Kent Conrad

Mr. CONRAD

Mr. CONRAD. What is stunning here is who is it going to go to? It used to be America financed its own debt; that is, we borrowed the money from ourselves. Increasingly, we are borrowing the money from abroad. Increasingly, we are dependent on the decisions of foreign central bankers to finance our veracious appetite for foreign capital. The Senator is exactly right. As the debt increases, even if interest rates remained unchanged, the interest cost would go up because of the increasing debt, the increasing borrowing that we are doing as a nation. On top of that, we know the increasing debt will put pressure to increase interest rates because people are going to keep making us these loans, especially when the value of our currency is declining. The only way to offset that is to increase the interest rates. So then you get hit by a double whammy, the double whammy of increased interest because your debt has increased and also it is increased because interest rates are increasing.

Mr. CONRAD. I would be happy to yield.

Mr. CONRAD. Well, I was, in the sense that my colleagues chose me as a conferee, along with the distinguished senior Senator from Maryland, Mr. Sarbanes, as well as the senior Senator from Washington, Mrs. Murray, but we were not invited to any of the working sessions. We were not invited to any of the negotiations. We were not invited to be any part of any of the discussion, other than the one meeting that is required by rule. It was a public session of the conference committee in which we were permitted to make short statements, but we were not part of any negotiation or any discussion. (Mr. ALLEN assumed the Chair.)

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 President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. CONRAD. That would be the fact.

Mr. CONRAD. Mr. President, I rise in strong opposition to this budget. I believe it is a profound mistake for this country to stack additional debt upon already record levels of debt that I believe puts the long-term economic security of our country at risk. The record is very clear. We now face record budget deficits, and we face them for as far as the eye can see. Those who have assured us repeatedly that deficits are being dealt with have failed the credibility test, and they have absolutely failed the test of fiscal responsibility. This budget bears no relationship to fiscal conservatism or fiscal responsibility, and this vote will be a defining vote on where Members stand with respect to fiscal responsibility for this country. Here is the record on deficits. Since 2001 the deficits have soared to new records, levels we have never seen in the history of the country--$412 billion in 2004 and very little improvement anywhere in sight. As we review back to 1980 the relationship between spending, here is what we see. The red line is the spending line of the United States, the green line is the revenue line. We can see spending has been brought down as a share of gross domestic product rather steadily until this administration. In fact, it is interesting, in the entire 8 years of the Clinton administration, spending came down steadily as a share of GDP. We have now had an increase, largely as a result of the attack of September 11 because 91 percent of this increase is defense, homeland security, aid to New York, and aid to the airlines. Going forward, we see that spending will stay roughly at these levels going forward, with some slight additional increase as we get closer to the time when the baby boomers retire. Look at the revenue line of the United States. Also during the Clinton administration, revenue rose each and every year so that finally we did away with deficits and, in addition, we actually stopped raiding the Social Security trust fund to use it for other purposes. President Bush came to office, and the revenue side of the equation has collapsed. Last year, revenue was the lowest it has been as a share of GDP since 1959. The President said when revenue was high as a share of GDP, we must have tax cuts. Now that revenue is at a 50-year low, the President's answer is more tax cuts. The result is a huge ongoing gap between spending and revenue that means ever-increasing debt, and all of it at the worst possible time before the baby boomers retire. Here is what the Comptroller General of the United States said in a speech to the National Press Club on February 2 of this year. He said: The simple truth is that our Nation's financial condition is much worse than advertised. The Comptroller General of the United States had that exactly right. Our financial condition is far worse than advertised. In fact, my first chart showed the deficit at just over $400 billion in 2004, at $412 billion. But that is not how much was added to the debt that year. It was far more because the deficit understates the seriousness of our financial condition. So, too, does the budget that was sent to us by the President of the United States. The President told the American people that he is cutting the deficit in half over the next 5 years, but the only way he got there is just by leaving out things. He left out any war costs past September 30 of this year. Does anybody believe there is not going to be any war costs past September 30 of this year? Here is what we have. The President sent up a supplemental. That passed the Senate and is in conference committee now. The supplemental is $82 billion for ongoing military operations in fiscal year 2005 but nothing past September 30. Look what the Congressional Budget Office tells us should be in the budget: $383 billion. That is their estimate of residual war costs.

Mr. CONRAD. Mr. President, I yield 6 minutes to the Senator from New Mexico, Mr. Bingaman.

Mr. CONRAD. I yield 10 minutes to the Senator from New Jersey and welcome him to the floor as well.

Mr. CONRAD. I am happy to do that. The Senator from Texas has been very patient. Let's allow her to proceed, I will take a few minutes, and we will go on with the other Members scheduled.

Mr. CONRAD. Mr. President, you just heard the Senator from Texas say this budget is going to cut the deficit in half over the next 5 years. I wish that were true. But it is not. Here are the numbers. These are not my numbers. These are the numbers that are in this document, pages 4 and 5. This is what they say is going to happen if this budget is passed. It says the debt is going to go up $683 billion the first year, $639 billion the second, $606 billion the third, $610 billion the fourth, and $605 billion the fifth. Where is the deficit getting cut in half? The amount that is being added to the debt every year is over $600 billion each and every year. I don't see the difference between revenue and spending, that gap, being cut in half anywhere. No, this is not a budget that is cutting any deficits. This is a budget that is increasing deficits. The Senator said if we cut taxes, we will get more revenue. I wish that were true. That would be great. Why don't we cut taxes 50 percent and balance the budget, if that is the case? Here are the facts. Here is what happened to spending and revenue since 1980. The red line is the spending line. The green line is the revenue line. This is spending as a share of gross domestic product in the 1980s. It was up in the 22-23 percent range. Then, in the 1990s, we saw the spending as a share of GDP come down. Revenue went up. Deficits were eliminated. Then we got a new President in 2001. Look what happened to the revenue. Taxes were cut. Did revenue go up? No. Revenue didn't go up. Revenue went down. Revenue went down dramatically from the highest share of GDP before the tax cuts to the lowest share of GDP since 1959. This notion that you cut taxes and the revenue goes up is a fanciful notion. It is a wonderful idea. If that really worked, let's go out and cut taxes 50 percent and balance the budget. That isn't the way it works. If you cut taxes, you get less revenue. That is what has happened--not just a little less, but a lot less under the President's proposals, which have opened up this chasm of deficits and debt. Earlier, I was pointing out the cost of the existing tax cuts in 2006, for those making over $1 million a year, is $32 billion. That is a fact. The cost of the existing tax cuts in 2006 alone, for those earning over $1 million, is $32 billion. That is in this budget. I wish it wasn't in this budget, but it is. That is a matter of priorities. From where are we getting this money? We are borrowing it because we are in deficit. The President says it is the people's money. Indeed, it is. And it is the people's debt. And this budget is exploding the people's debt. On the question of Social Security, I have pointed out that over the next 10 years, under the President's plan, $2.5 trillion of payroll taxes used to fund Social Security are being diverted to pay for other things. The Senator from New Hampshire says you have no choice. That is the law. Yes, you have a choice. Absolutely, you have a choice. This budget is a choice. Of course, the choice we could make is to balance the rest of the budget and use this money for the purpose intended, which is either to pay down the debt or prepay the liability of the country. That is a choice we could make. That is a choice I have offered my colleagues repeatedly, to so-called lockbox Social Security funds so they are only used for Social Security. But that is not what this budget does. This budget takes trillions of dollars of payroll taxes and uses it to pay for other things. That is going to come back and haunt us. The President says Social Security is short $3.7 trillion. His budget over the next 10 years takes $2.5 trillion of Social Security money and uses it to pay for other things. Is that making the situation better or worse? It is pretty clear to me; it is making it worse. Now this idea some of our friends on the other side have gotten into their heads--I don't know where they got it--that if you cut taxes, you wind up with more revenue. Let's go back. Let's reality test. In 2001, the President said: Massive tax cuts. And he said: If you make these massive tax cuts, it will spur the economy, and we will be able to fund a massive defense buildup, and we will be able to protect Social Security and Medicare. And we will be able to have maximum paydown of the debt. None of those things happened. Go back to 2001. We were presented with this span chart, possible outcomes of the deficit, this range of outcomes. And the midpoint was chosen as the most likely outcome. My Republican colleagues said: Kent, don't you understand, when we have these big tax cuts, we will get more revenue, and you will be above the top end of this range of possible outcomes. You are way too conservative. Look what happened. We had the tax cuts. The red line is what actually happened. We are way below the range of possible outcomes. After we enacted the tax cuts, they were supposed to give us more revenue. It didn't work. With that, I will yield 15 minutes to the Senator from Illinois.

Mr. CONRAD. Mr. President, I yield 10 minutes to the Senator from Minnesota, Mr. Dayton.

Mr. CONRAD. Mr. President, I yield 10 minutes to the Senator from Rhode Island.

Mr. CONRAD. Mr. President, I thank the Senator from Rhode Island for his remarks. He is one of the most thoughtful Members of the body on economic issues. He is a member of the Joint Economic Committee and I very much value his good counsel. I note the Senator from New Jersey is present. How much time does the Senator from New Jersey seek?

Mr. CONRAD. Yes, I will be happy to.

Mr. CONRAD. If we went to Senator Akaka for 10 minutes and then Senator Stabenow for 15, we would then be very close to 9 o'clock.

Mr. CONRAD. It is.

Mr. CONRAD. Can I suggest that Senator Hutchison had indicated to staff she would be more interested in a little later time slot.

Mr. CONRAD. Yes.

Mr. CONRAD. Mr. President, I will take just a few minutes. We have other speakers on the way. I ask the chairman, does he have somebody who wishes to speak?

Mr. CONRAD. It does not. We have this supplemental, as the Senator knows, that is going through the process. We passed it in the Senate. It is in conference committee now. It is $82 billion. Much of it will be spent this year; some of it will slop over to next year. This is what the Congressional Budget Office says should be in any realistic budget--not $82 billion, but $380 billion, and it is this gap which is part of the unrealistic nature of the budget that is before us and the budget the President sent us.

Mr. CONRAD. Well, that is the plan. That is what this budget calls for. In 2006, this budget accounts for tax cuts to those who earn on average over $1 million a year, and the tax cuts in the year 2006 alone for those earning over $1 million a year--the cost will be $32 billion for that 1 year alone, and every penny of it borrowed. Where are we borrowing it from? Much of it is being borrowed from Japan, China, and countries all over the world. Does anybody really think that is a good idea?

Mr. CONRAD. Let me say what is stunning to me.

Mr. CONRAD. We got into a dialog. We will end that and then we can get back to Senator Hutchison, who has been waiting patiently. What is a little hard to understand about this budget, we are borrowing money at record amounts, much of it from abroad, in part, so we can provide $32 billion next year in tax reductions for the wealthiest among us. Not only are we doing that in this budget, this budget also contemplates every dime of Social Security surplus--about $160 billion a year and growing every year of the 5 years of this budget--that surplus from Social Security is being taken and used to pay for other things when the President is traveling all over the country saying Social Security is short of money. Somehow none of this quite adds up. Social Security is short of money, so this budget takes $160 billion a year of Social Security money and uses it to pay for other things? And we are borrowing $32 billion a year to provide tax breaks for those earning over $1 million a year? And much of it we are borrowing from abroad on top of the 100 percent increase we have already seen in the last 4 years in foreign holdings of United States debt? Something is way off track. I yield the floor.

Mr. CONRAD. Mr. President, I thank the chairman of the committee for his fairness throughout the process, for his professionalism, and for his good humor. We have spent many long days and nights on this floor debating this budget. We have spent a long period in the Budget Committee. It has been with unfailing good humor on his part and a sense of fairness and bipartisanship that we have moved forward. We certainly don't always agree, but we have never been disagreeable. Perhaps that is a good model for the way we function in the Senate. I will take a minute to thank Sue Nelson of my staff. This is her last budget resolution. She has been with the Senate Budget Committee for 20 years. She is my deputy staff director. She is the person who is in charge of our numbers and Medicare as well. She at one time worked for Senator Domenici. We are going to miss the outstanding professional commitment of Sue Nelson. We are going to miss you very much. Thank you for all you have done for our committee and for the Senate. I also thank my staff director Mary Naylor. Mary has put together an outstanding staff and has worked unfailingly for us to make our case on what the budget priorities of this country should be, and to the rest of my staff as well who have worked extraordinarily hard and with a real commitment to fiscal responsibility and to fairness. They are: Sue Nelson, Deputy Staff Director; John Righter, Appropriations; Shelley Amdur, Education/Appropriations; Lisa Konwinski, Counsel; Jim Esquea, Medicaid/TANF; Jim Klumpner, Economist; Jamie Morin, Defense; Rock Cheung, International Affairs; Sarah Kuehl, Social Security/Transportation; Steve Bailey, Revenues; Mike Jones, Homeland Security/Justice; Cliff Isenberg, Energy/Environment; Jim Miller, Agriculture; Stu Nagurka, Communications Director; Steve Posner, Deputy Communications Director; David Vandivier, Planning/Outreach; Kobye Noel, Graphics Production Coordinator; Matt Havlik, Staff Assistant; Tyler Haskell, Staff Assistant; Anne Page, Executive Assistant. Let me also recognize the staff of the Senator from New Hampshire, especially staff director Scott Gudes and the rest of the members of his staff. This is a good relationship that we have between our two staffs. It is one of respect and fairness, and we deeply appreciate the many courtesies that have been extended to us during this process. I want to echo the laudatory comments of Senator Gregg regarding the outstanding contributions made by two senior professional staff members of the Senate Budget Committee, Lynne Seymour and George Woodall. Lynne and George are our two most senior administrative staff members who perform their respective duties with great distinction. They are true professionals who serve the members of our committee and our respective staffs with poise, respect and diligence. I have the utmost appreciation for their service, because they have attended to our committee during some of the most difficult administrative challenges imaginable. For example, in just over 4 years, since the beginning of the 107th Congress, this committee has had four different chairmen: Senators Gregg, Nickles, Domenici and myself. Thanks to the outstanding service of Lynne and George, the transition from one chairman to the next has been flawless. They have arranged for the moving in and out of our different staffs and the literal moving of our offices several times. They made sure our offices were properly equipped and that our computers, printers, phones, faxes and other technical equipment were in good working order--not an easy task, I assure you. They have also served our committee and this Senate during some of the most difficult times. They were here on the morning of September 11, 2001 when the Pentagon was attacked and when we believed the U.S. Capitol complex was also threatened. They were also serving our committee when anthrax was discovered in the mail system here in the Senate. These have not been easy times for staff members. Lynne Seymour and George Woodall have not only persevered, but they have excelled at their duties in serving us. I thank them for their service, and want them to know how much we in the Senate appreciate their long hours, their unselfish contributions and their professional service. With that, I will proceed to wrap up. I will take a few moments and then we will hear from the chairman and then the leaders, and then we will be prepared to vote. While I have great respect for the chairman, I have great respect for the staffs that have assembled this budget, I deeply do not believe that this budget charts the correct course for the country. I say to my colleagues, if you want to be supporting more debt, vote for this budget. If you want higher deficits, support this budget. If you believe that it is right to take every penny of Social Security surplus over the next 5 years and use it to pay for other things, then support this budget. This chart sums it all up. I call it ``building a wall of debt.'' That is what this budget is all about. We have heard people say it is going to cut the deficit in half. I don't believe it. Instead, I believe what is going to happen is the debt of the United States is going to go up, up and away. We are starting with $8 trillion, and every year of this budget debt is going to be increased by more than $600 billion. Every year it is going to go up by $600 billion. Those are not my numbers. Those are the numbers from the budget document itself on pages 4 and 5 of this conference committee report. It shows what is going to happen according to their own analysis and projections to the debt of the United States: $683 billion the first year, $639 billion the second, $606 billion the third, $610 billion the fourth, and $605 billion the fifth year. Anybody who says the deficit is getting cut in half and yet the debt is going up by over $600 billion each and every year is mistaken. This is a mistake for the country. We ought not to support it. I urge my colleagues to defeat this budget resolution. Let's go back to the drawing board. We can do better than this. I thank the Chair and my colleagues.

Mr. CONRAD. Actually, we have Senator Akaka and then Senator Stabenow.