Kent Conrad

Mr. CONRAD

Mr. CONRAD. Mr. President, I am glad to see my colleague show such spirit. I must say I disagree completely with his characterization not only of my amendment, but of our position on this issue. Look, I think it is very clear. The President came to the American people and said there is a problem in Social Security. I happen to agree there is a problem. My colleague must have missed part of my speech. I made it very clear, although I believe the basis of the assessment of how serious the Social Security situation is is based on a very pessimistic forecast of 1.8 or 1.9 percent economic growth for the next 75 years-- --

Mr. CONRAD. I yield another 5 minutes to the Senator.

Mr. CONRAD. I yield an additional minute off the resolution to the Senator.

Mr. CONRAD. Mr. President, I yield 20 minutes off the resolution to the Senator from Montana.

Mr. CONRAD. Mr. President, I will yield 4 minutes to the Senator from Montana.

Mr. CONRAD. Mr. President, I was frankly astonished to hear the Senator from Colorado say that Members of Congress and Federal employees have a choice not to participate in Social Security. That is not true. Since 1983, under the new Federal retirement system, FERS, the Federal Employees Retirement System, all of us are in the Social Security system. Members of Congress don't have a choice, if they have been elected since 1983, as to whether to participate in Social Security. The Senator from Colorado is flat wrong, absolutely wrong. I have heard this on talk shows around the country--that Members of Congress don't participate in Social Security. I want to make very clear that this Member participates in Social Security, and every Member elected sense 1983 participates in Social Security. Anyone saying something else is flat wrong. It is incorrect and not even close to being right. Let us be very clear. Federal employees didn't have a choice as to whether they participated in Social Security. I don't know where the Senator from Colorado got this idea. That is just not correct. Under the Federal Employees Retirement System, since 1983, Federal employees have participated in Social Security. That is a fact. It is important for people to know that. The Senator from Colorado also said other things that I think are incorrect. The Senator from Colorado said the tax cuts produced more revenue. No, they did not. That is factually incorrect. Here is what happened to the revenue since the tax cuts. The revenue as a share of gross domestic product plunged. It didn't go up, it went down. It is amazing to me how facts don't seem to matter when ideology gets in the way. Somebody once said everybody is entitled to their own opinion, they are not entitled to their own facts. The facts are that the revenue of the United States plunged to the lowest level since 1959 after the tax cuts. That is a fact. Here is a second fact. With the tax cuts, the United States suffered the worst multiyear revenue drop since World War II. That is a fact. Revenue did not go up, revenue went down. This is Federal revenues in trillions of constant 2000 dollars. Revenue went down 18 percent over 3 years with the tax cuts. Tax cuts did not generate more money, they generated less money. That is a fact. When I hear the claim that this budget before us is fiscally responsible, that is just words. What are the facts? The facts are, according to their own calculation--this is from their own budget document--the debt goes up each and every year of this budget by over $600 billion. It goes up $669 billion this year, it goes up $636 billion next year, $624 billion in 2007, up $622 billion in 2008, and up $611 billion in 2009. They say they are improving the deficit. No, they are not. This budget before us makes the deficit worse by $130 billion--worse than if we just put the Government on autopilot and made no policy changes. But this budget does make policy changes, and the policy changes that it makes makes the deficit worse, makes the debt worse in 5 years by over $3 trillion of additional debt when we have already got the debt that is running away from us. Amendment No. 144

Mr. CONRAD. Mr. President, I would be happy to yield 10 minutes to the Senator from North Dakota.

Mr. CONRAD. Twenty-eight minutes. I understand Senator DeMint is coming to offer an amendment. We will need a little bit of time to respond to that. So how much time will the Senator need?

Mr. CONRAD. So 21\1/2\ minutes on this side. What is remaining on the other side, if I could ask?

Mr. CONRAD. If the Chair would advise me at the end of 2 minutes, I would be appreciative. Let me again say to Senator Graham, I appreciate this effort. I appreciate the amendment he has offered. I have already indicated I intend to support this amendment because I think it lays out in some reasonable way the challenge we face. On this question of permanency, I agree with him. We certainly do not want a Social Security solution that leaves people in doubt that they are actually going to get their Social Security benefits. At the same time, when we use the word ``permanently,'' I don't want to have people left with the understanding that this is based on a forecast forevermore. The reason I do not is because that might lead to improper conclusions about what we are doing. These long-term forecasts I have seen over and over are a problem. Let me say why that is the case. The underlying forecast by the Social Security trust fund is that economic growth going forward is going to be 1.8 percent a year. That is the underlying forecast. Every year for the next 75 years, they are saying the economy is only going to grow at 1.8 percent. If we look back over the last 55 years, these green bars show how much the economy has actually grown, and in no time--at no time over the last 55 years, in 5-year increments, have we had economic growth that was as low as their forecast of how much the economy is going to grow over the next 75 years. So I have grave doubts about the accuracy of this forecast.

Mr. CONRAD. I thank the Chair.

Mr. CONRAD. Mr. President, could you advise us on the time remaining on the two sides of the amendment?

Mr. CONRAD. Mr. President, let me close by saying I support this amendment. I think it is a good-faith effort by the Senator to describe the problem in an accurate and honest way. For that reason, I intend to support it. I urge my colleagues to do so as well. I would like to conclude by saying thank you to the Senator across the aisle. I think he has done a great service to all of us who are trying to address this problem. When we wrote an op-ed together, we said there is a problem here. There is a challenge. We need to work together to address it. We should not take on massive new debt to do it. But we ought to consider all the options before us. I thank my colleague and I urge my colleagues in the body to support his amendment.

Mr. CONRAD. Give me a moment to get settled.

Mr. CONRAD. Mr. President, the amendment before us is very simple. It says: Social Security first. Very simply, the amendment says: No new mandatory spending or tax cuts until Social Security is solvent, unless the new spending or the new tax cuts are paid for or they can get a supermajority in the Senate. It is a matter of priorities. This says: Social Security first. No new spending, no new tax cuts until Social Security is solvent, unless those amendments are paid for or they get a supermajority vote here in the Chamber. Mr. President, how much time do I have remaining?

Mr. CONRAD. Mr. President, I yield 12 seconds to the Senator from Michigan.

Mr. CONRAD. Mr. President, I yield time to myself. I would support the amendment of the Senator from South Carolina if the amendment did what the Senator just described. That is not what the amendment does. It says, in pertinent part: It is the sense of the Senate that Congress should reject any Social Security plan that requires deep benefit cuts or massive increase in debt . . . I agree with that absolutely. Then it goes on to say: . . . and a failure to act would result in massive debt, deep benefit cuts and tax increases. That part of it is just inaccurate and here is why. When we get to 2052, according to the Congressional Budget Office, and Social Security can only meet 78 percent of its obligations, the result is deep benefit cuts. There are no tax increases that are triggered by the law at that point. What happens is deep benefit cuts. I would just say and urge my colleagues, I think you have to oppose this amendment because, frankly, it states something that is just not accurate.

Mr. CONRAD. Mr. President, if I might say to the chairman of the committee, we also are trying to slot additional votes, if we can make that clear to our colleagues, and the votes would start at about 1 o'clock tomorrow afternoon. We are hoping to have five votes lined up at that time. I think it is important to say that for planning purposes of our colleagues. That is the intention of the managers of this bill. We would slot these times, as has been indicated in the agreement. That intention would be, in addition to the two votes on Amtrak and ANWR, there would be two votes on veterans and a vote on NIH starting at 1 o'clock tomorrow. That is the intention. It is not fully spelled out in this agreement because we do not have language on those amendments at this time. But for the information of our colleagues, that is the intention of the managers.

Mr. CONRAD. It pushes the problem forward. For example, the Congressional Budget Office had told us that the trust fund would go cash negative in 2018. Now, they have updated their forecast to say, no, we won't go cash negative until 2020, because economic growth has been stronger than the underlying forecast. A big reason for that is productivity growth has been much stronger than the underlying forecast. So I think it is very important that we be clear. That is why the word ``permanently'' gives me heartburn in the sense that we are trying to forecast forevermore, and I just flatout don't believe this forecast for 75 years. I want to make clear that we still have a challenge. We still need to address this problem because we have the demographic problem. That is one reason I have tried to talk to my colleagues about not just Social Security but Medicare and the budget deficit and Medicaid, because it is all these things coming together that really presents us with a challenge. It is real. In any event, I don't know what the Senator's disposition is on the word ``permanently,'' if he would be willing to change that or maybe he is wedded to that. I don't know.

Mr. CONRAD. The reason for their very pessimistic forecast is they are looking at productivity growth and new entrants to the workforce as the two drivers of economic growth going forward. They have a very low number for new entrants into the workforce because of the demographic change. I think we can all understand that. But they also have a very low number of productivity growth for the next 75 years--1.6 percent a year of productivity growth. The fact is, productivity growth has been about double that in the last 5 years. So I, frankly, don't believe the 75-year forecast. That doesn't mean, by the way, that we don't have a challenge. I want to be clear. It reduces the challenge, and if these projections are wrong and they are overly pessimistic, it makes a substantial difference in how big the problem is. We are still left with a challenge of this demographic change.

Mr. CONRAD. Absolutely.

Mr. CONRAD. Yes.

Mr. CONRAD. I have tried to be clear on the problem I have with that one word. That said, because I support the thrust of this, I intend to support it. I want to make clear that I believe we should be looking toward 75-year solvency because I think the forecasts are so murky, and we would make a real advance if we were to secure 75-year solvency. With that said, I think the overall direction of the amendment is good. I ask the Chair, where are we in time?

Mr. CONRAD. I will yield 7 minutes to the Senator from California.

Mr. CONRAD

Mr. CONRAD. Mr. President, I rise today to introduce legislation to make permanent the 15-year depreciation period for leasehold improvements that was enacted on a temporary basis as part of the American Jobs Creation Act of 2004. I am pleased to be joined in this effort by my Finance Committee colleague, Senator Kyl. Leasehold improvements are the alterations to leased space made by a building owner as part of the lease agreement with a tenant. In actual commercial use, leasehold improvements typically last as long as the lease--an average of less than 10 years. However, until last year, the Internal Revenue Code required leasehold improvements to be depreciated over 39 years--the life of the building itself. Economically, this made no sense. The owner received taxable income over the life of the lease, yet could only recover the costs of the improvements associated with that lease over 39 years. This mismatch of income and expenses was alleviated somewhat by our action last year in reducing the recovery period to 15 years. A shorter recovery period more closely aligns the expenses incurred to construct improvements with the income they generate over the term of the lease. By reducing the cost recovery period, the expense of making these improvements has fallen more into line with the economics of a commercial lease transaction. One of the most important goals of this change is to encourage building owners to adapt their buildings to fit the needs of today's business tenant. It is good for the economy to keep existing buildings commercially viable. When older buildings can serve tenants who need modern, efficient commercial space, there is less pressure for developing greenfields in outlying areas. Americans are concerned about preserving open space, natural resources, and a sense of neighborhood. Unfortunately, the recovery period reduction enacted last year is effective only through the end of 2005. If Congress fails to act before the end of this year, the recovery period for leasehold improvements placed in service beginning in 2006 would again be 39 years. I urge all Senators to join us in supporting this legislation to provide rational depreciation treatment for leasehold improvements for the long term. I ask unanimous consent that the text of the bill be printed in the Record.