership, and management. I was forced to make a lot of hard choices. We had to reform our tax policy, scale back spending, and target our resources to the people who needed them the most. We worked harder and smarter, and we succeeded at doing more with less. In fact, my years as Governor represent the lowest rate of growth in State spending in 30 years.
Here in Washington, it seems as if no one is willing to make the tough choices. I cannot understand it. Too many Members won't do anything if it doesn't bolster their side politically or fit into a 10- second sound bite. Instead, both parties are using gimmicks to cover up the state of our Nation's long-term fiscal health.
Let me offer some examples. The administration released its fiscal 2008 budget request in early February and projected a deficit of $239 billion. This number is the deficit left over after spending every dollar of Social Security surplus. But the Social Security surplus must be reserved for future retirees. As far as I know, you can't spend the money twice, but Congress keeps pretending that it can. If you remove the Social Security surplus from the equation, that $239 billion deficit they are talking about almost doubles to $451 billion. If you use the accrual way of figuring it, it is about $640 billion.
The administration goes further to achieve its surplus by assuming nonsecurity discretionary spending will peak in 2007 and go down every year after that. So we are reducing our deficit by eating our seed corn. That is a real problem today.
What we have to understand is that only one-sixth of the budget is nondefense discretionary. All of the hits are being made against that one-sixth to try to balance the budget. We are ignoring so many things this country ought to be doing.
Furthermore, the administration calculates the security-related discretionary spending will peak in 2008, and that supplemental spending for military operations will end after 2009. Give me a break. We are going to end that in 2009? We are going to be over in Iraq and Afghanistan for a long period of time. But the President just increased the number of troops going to Iraq by more than 21,000. These estimates are not based on reality. Why don't we tell the American people the truth? Let's tell them the truth.
Meanwhile, my colleagues on the other side of the aisle are using tricks that even are more egregious. The majority's budget allows for a dramatic increase in entitlement spending through the use of more than 20 reserve funds. They are not included in the overall budget totals. They simply conceal what they intend to spend and it gives the appearance of a more responsible budget.
The majority's budget hides increases in discretionary spending through the use of seven cap adjustments. Appropriations for seven favored programs and agencies will not count toward the budget limit. Just like that, poof, and they are gone.
Furthermore, the majority's budget allows for unlimited emergency spending. I think we all understand that on occasion we have natural disasters or unanticipated crises, such as Hurricane Katrina, that require emergency resources. For this reason, we cannot estimate all of our emergency spending in the budget. But a great deal of the spending that is currently designated as ``emergency'' is actually quite regular and predictable.
For example, every year we spend emergency funds on drought relief. This is difficult for me to understand: If we spend it every year, why can't we account for it in our budget? This is why we ought to have a rainy day fund such as I had when I was Governor that set aside designated funds for legitimate natural disasters so the ``emergency'' label is not abused for otherwise anticipated events.
My friend from New Hampshire, Senator Gregg, created a rainy day fund with a fixed dollar limit in last year's budget resolution, and I thought: That is a great idea. But the new majority has already eliminated that fund from the budget and has created an open-ended source of emergency spending that is not subject to any financial limitations.
There is one trick after another in this budget resolution. We are already raiding the Social Security trust fund and a bunch of smaller trust funds to make our bottom line look rosier than it is. This budget exacerbates a problem the Budget Committee chairman himself and I have spoken out against for a great many years.
I have a great deal of respect for the Democratic chairman of the Budget Committee. I think he is one of the most responsible guys, but he has also got to do his thing in terms of the politics of this Senate. In fact, in the last Congress, the Budget Committee chairman and I introduced legislation that would invest the Social Security surplus in non-Federal bonds to prevent the surplus from being used to fund other Government spending. We plan to reintroduce this bill again.
In other words, what we are saying is we are going to take the money that is now being used to fund the budget and instead of borrowing it from trust funds--Social Security--we are going to take the Social Security funds and put them in a non-U.S. account--municipal bonds--so they will accrue interest; and when the time comes that we will need to use that money, there will be something there besides an IOU from the Federal Government that says: We are going to take care of it.
The bill would require the Government issue more Treasuries to the public in order to pay for other spending instead of borrowing from Social Security. What we basically are going to say to the American public is: We are borrowing all these funds from Social Security, all the other trust funds, and we are going to put that aside, and we are going to borrow that money from the public so you know how much borrowing is going on. We are not going to mask this thing, as we have done for so many years.
We thought, finally our children and grandchildren will have a clear picture of how fiscally irresponsible we are. But today the Budget Committee chairman is relying on the very same gimmick--borrowing from the Social Security trust fund--to claim a balance in 2012.
What about taxes? The majority's budget claims that $400 billion in revenue will be collected from ``closing the `tax gap' ''--in other words, collecting more of the taxes that are currently owed but not paid. Yet the President's proposal to collect just 2 percent of this $400 billion caused small businesses to howl in protest that the new administrative and compliance burdens would overwhelm them.
In other words, it is easy to talk about closing the tax gap, but from a political point of view, it is not going to be very easy. We should do that. There is no question about it. I talked to Charles Rossotti, who was the former head of the Internal Revenue Service. He said with more filings and more people in the Internal Revenue Service, we should be able to pick up another $50 billion. That is a realistic way of looking at it. But just to say: $400 billion; we are going to come up with it somehow; close the tax gap, and it is all going to be there--voila.
In fact, the Greater Cleveland Partnership and the Council of Smaller Enterprises, which represent small business in northeast Ohio, describe the administration's tax gap proposals--by the way, this is not a Democratic proposal; this is the administration's tax gap proposals--as ``an unreasonable tracking and reporting burden for small business.'' And that is just for 2 percent of the revenue the majority claims it can raise by going after small businesses. We should try to collect money that is owed, but if it were that easy--as my friend from Iowa Senator Grassley suggests--we would have found the money to fix the AMT years ago.
But, sadly, these gimmicks are not the worst part of the budget. What is more disturbing about this resolution is what is not included. The majority did not designate one dime in Social Security, Medicare, or Medicaid savings to help slow the impending entitlement tidal wave heading our way--not one dime. Entitlement spending threatens to flood our budget and soak up every Federal dollar, as I mentioned
earlier, leaving no revenue for education, the environment, infrastructure, or scientific research. The majority's budget ignores this problem.
In fact, this budget does worse than ignore the problem. It will pile billions of dollars in new entitlement spending on top of the existing problem. It is so obvious that this budget resolution simply satisfies a political agenda. It is a public relations campaign that the majority is using to avoid telling the American people the truth. I am accusing them of that, and I have to say the same thing for my side of the aisle. We are both guilty. All of our hands are dirty.
To add to insult, since Republicans switched to 5-year budgets a few years ago, Democrats have repeatedly called for 10-year budgets because 5-year budgets hide our long-term problems. In other words, the other side of the aisle kept complaining: You are using 5-year budgets because if you use 10, the American people are going to find out how much money you are spending. So we went to the 5-year budget. We want to hide that figure about the next 5 years. If the Democrats wanted to do it this time, I would have said: Do the 10-year budget. Let the American people know what the truth is about how much money this budget is going to cost.
For example, the CBO currently projects that total outlays for Medicare and Medicaid will more than double--more than double--by 2017, increasing by 124 percent. This is roughly two times as much as the economy is expected to grow during the same period. A 5-year forecast hides this explosion in entitlement liabilities. Tell the truth-- transparency. Let the American people know what the score is.
Yet, here we are, with Democrats in control of both Chambers, and they are trying to pass a 5-year budget that continues to cover up the gathering fiscal storm looming on our horizon. Shame on us. Shame on them. They are playing the game we played starting in 2004, after promising to do better.
I take our Nation's fiscal health very seriously. I am concerned there is a lack of transparency in this budget. There are gaping loopholes the majority can exploit to cause spending and deficits to rise much higher than the budget resolution claims. In an attempt to close some of these loopholes, tomorrow I am going to offer two amendments.
First, we need to reform our Nation's entitlement programs. I have been begging on my knees trying to get the White House to take on the responsibility of reforming our Tax Code--we need it; it is overdue--to take on entitlements, to reach out to Republicans and Democrats and say: The time has come. Let's put everything on the table. Let's reform our Tax Code. Let's do something about entitlements. The fact is, silence--silence. I have to tell you, if we do not do this, then our children and grandchildren are going to drown--they are going to drown--in a sea of debt.
I am concerned, however, that if we reform entitlements and save billions of dollars, Congress might grab those savings and spend some of them on other programs instead of paying down the debt. So what I am saying is, I am hoping--and I know the chairman of the Budget Committee, the Senator from North Dakota, has said he wants entitlement spending reform--I am hoping we get it. All this amendment says is: If we do get entitlement spending reform, it is going to be used to pay down the debt and not fund other entitlements.
I previously introduced legislation called the SAFE Commission Act that would guarantee a fast-track, comprehensive approach to reforming our Nation's tax, entitlement, and budget systems. If the 110th Congress enacts entitlement reform, either by way of legislation or as a result of another bipartisan effort, we must use those savings to reduce the deficit and, as I say, pay down the debt and not on entitlement spending.
Specifically, my first amendment would require any savings from legislation that slows the growth of entitlement spending by $5 billion or more be dedicated to deficit reduction. Some of my colleagues are asking: George, why are you worrying about this? Well, I hope we have this problem where we have to decide what to do with these entitlement savings we have enacted. Because, as I said earlier, the majority has not included even one dime's worth of savings in this budget resolution. We do nothing--not one thing--in this budget about entitlement spending.
Second, every time we enact new entitlement spending or tax cuts, which are financed through additional borrowing, we increase the level of interest payments the Government has to make on its debt. I have talked about this debt and the interest costs. These new interest costs represent additional Government spending. Yet, CBO cost estimates ignore the effect of these interest payments on spending and the national debt.
In other words, we are spending money on reducing taxes--and we are paying for it by borrowing--or we are spending money on new programs-- and we are borrowing the money--because we keep ratcheting up the debt and we do not calculate the interest costs that are involved in either tax reductions or the spending for these new programs.
These ballooning interest costs add up to $370 billion in 2008. Think about this: That interest cost will be 13 percent of the budget. The public needs to know that in addition to spending additional money on new programs, we are paying interest on that money. I am concerned about these growing interest costs because they are part of our mounting national debt.
Frankly, our interest rates are low right now, but they could skyrocket. The first couple years I was mayor of Cleveland, interest rates at the time were 13 percent. Some Americans remember savings passbooks that were paying 14 and 16 percent. I will never forget it because I had the money for my children's college education in mutual funds. I sold the mutual funds and put them in the passbook savings because we were getting--can you imagine--we were getting 16 percent-- 16 percent--on a passbook investment.
I think we need to wake up to the fact that if we get a change in the international marketplace--as I mentioned earlier, 55 percent of our budget is with foreign investors--if those central banks get a little bit nervous about the United States of America--and I have talked to Alan Greenspan about this; we could see interest rates skyrocket to 12 percent, 13 percent--that would suck up an enormous amount of money.
So the fact is, we ought to pay attention to letting people know when we either reduce taxes, and borrow the money, or we spend money above the budget, somebody has to pay some interest on that cost. We must stop this charade once and for all. Both sides of the aisle have a clear, moral obligation to improve the fiscal health of our Nation. It starts with formulating a fair and honest budget. Yet we are being dishonest and masking the long-term challenges that confront our Nation.
We must deal with these problems head on and work on a bipartisan basis to reform our tax system, control the growth of entitlement spending, and slow this freight train that is threatening to crush our children and grandchildren's futures.
Experts say the most important step you can take is to first admit you have a problem. I will never forget when I was mayor of Cleveland and came in, the easiest thing sometimes in life was just to keep the problems in a drawer and not look at them and hope they would go away. I found a long time ago that if you take those problems and pull them out and deal with them, you are so much better off than if you just let them lay around and get worse.
The question today is, Do we have the moral courage to fix it? Do we have the moral courage? Can we do that? It is a moral issue.
I will never forget Frank Wolf. I gave a speech last year and Frank called me and he said: I am going to put a bill in, and we are going to set up a commission that is going to do something about tax reform and entitlement.
He said: I have--I think he said 11 or 12 grandchildren. He said: I thought about it. I am a fiscal conservative. He said: But you know something. We have a moral obligation to our children. We just can't let this thing keep going. The fact is, do we have that moral conviction to fix it or are we too darn interested in protecting our political hides--our political hides--to do anything? Do we have the courage to do it? Do we have the courage?
I am 70 years old. I have seven grandchildren. I care and worry about them.
My concern is what legacy am I going to leave my children and my grandchildren. I was fortunate. We were fortunate. We had others before us who were responsible--others, for example, who were willing to pay for the wars that we were in. Today, in this country, let's see, it is up to $510 billion for Iraq and Afghanistan, and if we pass the supplemental, it is going to be $610 billion. The only sacrifice that is being made today in this country is by the families that have the body bags returned to them. Twenty-six thousand of our men and women who have been injured, half of them disabled for the rest of their life, and we are not doing anything. We are not doing anything.
Last year, I said if we can't get tax reform to raise the money that we need to take care of things, then we ought to have a temporary tax increase to pay for our war. We should. It is the right thing to do. But, no, we will let it go and let somebody else worry about it the next time around--the new President.
Mr. President, I yield the floor.