Kent Conrad

Mr. CONRAD

Mr. CONRAD. The Senator is recognized and the Senator continues to hold the floor, and I have an additional 5 minutes I have granted myself.

Mr. CONRAD. Mr. President, we also paid for our amendments by closing corporate loopholes. The Senator says there wasn't the money in corporate loopholes to cover the spending we have provided. That is not true. In fact, we have taken a corporate loophole closing this body has previously passed and used it to fund high priorities such as money for education, such as money for veterans. How has the other side done it? They have offered a series of amendments to add more spending, but they have taken it out of a function that does not have any money in it. They have raised money for defense, but they took it out of function 920, which does not have a dime in it. They said they raised spending on defense $3 billion. There is no money in the fund from which they say they are taking the money. It is right here in the budget book, page 29. Go to function 920. Here it is. It says function 920 is $500 million in the hole. That is before they increased defense spending by $3 billion and supposedly took it from function 920. That is before this morning, when they took $2 billion to supposedly strengthen our borders. They took it out of function 920, where there is no money. It was $500 million in the hole. The Senator is exactly right. This does define the differences between our parties. We think we ought to pay for the spending; the other side just wants to put it on the charge card, run up the debt. They have become a party of borrow and spend, borrow and spend, spend and borrow, run up the debt. That is exactly what they are doing today. They are running up the debt of this country in a way that is reckless, that is radical and should be stopped. That is why we are going to urge our colleagues to vote against this budget when the opportunity comes. Let me go back to exactly what is happening. This chart shows graphically the dramatic runup in debt in this country. When this President came to office, the debt of the country was $5.8 trillion; that was the end of his first year. Today, the end of this year, it will be $8.6 trillion. If this budget is agreed to, it will be $11.8 trillion. They will have doubled the debt with this policy of borrow and spend. That does define the differences. I am glad we have had a chance to have this discussion. I understand the Senator from Maryland has an inquiry?

Mr. CONRAD. I am happy to yield.

Mr. CONRAD. The Senator is entirely correct. That does define the differences here. The Senator from Pennsylvania, on the Republican side, offered an amendment to add $1.3 billion for community development block grants. But his amendment seeks to fund that amount how? By taking it out of function 920, just as we have had one amendment after another from the other side seeking to fund things out of function 920, where there is no money. They were $500 million in the hole when we started this process, and they have increased defense $3 billion. How did they pay for it? By function 920, where there is no money. And then this morning, $2 billion to strengthen our borders. How did they pay for it? Function 920, where there is no money. They say that is responsible budgeting, that this is the difference which defines our parties. They are exactly right--this is the difference which defines our parties. When Democrats were in control, we paid down the deficit. We actually were in surplus and, in fact, we were able to stop taking Social Security money to pay other bills. Now, with them taking over, we have reversed course, going from record surpluses to record deficits and even higher running up of the debt. What they propose with this budget is more of the same--borrow and spend, spend and borrow, put it off, put it on the charge card, do not worry about it, tell the American people: You can have every tax cut and every spending increase, and you do not have to pay for anything. I yield myself another 5 minutes off the resolution. Does the Senator inquire further?

Mr. CONRAD. Yes. The Federal budget was in surplus by $128 billion. In fact, we had a string of surpluses as the Clinton administration during those 8 years brought spending down and revenue up. So we paid our bills. We stopped raiding Social Security. Now it has all been reversed, and we have record deficits with bigger amounts adding to the deficit, and they are taking the Social Security surplus to pay other bills. Under this budget plan, they will take almost $180 billion of Social Security surplus--money that is not really in surplus; it will all be needed, it will all have to be paid back--and they are taking every dime to pay other bills. Just more of the same--run up the debt, and we will worry about it tomorrow. At some point, we better start worrying about it today. The result of these policies is that foreign holdings of American debt have exploded, absolutely exploded. It took 224 years to run up $1 trillion of external debt. That is U.S. debt held by foreigners. This President has more than doubled that amount in just 5 years. It is stunning, but that is what is happening. The Dubai Ports deal, what is that about? I suggest that part of it is a result of our fiscal policy which is running up these massive debts, increasingly funded by foreigners, so foreigners are holding all these dollars. What are they going to do with them? In part, they are going to buy U.S. assets. They might as well put up a for-sale sign on the country because what is happening is all this money we are borrowing because our friends will not pay the bills, they just want to borrow the money, and the result is we owe Japan $668 billion and we owe China over $263 billion. And guess what. They are sitting on all this money. We owe the Caribbean bank centers almost $100 billion. They take that money. They have to do something with it. What are they doing? They are buying American assets. So if you like the idea of shipping American jobs overseas, if you like the idea of running up the debt, if you like the idea of going deeper and deeper into the ditch, this budget is the one you ought to vote for because it continues this policy. At some point, this is going to have to come to a screeching halt because the bill is going to come due.

Mr. CONRAD. Madam President, at this point, the Byrd amendment is in order; is that correct?

Mr. CONRAD. Madam President, I want to thank Senator Byrd for graciously coming to the floor as we sought to accommodate other Senators so they could make quorums in other committees. It was very gracious of him to come on short notice so that this time would not be lost.

Mr. CONRAD. No, I will not. I had a chance to listen and now I will have a chance to answer.

Mr. CONRAD. Mr. President, now we will go to the Senator from Pennsylvania for 5 minutes to offer his amendment, and then we will come back to this subject. So I alert the Senator from Florida, we have some time remaining. I yield to the Senator from Pennsylvania. Amendment No. 3050

Mr. CONRAD. Mr. President, unfortunately the Senator is completely correct. There is no money in function 920. The Senator is absolutely correct that when we started this process, function 920 was $500 million in the hole. I guess what is even more remarkable is we have now had $10.5 billion of additional funding supposedly covered by function 920 when there never was any money to begin with.

Mr. CONRAD. No, it is not real. What is happening now--I must say my colleagues on the other side have got an increasing habit of spending money that doesn't exist. We started out with function 920 having no money, in fact, being $500 million in the hole. They have now passed amendments that take another $10.5 billion out of a function that has no money. What will the practical effect be? The practical effect will be an across-the board cut in all the domestic discretionary accounts. What are they? It will cut defense, it will cut homeland security, it will cut law enforcement. That is what is really happening. It is the difference between doing something and acting like you are doing something but not doing it. The fact is, as to the amendments they have offered, before they offered them there was $873 billion available to the appropriators for the domestic accounts. When all their amendments are finished, the appropriators will have--guess what--$873 billion, not a nickel more. So this is all a sham. It is creating funding that does not exist. The Senator is correct. The amendment that she offered really did offer new funds, additional funds to buttress the community development block grant.

Mr. CONRAD. I do not believe it is a tax increase, to require people to pay taxes that are legitimately owed and due now that they are failing to pay. We could easily pay for the amendment of the Senator by shutting down two sham operations. Let me describe them. One is American companies and American wealthy investors--this will be hard to believe, but this is really going on--buying sewer systems in Europe, depreciating them on their books to reduce their taxes in America, and leasing back those sewer systems to European cities so that they can run them. Shutting down that scam, is that a tax increase? I don't think so. Let me describe one other. The other day my colleague showed an office building in the Cayman Islands, a five-story office building that is the home to 12,700 companies. I say that is a remarkable building. That is a real smart building, to be able to house 12,700 companies. What is really going on? What is really going on is a giant tax scam. They say they are doing business in the Cayman Islands. They are not doing any business in the Cayman Islands. They have a file clerk in this building who takes their financial records so they can claim they are doing business there. Why do they want to be doing business in the Cayman Islands when they are really not doing business in the Cayman Islands? Because the Cayman Islands is a tax haven. It is a place where you can show your profits and not pay taxes. We could pay for your amendment five times over by shutting down those two scams alone. That is not a tax increase. That is stopping a tax scam. I might say, of the the amendments that have been passed so far that have been theoretically funded by section 920, we had an amendment to increase defense by $3 billion. That was funded out of section 920 when 920 had no money. We passed an amendment for veterans, supposedly to increase funding for veterans by $823 million, funded out of section 920 when section 920 has no money. We funded an increase in education by $2 billion out of function 920 when there is not any money. We had border security this morning, and $2 billion was supposedly paid for out of function 920 when we all know there is no money in 920. So what will happen is there will be across- the-board cuts and they will cut defense, they will cut homeland security, they will cut law enforcement, and cut everything else. The fact is there is no new money to pay for any of them.

Mr. CONRAD. Mr. President, I move to reconsider the vote and to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. CONRAD. The regular order is now to go to Senator Nelson, is that correct?

Mr. CONRAD. Mr. President, how much time do I have remaining?

Mr. CONRAD. I am happy to yield.

Mr. CONRAD. Mr. President, let me say on this side we agree entirely with the need to put more resources into enforcing the border. And that part of the Senator's amendment on our side we strongly support. Let me just register, as I have registered on previous amendments, that the problem I see with this amendment is how it is paid for. It is paid for out of section 920. But there is no money in section 920. We keep passing amendments that are theoretically funded by that source. But before we started voting for additional amendments taking money out of 920, 920 was already $500 million underwater. So what happens? What is the practical effect? The practical effect is that there will be an across-the-board cut on all discretionary accounts. We have now passed $10 billion in amendments that will be funded by across-the-board cuts in discretionary accounts. That means we will reduce homeland security, we will reduce law enforcement, we will reduce national defense in order to pay for these amendments which are theoretically funded out of 920 because there is no money in 920. So what we are left with is, at the end of the day, the appropriators had $873 billion before this amendment, and after this amendment they will have the same amount of money--$873 billion. If they are to use more money within that allocation for this purpose, they will simply have to reduce the other discretionary accounts. Of course, the biggest one is defense. They will have to reduce homeland security. They will have to reduce law enforcement. They will have to reduce the others. That is the practical effect. I know there are a whole series of other amendments that use 920 as a funding source, when there just is no money in 920. So at the end of the day, what is going to happen is there will be an across-the-board cut in all domestic accounts, and that will include defense, that will include homeland security, that will include law enforcement. So that is the practical effect. The hard reality is, we had $873 billion for the appropriators before this amendment. After this amendment, we will have that same amount of money for the appropriators. They will ultimately have to decide how it is funded. With that, I want to indicate we would be willing to take this amendment on a voice vote, if the Senator from Arizona would be willing to so do.

Mr. CONRAD. Mr. President, before I go to the Conrad amendment, I will take 5 minutes off the resolution. The Senator is correct; we are now talking about the fundamental differences between us. We believe you ought to pay for your spending. We believe we ought to pay the bills we are generating. We believe on the Democratic side that you ought to match your spending with your revenue so you are not increasing the debt. Our friends on the other side of the aisle have taken a distinctly different position. Their position is you increase spending. The Senator has identified the increased spending in his own budget, but he will not raise the revenue to cover his spending. He won't make the hard choices. He won't cut his spending to match the revenue he is willing to raise, and he will not raise revenue to cover his increases in spending. The result is the debt is mounting dramatically because our friends on the other side of the aisle refuse to pay the bill. They want to spend the money, but they do not want to pay for it. When I grew up, common sense told you, responsibility told you, that you pay your bills. You pay your bills. If you don't have the money, you don't spend the money. That is the way I was raised. Here is what is happening.

Mr. CONRAD. I yield it. I thank the President.

Mr. CONRAD

Mr. CONRAD. Senator Grassley's amendment is the next order in the queue.

Mr. CONRAD. Mr. President, first of all, I thank the Chair. Mr. President, we are now on the subject of raising the debt limit of our country by $781 billion. This is after we have already had, during this administration, repeated increases in the debt limit over and over and over again--during the first 5 years of this administration, raising the debt limit $3 trillion. I have used this slide to make the point that I believe the debt is the threat. So much of the writing and so much of the commentary is about the deficit. But the deficit is going up much more slowly--even though it is at record levels--than the debt. This year, they estimate the deficit will be $371 billion, but the debt will increase by $654 billion. When are we going to get serious about what is happening to our country? We are plunging deeper and deeper into debt, and increasingly, it is financed by foreigners. I have to say, I have never been more concerned about the future fiscal strength of our Nation than I am today because we just seem to be in total denial. We seem to be so disconnected from reality. We keep on spending. We keep on cutting taxes. We keep running up the debt. When the President came into office, here is what he told us. He said: My budget pays down a record amount of national debt. He said: We will pay off $2 trillion of debt over the next decade. That will be the largest debt reduction of any country, ever. Then he went on to say something that I believe: Future generations shouldn't be forced to pay back money that we have borrowed. We owe this kind of responsibility to our children and [our] grandchildren. That is what the President said. He was going to have maximum paydown of the debt. Well, that is not what happened. The President was wrong. Not only has there not been any paydown of debt, the debt has skyrocketed, as this chart shows. The debt, at the end of the first year of this President's first term, was $5.8 trillion. The debt, at the end of this year, is going to be $8.6 trillion--$8.6 trillion--at the end of this fiscal year. If we adopt the budget that is before us, we will pile on another more than $3 trillion of debt over the next 5 years, winding up with a debt of $11.8 trillion. Now, here is what has happened already during this administration. From 1998 to 2001, we added no debt. In fact, we were paying down debt. Those were the ending years of the Clinton administration's time. In 2002, under the President's policies, we added $450 billion to the debt limit. In 2003, we added $984 billion to the debt limit. In 2004, we added $800 billion to the debt limit. In 2006, now they are out here wanting to add another almost $800 billion to the debt limit. These are not just numbers on a page. These are not just bars on a graph. These are not just charts. These are debts of our country that have to be paid back. What is perhaps most stunning is the degree to which this debt is being increasingly financed by foreigners--foreign central banks, foreign investors. I use this chart to make the point. It shows the pictures of 42 Presidents. These 42 Presidents took 224 years to run up $1 trillion of external debt--U.S. debt held by foreigners. This President has more than doubled that amount--much more than doubled that amount--in just 5 years. The result of all this is we now owe Japan $668 billion. We owe China $260 billion. We owe the United Kingdom over $240 billion. We owe the Caribbean banking centers almost $100 billion. These numbers change from time to time because of money flows. South Korea, we owe over $60 billion. So what. What does it matter that foreigners now hold almost half of U.S. debt? What difference does it make if we owe Japan $670 or $680 billion? So what. Well, the ``so what'' is, when you owe somebody money, you have a different relationship to them than when they owe you money. We have gone from being the biggest creditor nation in the world--more countries owing us more money than any other country in the world--to now being the biggest debtor nation. We owe more money than any other country in the world, and by a big amount. I just had representatives of the American automobile industry come to see me. They said: We have to get tough on Japan because they are manipulating their currency for advantage in selling their automobiles. I said: Do you have any idea how much money we owe the Japanese? They said: No. We have no idea. I said: Well, we owe them over $660 billion. How are we going to get tough with somebody we owe $660 billion? Earlier I had a group of business leaders come to me and tell me: We have to get tough with China because they are manipulating their currency for advantage in international markets. I asked them: How much do you think we owe the Chinese? They did not know. I told them we owe them over $250 billion. How are we going to get tough with China when we owe them all this money? What would we do if all of a sudden they did not show up to buy our debt because now every time we have an auction, most of it is going to foreign entities. That is how we are floating this boat. We are mortgaging the future. That is what we are doing. Does that make America stronger or does that make America weaker? A number of weeks ago, the President had a small group of us over-- Senators--to talk about energy. He reminded us that in his State of the Union Address he said America is addicted to oil. And he turned to me and said: That's pretty good for a guy from oil country to say that, don't you think? And I said: Yes, I do, Mr. President. But I tell you, not only are we addicted to oil, we are also addicted to foreign capital. We are addicted to borrowing from countries all over the world. This creates a vulnerability for our Nation because if these folks decide they are not going to keep lending us money, what would we have to do to attract the capital to finance these massive deficits, this massive debt? We would have to raise interest rates. That is what we would have to do, and perhaps precipitously. Then all these mortgages that are out here that are interest-only mortgages, all these mortgages that are adjustable rate mortgages, all these car loans, all these student loans, all these business loans, all these corporate financings--all of it--would go up, and go up sharply. That is the great risk that is being run. It is a danger to our country. The Chairman of the Federal Reserve Board has said this is an unsustainable course. The Comptroller General of the United States has told us it is an unsustainable course. The head of the Congressional Budget Office has told us it is an unsustainable course. But we keep right on keeping on. There is no change. And sometimes you wonder: Does anybody care? Does anybody have the faintest notion of where this all heads? Before us is a budget for the next 5 years, put before us by the President of the United States, and now passed by the Budget Committee in the Senate. Those who brought the budget before us say it is going to reduce the deficit. They show these red bars on this chart, and they say those red bars are getting smaller, the deficit is going down. Boy, how I wish that were true. How I wish that were true. But it is not true. This is what is really happening. They have left out things. They have left out war costs past 2007. They have understated the war cost in 2007 in addition to that. But the chairman, to his great credit, has added far beyond what the White House suggested in terms of war costs for 2007. He has made at least a serious effort to cover the war costs in 2007. There is no money past 2007. There is no money past this year to fix the alternative minimum tax. Over the next 10 years, it costs a trillion dollars to fix. There is no money here past 2006. You put that back in, and then you put back into the calculation the money they are taking from the Social Security trust fund. Every year, they take from Social Security to pay other bills. It all has to be paid back. None of it is in the deficit calculation, but it all gets added to the debt. When you add it all back, what you find is that when they say the deficit is going to go up $359 billion for fiscal year 2007, starting October 1, the debt is going up $680 billion; and the next year, the debt will go up $656 billion; and the next year, $635 billion; and the next year, $622 billion. And in 2011, it is going to go up $662 billion. And they are telling us everything is getting better? It is not getting better. It is getting a whole lot worse. That is the truth. They have come tonight and asked us to raise the debt limit of this country another $781 billion. Over the next 5 years, they want to run up the debt by another $3.5 trillion. So at the end of that period, we have $11.8 trillion in debt. That is before the baby boomers retire. People may not know the exact numbers, but the American people have a lot of common sense. You can kind of reality test. We can't pay our bills now. We are nowhere close to paying our bills. And we are borrowing money from countries all over the world. We are borrowing money from the Caribbean banking centers. Anybody listening to me doing their banking down in the Caribbean? We owe them almost $100 billion. I know we use so many numbers when we talk about a budget. A lot of people tune it out and say: I can't follow all the numbers. Just follow one number: The debt of our country has doubled. The debt of our country has doubled in this 10-year period. The first 5 years of the Bush administration and the next 5 where they are proposing the budgets, they are going to have doubled the debt of our country before the baby boomers retire. And almost half of this debt has been financed by foreigners. When we have a bond auction now, much more than half of it is being bought by foreigners. We are digging a hole that is so deep, it will take years to get out. We just had this Dubai Ports deal. Everybody gets upset about the United Arab Emirates buying the terminals in six of our major ports. I thought it was unwise. But that is the logical conclusion to this fiscal policy and this trade policy. Because while we are running up the debt on the budget side by $600 billion a year and running trade deficits of more than $700 billion a year and we are financing it by borrowing from abroad, guess what. Foreigners are up to their gills in dollars. They are loaded to the gills with dollars. And what are they going to do with them? They are going to buy American assets. Look at what has already happened to our ports. The vast majority are owned by foreign interests now. You might as well just put up a big for-sale sign on America and say: Come and get it, because we have not been able to restrain our spending and our appetite for debt and our unwillingness to tax ourselves to pay our bills. So what is the result? The result is runaway debt, increasingly financed by foreigners, and at the same time these trade deficits, which have the exact same effect, putting more and more dollars in the hands of more and more foreign entities. They have to do something with them. They can sit on them. They can hold them in their banks. They can invest them in U.S. stocks and bonds, which they are increasingly doing. And they can also just buy hard assets here. We wonder about the Dubai Ports deal. Get ready. There are going to be a whole lot more deals like that coming because the world is awash in dollars, and we are buying much more than we are selling to foreigners. At the same time in our own budget, we are spending much more than we are taking in. As a result, we have to borrow, borrow, borrow. The Comptroller General of the United States is the man who is given the responsibility to advise the Congress on the fiscal condition of the country. Here is what he said before the Senate Budget Committee: Continuing on this unsustainable fiscal path will gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately our national security. It is that simple. It is that important. Tonight we are going to make another fateful decision. Unfortunately, there is no alternative. We are going to have to pass this increase in the debt limit because the money has to be paid back. We have already borrowed it. We have already spent it. It is gone. Now the only question is, Are we going to pay the bill? There is no option. There is no alternative. If the United States failed to pay its debt, the value of our currency would plummet, interest rates would skyrocket, and our economy would tank. That is the hard fact. This should be a wake-up call for every Member of the Senate, every Member of Congress, and a wake-up call for the President of the United States. The question is, Are we staying on this course to keep running up the debt, debt on top of debt, increasingly financed by foreigners, or are we going to change course? I hope with every fiber in my being that we change course because if we fail to do so, we will weaken the country immeasurably. We will threaten not only our economic security but our national security. I thank the Chair, yield the floor, and suggest the absence of a quorum.

Mr. CONRAD. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. CONRAD. Mr. President, how much time does the Senator require?

Mr. CONRAD. Mr. President, I thank the Senator from Michigan, who is such an exceptionally valuable member of the Budget Committee. She has been one of the strongest voices on the question of what are the priorities of the budget. Also she is a very strong voice for fiscal responsibility, recognizing that if we want to spend money, we have to pay for it. The Senator from Michigan has been a great leader on the Senate Budget Committee. I thank her so much for her contribution during the year, and again on the debate on the budget resolution this year. While we are waiting for the chairman of the Finance Committee, who is being called off the floor momentarily, I want to remind colleagues of the circumstance we face tomorrow. If there are staffs listening or Members listening, we are still getting requests as though we had a lot of time left. We simply do not. Tomorrow we are going to start at 9. We are going to be handling amendments that are in the queue until 10:30. At 10:30, we will start voting on amendments and we will vote on the debt matter and amendments to the debt resolution. When those have been dispensed with, we will then go back to the consideration of amendments until 1:30. At 1:30, all time has been deemed to have been used up in the budget resolution debate. We will start a series of votes every 10 minutes. Right now, with the number of amendments pending, we now have 65 votes pending on this side alone. We know we can do 3 amendments an hour. If everybody sticks to their amendments, that is 22 hours of straight voting. That is just the amendments on our side. The other side has another 15 amendments. That is 80, so that is 27 hours of voting. That is the situation we face. It is in the hands of the Members. Are people going to show restraint or are people going to insist on every amendment to be offered and voted on? I hope very much that we can convince colleagues to take very short time agreements tomorrow. I will not agree to any time agreement over 10 minutes tomorrow, period. Let me make that very clear. I hope we can get time agreements as short as 5 minutes before we get into vote-arama. When we get into vote-arama, understand that there will be 1 minute on a side. So, again, I hope colleagues understand the circumstance we face. We have lost a tremendous amount of time to extraneous events--a joint session, meetings at the White House, and the debt limit debate put in the middle of this discussion. So that is the reality we face. Last year, Lula Davis has just informed me, we started voting at 1:17 in the afternoon, and we voted until roughly 10 o'clock at night. Some of those votes were held every 5 minutes, and we handled over 20 amendments during that period. I think one can see if we have to try to do 80 amendments, we are going to be here a very long time. With that, I thank the Chair and yield the floor. Is the Senator from Oklahoma seeking recognition?

Mr. CONRAD. I am happy to yield 10 minutes to the Senator from Michigan.