Will the Senator yield for a question? I want to clarify one point. Will the Senator yield for a question? I understand this point the Senator is making is compounded by the fact that what we are looking at with this budget is just a…
Will the Senator yield for a question?
I want to clarify one point.
Will the Senator yield for a question?
I understand this point the Senator is making is compounded by the fact that what we are looking at with this budget is just a 5-year projection.
It is my understanding it includes within it the idea of making these tax cuts that were passed permanent instead of temporary. Of course, the people who put the tax cuts in place were the ones who made them temporary. Now they are coming back, seeking a change in the law to make them permanent. They, in effect, are changing the tax structure. Otherwise, they would expire.
But they are only projecting a 5-year period. As I understand it, if you do the 5-year period, this is the increase in the deficit here, just this amount. But the full brunt of this doesn't hit home until the subsequent period. So if you take a 10-year period, which we have done in the past--we have used 10-year projections rather than 5--if you take the 10-year period, look what happens to the cost. There is a deficit explosion. It is just staggering.
Of course, we are only being shown this part of the picture instead of being shown all of the picture, which shows a $1.6 trillion 10-year cost. There is a $1.6 trillion 10-year cost to extending the tax cuts over this next 10-year period.
So the Senator is making one point about the understatement of the situation we are moving in, but this also dramatizes another very important point. We are being set on a fiscal course that spells disaster for the country, and we need to recognize that. It is one of the reasons I joined with the Senator in the Budget Committee in voting against this budget. This is not a sound, solid, steady course to be on, in terms of the Nation's fiscal policy.
That is right. Exactly.
You see it runs along here like this. This is as far as the chairman's budget projects it, right to there. Then it stays on that line a little bit and then look what happens to it--it is incredible. It is the shooting star deficit, the way this thing is going.
At least.
Will the Senator yield further?
I would like to pick up on the Senator's point about the cost of adjusting the alternative minimum tax. Of course, the alternative minimum tax was put in place in order to tax wealthy people who are using various deductions and exemptions, and so forth, not to pay taxes. The idea was, at a minimum you ought to pay a certain amount of tax. There was a huge public outcry about that--justifiably so in my opinion. So we put it into place. Of course, as the economy evolves, you have inflation and so forth and so on, and you have to keep adjusting it; otherwise, it is going to work its way down further into the middle class. It was never intended to do that. So it has been adjusted from time to time.
In fact, the President is proposing in his budget, as I understand it, a 1-year
adjustment--not projecting it out. Of course, that raises the question immediately in your mind: Why a 1-year adjustment? I think it is obvious why, if you do this, because it shows if you really adjust it as it ought to be adjusted, you are projecting out $658 billion in a 10-year cost to reform the alternative minimum tax. There is a $658 billion 10-year cost to reform the alternative minimum tax. Here you have $1.6 trillion to extend and make permanent the existing tax cuts, the sum total of which is $2.2 trillion.
You are telling me it is real money. Absolutely. The Senator is absolutely right. This budget is kind of you see this, but you do not see what is behind the scenes, what is coming. We cut off the picture and look at a certain point. It works pretty good. You cut it off here before this line takes off. You see what we are showing-- this part. It is an exercise in prudence to come along and say: Wait a second; let us see how that works in the outyears. All of a sudden, you see it just takes off like that.
The Senator is absolutely right.
Will the Senator yield?
It is interesting. If you deal with the first year of the 10-year period, it is $23 billion, as I understand it. But you can't assume, well, we will just project that out at $23 billion a year, each year. So the cost over 10 years would be $230 billion, which is what someone just coming to it at first blush might assume. The fact is that the cost escalates rapidly. So over the 10-year period, it is not 10 times $23 billion, or $230 billion; it is $658 billion, almost triple what you might suppose it would be.
Will the Senator yield for a further question?
The Senator enumerated the three concerns: a 10-year projection of the cost of the tax cut, the alternative minimum tax; the Senator mentioned the failure to reflect in the budget any cost for our involvement in Iraq or Afghanistan. I want to be clear on this point. Am I correct in understanding that the budget which the President sent to the Congress for the next fiscal year beginning on October 1 of this year, 2004--the budget he submitted to the Congress, the spending blueprint--has zero for the cost of Iraq and Afghanistan? Is that correct?
Absolutely. Yes.
They are already talking about that around town. The other day, the Chairman of the Federal Reserve himself talked about cutting back on the benefits under Social Security.
Here is what has happened. It needs to be understood. There is a direct connection.
These large tax cuts that primarily benefit very wealthy people-- there is some benefit for others, no question. The chairman talked about that today, but in the total picture of where the benefits are going, that is a relatively small portion. Most of the benefits go right up to the top group in society by income and wealth. They say we are running deficits, so to cover the deficits they have to use up the Social Security surplus. Then they say to correct the using up of the Social Security surplus, we have to cut Social Security benefits.
It must be understood, these things are linked. The reason they have the deficit which now says they must cut Social Security benefits is because they gave the very large tax cuts to the elite, producing the deficit, which resulted in drawing down the Social Security surplus which then leads them to say, we have to cut the Social Security benefits.
These are choices. This administration has made a choice. The choice the administration has made is to put tax cuts for the elite ahead of sustaining Social Security benefits. That is the choice they have made. It needs to be understood.
Does the Senator agree there is a direct connection in this regard?
In other words, a third of the Nation's retirees get at least 90 percent of their income from Social Security, another third get from between 50 and 90 percent of their income from Social Security. It demonstrates how dependent retired people are on Social Security to keep them out of poverty so they can lead a reasonable life.
Will the Senator yield?
Does that chart mean if one-third of the tax cuts that are being proposed to be made permanent, if only one-third of them remain not made permanent, that would more than cover the shortfall in Social Security?
Mr. President, I appreciate my distinguished colleague from North Dakota joining with me in this exploration of the implications of this budget.
I will talk about job creation for a moment, and to indicate any budget we deal with, which is the most important Government document we act upon, contains thousands of decisions that are critical to our national life. Those decisions reflect important choices in terms of the priorities for our country.
We have just been engaged in a discussion about tax breaks for the wealthiest among us. Are we more concerned with strengthening Social Security to make sure that people in retirement are adequately covered or making the necessary investments in education, transportation, and the environment? All of those decisions are involved in crafting the budget.
In its composite, the budget is a very important macroeconomic document because it sets the fiscal path for dealing with the overall economy.
We ask the question, Will the budget fund the programs, create jobs, and strengthen our economy? Will the budget have long-run structural deficits? What will be the impact of those deficits on our future economic performance? Will it move us toward full employment or away from it?
We talked about the credibility of the President's budget and the fact that it fails to account fully for what the projections should be. We talked about the budget's failure to project for 10 years to show the full cost of making these tax cuts permanent, the failure to adjust for the alternative minimum tax, and the fact that the budget has zero in it for our involvement in Iraq and Afghanistan.
Who are they kidding? Everyone knows that our involvement in Iraq and Afghanistan is going to cost something. Then they say: Well, we cannot really estimate. They should make a good-faith estimate for inclusion in the budget. We are confronted with these facts, and again and again we are not getting the full picture. It is a little bit like things are under shells. If you lift off the cover, all of a sudden you discover another problem.
When the President proposed his first massive tax cut, he told us, ``We can proceed with tax relief without fear of budget deficits.'' That is what President Bush said when he came into office.
In the first budget he submitted, he predicted, for fiscal year 2004--the year we are now in--that we would have a $262 billion surplus. This was the President's prediction.
The following year, with a budget already in deficit, the President advocated another tax cut. At that time, he said, ``Our budget will run a deficit that will be small and short term.'' And the President's budget at that time--that is, the next year--stated the deficit would be so short term that by fiscal year 2004--the year we are now in--the Government would be back in surplus by $14 billion.
Last year, on the brink of war with Iraq, the President proposed yet another tax cut. He also submitted a budget that did not include the cost of the war. He predicted that the deficit for fiscal year 2004 would be $307 billion.
Now, in 3 years, the President had shifted from predicting a surplus of $262 billion for 2004 to the next year when he predicted a surplus of $14 billion for 2004. Then, when he submitted the 2004 budget, he predicted a deficit of $307 billion. So over the 3-year period, we went from a $262 billion surplus, predicted for the year we are in, to a $307 billion deficit. That is a change of $569 billion.
It is pretty clear that although the President said, when he submitted the 2004 budget, he was predicting a deficit of $307 billion, it looks now as if the 2004 deficit will be about $520 billion. That is $780 billion more than the President predicted in 2001, $535 billion more than he predicted in 2002, and $214 billion more than he predicted when he sent this year's budget--the budget we are in--to the Congress.
So we are told we can do these big tax cuts and that it will not matter because we are not going to have a deficit. And here we are deeply in the hole.
What is the consequence of this? Some might say: Well, he is producing jobs. We had an economic slowdown, and now we are producing jobs. We are putting the country back to work.
Let's look at those predictions and what has actually happened.
In the 2002 Economic Report of the President, the administration forecasted that in 2004 the economy would have 138.3 million jobs. Last year, the President lowered that estimate to 135.2 million jobs. And in his most recent economic report, he lowered it again to 132.7 million jobs. In other words, in just 2 years, the forecast for jobs in the country has been lowered by 6 million.
When the President passed the 2003 tax cut, the administration predicted that by January 2004, the economy would create over 2 million jobs. In the fall of 2003, Secretary Snow predicted the U.S. economy would create 2 million new jobs from the third quarter of 2003 until the third quarter of 2004--an average of over 200,000 jobs a month.
What has happened? We just got the figures on Friday for the month of February. For the month of February, it was reported that the economy created 21,000 new jobs in February--21,000--none of them in the private sector, incidentally; zero private sector jobs were created.
When Secretary Snow made this prediction of just over 2 million new jobs last fall, we would have needed an average of about 200,000 new jobs a month in order to meet his prediction. The performance has been so dismal, we have only averaged 59,000 new jobs per month over the last 2 months. We have to produce jobs 444,000 a month from now until the third quarter of this year for Secretary Snow's prediction to be borne out.
The economy is not creating these jobs. We face a real difficult jobs situation.
Certainly.
The tax cut alone.
Well, I say to my colleagues it is classic trickle-down theory. It has been discredited before. Yet here it is back before us again, classic trickle-down economics. Every administration since Herbert Hoover, which was, of course, classic trickle-down economics, Democratic and Republican, has had a net creation of jobs over the course of its administration. In other words, over that 4-year period, every administration were able to have a net gain in jobs.
This administration is about 2.3 million jobs below where the Nation was when they came into office--down about 2.3 million jobs. It is the first administration since Herbert Hoover that will not show a net gain in jobs over the course of its 4-year tenure. That fact needs to be laid out before the American people.
This recession we experienced began 35 months ago, the first few months into the Bush administration. The economy today has fewer jobs than it did then. This is the first recession since the Great Depression in which the economy failed, over a 35-month period, to recreate all the jobs that were lost in that recession. In a typical business cycle, we long ago would have recouped those jobs and gone on from there. That has been the case--and this is a long time period--in every recession we have experienced since the Great Depression.
But here we have a situation in which jobs are not being created to close the gap, and there is no real prospect, in the few months remaining, of meeting Treasury Secretary Snow's prediction. To do so, we would have to average about 444,000 jobs per month out into the fall of this year. Over the last 3 months, we averaged only 42,000 new jobs per month, as opposed to 440,000.
This, of course, raises a number of difficult problems. We have seen manufacturing jobs continue to fall and they have now fallen for 43 consecutive months. We see temporary jobs increasing. We see people dropping out of the labor force. Last month, 392,000 people left the labor force. People come in and say, you know the unemployment rate didn't go up. But if people drop out of the labor force and are not looking for work, they are not counted as unemployed. One of the reasons is they become so discouraged they drop out. That helps to keep the unemployment rate flat, but the exodus from the labor market is reflected in the job figures.
Yes.
If the Senator will yield, it is not only that we have not been able to get up to here, we have not been able to even get back to the jobs we had at the beginning of the recession. We are still well below, about 2.3 million jobs, where we were when the recession began in the early months of 2001, absolutely.
The last chart my colleague presented is an extremely important one because it shows the percent of long-term unemployed among the unemployed is at record levels, higher than it has been since 1984. In fact, close to 23 percent of the unemployed workers have been unemployed for more than 26 weeks. It has been above 20 percent now for 17 consecutive months. For a year and a half, the percent of unemployed who are long-term unemployed is above 20 percent, which is an important benchmark. The last time we had a period that ran that long was 20 years ago. The Senator's chart showed exactly that. That was back in 1984.
That is why this effort that has been repeatedly made on the floor of the Senate and in the committee just last week to address extending unemployment insurance benefits is so important. That effort has been turned back. I plead with my colleagues on the other side to move ahead on extending unemployment insurance benefits.
We still have a serious labor market weakness. We have not recovered the jobs. It is not as though you could say a lot of job opportunities have opened up and people can go back to work. That has not happened in this instance.
Long-term unemployment is at record levels. Nearly 2 million people have been unemployed for more than 26 weeks. Twenty-six weeks is the period that the traditional unemployment benefits cover. In the past, we have always extended unemployment insurance benefits so people can meet the problem of providing for their families. We have actually provided more benefits in the past than we have in this recession.
In the previous Bush administration, the program was extended and then extended again. We built up the unemployment insurance trust fund for this purpose: to fund these benefits when we encounter an economic downturn. There is over $15 billion in the unemployment insurance trust fund specifically collected for the purpose of paying unemployment insurance benefits in an economic downturn.
I joined with my colleague in the committee the other day to offer an amendment to make a provision within the budget for extending unemployment insurance benefits. Regrettably, it was turned down on a straight party-line vote. I anticipate that amendment will be offered again on the floor, and I hope my colleagues will reflect upon it before that occasion arises.
We need to do something. These are people who were working. You cannot collect unemployment insurance benefits unless you have a work record that entitles you to collect them. These are not, if you want to say, malingerers or people who don't want to work. These are people who had jobs. They lost their jobs through no fault of their own. If it is their fault, they cannot get unemployment insurance benefits. If they are to blame, if they have not performed on the job, they do not get unemployment insurance benefits. These are people who were working, in many instances had a long working career. They are out of a job. They are in a labor market where jobs are not being created, as my colleague dramatically illustrated with the chart he showed. How are they going to provide for their families? What are these responsible, hard-working Americans to do in terms of meeting the needs of their families?
Yet we have been turned back on the effort to extend unemployment insurance benefits, and I very much hope when the issue comes before us that Members will reflect and agree we need to do something about this pressing problem.
I will make a couple more points before I close.
This fiscal situation of the United States in which we find ourselves and the magnitude of it has drawn very sharp comment from objective observers. Listen to what the IMF said only recently:
U.S. Government finances have experienced a remarkable
turnaround in recent years. Within only a few years, hard-won
gains of the previous decade have been lost, and instead of
budget surpluses, deficits are again projected as far as the
eye can see.
Let me repeat that. This is the IMF commenting about U.S. Government finances:
Within only a few years, hard-won gains of the previous
decade have been lost, and instead of budget surpluses,
deficits are again projected as far as the eye can see.
The President says he is going to cut the deficit in half by 2009. My colleague pointed out, I think with great perception, that was not in the cards. It is not sustained by the numbers.
If we are going to have a debate, we cannot just play around with the numbers as though they do not mean anything. We have to have some hard facts upon which to work. These structural deficits that are built in this budget are extremely harmful to the economy as we move ahead--a promise to raise interest rates, reduce economic growth, decrease the number of jobs, increase our vulnerability to a sudden economic crisis. A responsible budget would not encompass a structural deficit, and if there is a structural budget deficit, a responsible budget would seek to correct the imbalance.
I could go on at some length about the choices made within the budget with respect to what our priorities ought to be, but I make this fundamental point: In every instance, there is a choice. You do not make one decision, for instance, to cut taxes for very wealthy people which then results in a larger deficit and then turn around and say to educators who say, We cannot carry through on the No Child Left Behind legislation, that there is no funding to address your complaint. That complaint is coming from all over the country. Out in the Rocky Mountain States, we have educational officials telling us they cannot carry through on that program. They are making that point very forcefully.
I was reading about it only today or yesterday in the paper. They said: We can't carry through on it. They are told, We can't carry through on it because we have this deficit to worry about. Why do we have the deficit to worry about? We have this big deficit because we are doing these big tax cuts for wealthy people. So the choice that was made in the President's budget was to do the tax cuts for the elite rather than fund the No Child Left Behind program. That was the choice.
I think that is a bad choice. I think the country thinks it is a bad choice. But there is a need to understand when you put this budget together, whatever you do on the one hand has an impact on the other hand. You cannot avoid that.
If you did not do these extensive tax cuts--which the President wants to make permanent--with those huge costs, the deficit would not run up; you would be able to hold the deficit down and do something about education and health care. But the President has put the Nation in an absolute deficit box.
Certainly.
I think that is less than 1 percent of the American public; is it not?
What that says is he could fund No Child Left Behind and he would still have $36 billion left of the tax cut; is that right?
There are other examples of this. I offered an amendment in the Budget Committee to fully fund the firefighter grant program. That amount is $900 million--not billions as we are talking here but just $900 million. Two years in a row, the Congress has appropriated $750 million. So we have not appropriated the fully authorized amount but we have gotten up fairly close to it at $750 million.
The President's budget submitted to the Congress had $500 million. In other words, it cut the program by one-third, $250 million, from the level it had been for 2 successive fiscal years. These are grants that go out to firefighters across the country to try to enhance their professionalism, upgrade their equipment, better prepare them to deal with the threats we confront.
One of the things we are very anxious to deal with is that one-third of all the firefighters in the country do not have the equipment, the breathing equipment to protect them in a serious fire, from smoke inhalation. That is one of the things we would like to take care of. Yet the President's budget proposed to the Congress cut the funding for this program by one-third.
The President is now running political ads showing firefighters on 9/ 11 moving out of the wreckage, and there is a stretcher with a flag on it. We know what the firefighters did. We know the heroism they have shown.
Every year, I go to the National Fallen Firefighters ceremony, which is held at the National Fallen Firefighters Memorial, which is in Emmitsburg, Maryland, the location of the U.S. Fire Academy. Families come from all over the country. There is a weekend of events and ceremonies to mark the memory and the heroism of fallen firefighters. The year after 9/11 we could not do it in Emmitsburg. There were too many people and so the ceremony was held at the MCI Center in Washington because the number jumped so tremendously as a consequence of those deaths in New York.
In money terms, that is not a big item, but in its significance and in what it stands for, I think it is very substantial. We know our first responders place themselves at risk. They are the first called upon.
There were firefighters going up the steps of the World Trade Center in an effort to rescue people when people in the building were coming down the steps in order to escape. In effect, they were placing themselves in further danger in order to save their fellow human beings. They did not know these people. They were all strangers to them but they were responding to their duty. It is extraordinary when we stop and think about it.
The impact of it is obviously recognized by some of the President's people because they are putting it in this political ad. But I would like to see them take the program up to $900 million to do the firefighter grants so we could provide firefighters across the country with the protective equipment which they need as they carry out this very dangerous occupation. That would require only $400 million. The President's tax cuts provide $45 billion for the top 1 percent. Will the top 1 percent, those making over $337,000, who are getting an enormous--what is the tax return they are getting? Does the Senator have that figure in his mind, $120,000 or something?
Those earning over $1 million get $127,000 per year. As a category, they get $45 billion. Would they be willing to reduce that to $44,600,000,000 in order that we could fund these firefighter grants at the full authorization level of $900 million instead of the $500 million that is in the President's budget, which itself represented a cut of $250 million from what Congress had appropriated in each of the other 2 years?
Is it unfair, inequitable, unjust to say that in the order of priorities, funding those firefighter grants should come ahead of a small portion of these tax cuts for those making $337,000 a year? I defy anyone to argue the equities of that case.
That is why this is not a good budget. That is why we voted against it in the committee and that is why over the coming days, under the leadership of our very able colleague from North Dakota, we will put before this body--I and others and certainly the Senator from North Dakota himself--amendments that will frame the choice in terms of priorities. Those are the choices we need to face. Let's put the choices out there.
Do my colleagues think it is reasonable to take a small portion of this tax cut and use it for this purpose, or must every single penny of what the President is seeking for the very elite go to the very elite, despite these other pressing needs?
As I understand it, in the coming days this week, opportunities will be presented to offer amendments which will frame those choices. The Senator has framed one. Everyone talks a good game about education, including the President. The question is, will you put the resources there to do the job?
As the Senator points out, fully funding education is more costly than the example that I have been citing. But nevertheless, for just over $9 billion we could fully fund No Child Left Behind, which would address what we are hearing from the States, who are saying now, We can't do this job. You have saddled us with a job without the resources. The $9 billion is one-fifth of this tax cut that is going to those making over $337,000 each and every year.
Those amendments framing those choices need to be put to this body. I look forward to the responses my colleagues will make to them.
I yield the floor.