Kent Conrad

Mr. CONRAD

Mr. CONRAD. I would be happy to yield.

Mr. CONRAD. Mr. President, I have been interested to listen to this early morning repartee on the other side about what the status of the economy is and what the status of the job market is. I do not think it is a matter of spin to talk about what the facts are, and the facts are really very clear with respect to this President and what has happened to the job market under this President. When people say this is the first President to have lost private sector jobs since Herbert Hoover, that is a fact. Nobody is saying, as the Senator from Kentucky represented, the Bush record on the economy is the same as the Herbert Hoover record on the economy. That is not what anybody has said here. The Senator from Kentucky has not been here; perhaps he missed what has been said. What has been said is the simple fact that this administration is the first administration since Herbert Hoover to lose private sector jobs. In every other administration--Roosevelt, Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford, Carter, Reagan, the first President Bush, President Clinton--there has been in every one of those administrations growth in the private sector job market. Under President Bush, we have seen a loss of private sector jobs. The last time that was true was in the administration of Herbert Hoover. That is a fact. That is not talking down the economy. It is a fact. The second fact is this recovery is very different from every other recovery from recession since World War II. That also is a fact. If we look at the average of the nine recessions since World War II, what we see is, after 17 months, after the business cycle peaked, we start to see substantial job recovery. That has been the pattern of the nine recessions we have had since World War II. Look what is happening in this recovery. Here we are 36 months past the peak of the business cycle, and still we are not getting job recovery. Something is wrong. If we want to be serious about figuring out how to solve the problem, we first have to diagnose it correctly. We are 5.4 million jobs short of the typical recovery in the nine recessions since World War II. Something is wrong. Private sector jobs have declined. We have seen 3 million jobs lost since January of 2001. That is not talking down the economy. That is a fact, I say to my friend. It is a fact. If we are going to diagnose what is going wrong here, we have to figure out how is this different from what we have seen previously. I think any objective observer looking will have to conclude this is something dramatically different. The Chairman of this President's Council of Economic Advisers, in a briefing on the 2004 Economic Report of the President, which was issued just last month, said: [W]e expect sort of on average jobs in 2004 to be 2.6 million more than the jobs in 2003. That was this administration's projection a month ago. For that projection to come true, there would have to be 520,000 jobs created in every month from now to the third quarter of this year. Look what happened in February. There were not 520,000 jobs created. There were not 420,000 jobs created. There were not 320,000 jobs created. There were not 120,000 jobs created. There were 21,000 jobs created in February. That is 500,000 jobs short of the monthly totals this administration will need to meet its projection. Every one of these jobs that was created was a Government job. There were no jobs created in the private sector. Something is wrong. When we report to the American people on the status of the economy, there is a dramatic difference between what was occurring during the Clinton years--remember, during the Clinton Presidency, 22 million jobs were created. This President has lost 3 million jobs. In the Clinton administration, there were 22 million jobs created in the private sector. If we look at this current recovery, one of the things we see is that we have the longest average duration of unemployment in over 20 years. In other words, when somebody loses their job, it is taking them longer to find a new job than at any time in 20 years. Now, that is dramatically different than what occurred during the Clinton administration. During the Clinton administration, there was very powerful job creation. In fact, there was not only powerful job creation but the longest economic expansion in our Nation's history. In addition to that, we had the lowest unemployment in 30 years, the lowest inflation in 30 years, the highest level of business investment in our Nation's history, and record deficits were turned to record surpluses. That is the economic record during the Clinton administration. So if that is what they want to debate, we would be delighted to join in the discussion. We would be delighted to talk about the difference between the economic performance during the Clinton years and the Bush years. This is just one indication, the longest average duration of unemployment in over 20 years. That is what is happening in this Bush administration. Something is wrong. When we go further and look at the number of people employed, the Senator from Kentucky said we have over 100 million people employed--I do not remember the exact number he used but I am sure he was accurate in his number--but if we look at it in a different way, we see the smallest share of the population at work since 1994; 62.2 percent of the American people are employed. That is the lowest level in a decade. Again, it is just a fact. If we are going to analyze what is happening in this economy, we have to diagnose what is happening. To diagnose what is happening, we have to describe accurately what is occurring. We also look at real wages. I asked my staff to find out for me what has happened to real wages in this country during this administration. We went back to 1996--we probably should have gone back even further-- and look what happened in 1996 to 2000, the last term of the Clinton administration. We saw a dramatic growth in weekly wages. Since that time, they have basically stagnated. Real wages are up less than $8 a week in this administration. If we are interested in public opinion, which I think we all are--the Senator from Kentucky talked about public opinion--consumers believe jobs are hard to get. Eighty-eight percent believe jobs are not plentiful or are hard to get. Only 12 percent believe jobs are plentiful. So this is not just a matter of opinion on the Senate floor. The American people are saying jobs are hard to get. They are saying jobs are scarce. This is another look at what is happening in the job market. We see that wage growth of production workers is starting to fall behind inflation. Again, we went back to the beginning of this administration. The red line is consumer prices. The green line is average hourly earnings. We can see now for the first time the lines crossing. So wage increases are not keeping pace with inflation. That is putting pressure on people. That is why I think we see this strong concern all across the country. People are worried about what is happening in this economy.

Mr. CONRAD. Well, let's first talk about what is happening with deficits under this administration. Over the next 5 years, under the President's plan, the debt of the United States will increase by $3 trillion. Now let's think about that. That is an average of $600 billion a year of increased debt. The President says he is going to cut the deficit in half over the next 5 years, but he only gets that by leaving out things. For example, he leaves out any war cost past September 30 of this year. He says there is no cost of the war in Afghanistan, the war in Iraq, the war on terror, past September 30 of this year. Does anybody believe that? When we ask his people about it, they say, well, it is hard to predict what the cost will be. Well, we would agree with that, it is hard to predict. The right answer is not zero. The right answer is there is not going to be no cost. The Congressional Budget Office tells us the cost is going to be $280 billion. Yet the President has nothing in his budget. It does not stop there. If one looks at the cost of the President's proposed tax cuts, what one sees is that in the first 5 years they are relatively modest, but the cost of those tax cuts explode in the second 5 years. It does not end there. The alternative minimum tax, which is going to cost some $600 billion to fix, according to the Congressional Budget Office--my colleagues will remember the alternative minimum tax was designed to catch millionaires. It was put in place back in the 1980s, but it has not been adjusted. The result is, more and more middle-income people are being sucked into the alternative minimum tax. There are about 3 million people affected now. By the end of this decade, 40 million people will be affected. In his budget, the President provides 1 year of the cost of fixing the alternative minimum tax. He lets the rest of it go, which is writing in a tax increase beyond the first year, and it will be a tax increase increasingly on the middle class. It does not end there. The biggest thing the President is proposing, in terms of how he finances these massive deficits and debt, is to borrow money. The President is fond of saying it is the people's money, and he is exactly right, it is the people's money. It is also the people's debt. How is he financing these enormous deficits and debt? First, he is borrowing every penny of the Social Security surplus over the next 10 years, every dime, $2.4 trillion, money that is really not in surplus at all because it is going to be needed when the baby boomers retire. So the President is really not showing the American people how serious our fiscal condition is. When he says he is going to cut the deficit in half, he says the deficit in the fifth year will be $237 billion, but if we add back all of the things he has just left out, what we find is the debt of the country will actually increase by over $600 billion in that fifth year. All of this is right before the baby boomers retire. So on the question of do deficits matter, certainly deficits matter. The trade deficit matters. That is running nearly $500 billion a year. The budget deficit matters. That is going to run nearly $500 billion this year. Why does it matter? Deficits matter because when the Government spends more than it takes in, it has to borrow the money. When the Government borrows money, it is in competition with others to borrow money. In this society, we have over $20 trillion of debt--government debt, Federal Government debt, State and local government debt, corporate debt, private debt--$20 trillion. When the Government has to go borrow money in competition with the private sector, most economists would argue that puts upward pressure on interest rates. When you have $20 trillion in debt in an economy, a 1-percent change in interest rates costs you $200 billion. I can remember very well when Lloyd Bentsen was Secretary of the Treasury, he called me to lunch one day down at the Treasury Department. I walked in and sat down. He said: Kent, you probably wondered why I asked you here today. I said: Yes, I did wonder. He said: I wanted to share with you because now you are on the Finance Committee, you have my seat on the Finance Committee, something that is very important to remember when you are dealing with the economics of the country; that is, when you look at the debt of the country in all forms--government debt, corporate debt, individual debt--and you look at a change in interest rates, you come to understand how critically important it is to manage this economy in a way that keeps pressure off of interest rates. That means it is critically important to hold down deficits and to hold down debt because that will keep pressure off of interest rates. If you hold down pressure on interest rates, you are giving more lift to the economy than anything you can do on the tax cut side of the ledger. It is so powerful, the difference 1 percent makes in interest rates in this society because of all the debt there is. It is a lesson I have never forgotten. I don't think any of us should forget it. That is why deficits matter. Some will say interest rates are at very low levels now. Indeed they are. In fact, one of the reasons we have seen the economy resume growth is because interest rates are at a 40-year low, even though we have these massive deficits. How can it be? How can interest rates be at a 40-year low when we have these massive deficits? It is because right now there is very little competition for money from the private sector because the economy has been weak. As the economy resumes growth, as it has, we will see upward pressure on interest rates. That is something we have to keep in mind as we fashion Federal policy on the budget. We have the ability in the Senate, the Congress and the President, to influence the fiscal policy of the country. There are two things that contribute and affect the economy. One is fiscal policy, spending and revenue decisions that are made here and in the House of Representatives and by the President. The other aspect of Government policy that affects the economy is monetary policy. The monetary policy is guided by the Federal Reserve. The Federal Reserve has put in place a very accommodative economic policy, the lowest interest rates in 40 years. It is a key reason for this economic recovery. But that is jeopardized, it is threatened if interest rates are forced up. What might force them to go up? As we see economic recovery, as we see the private sector borrowing more money to build and expand their businesses, and the Federal Government is also borrowing these record amounts of money, that will put upward pressure on interest rates. That will threaten long-term economic growth and recovery. That is why deficits matter. Does the Senator from Pennsylvania seek time? I yield the floor.

Mr. CONRAD. Mr. President, I think we should see how the morning goes before we make that decision.

Mr. CONRAD. I am happy to yield if I misstated.

Mr. CONRAD. Mr. President, I am delighted to follow the Senator from Pennsylvania. I have been looking forward for a long time to this opportunity because the Senator from Pennsylvania makes a lot of aggressive assertions. Unfortunately, he is aggressively wrong, wrong, wrong. Let's start with the question of when the deficit starts. The Senator from Pennsylvania says it started in the Clinton administration.

Mr. CONRAD. Yes.

Mr. CONRAD. I am happy to yield.

Mr. CONRAD. I am happy to have the Senator state his position. Let me just say the problem with that is the National Bureau of Economic Research, which does the official dating of recessions, says the downturn began in March 2001, early in Bush's Presidency. But that is not the thing I am most eager to answer in terms of what the Senator from Pennsylvania has said. He has repeatedly used his spend-o-meter chart in the Senate and that chart is just a complete fabrication. I don't know of a nice way to say this. That chart is a complete fabrication. How is it a fabrication? First of all, all the Democratic amendments to last year's budget resolution were paid for. The Senator from Pennsylvania said they were not paid for. That is factually wrong and he ought to come out here and correct the record because it is wrong. All he has to do is look at the record to know it is wrong. Our amendments were paid for. I will go to a complete list of those amendments next to demonstrate the statements of the Senator from Pennsylvania are false. In addition, the Democratic amendments were offered individually, not as a package. The Senator from Pennsylvania wants to act as though the Democratic amendments were offered as a big package. False. They were offered individually. Third, the Senator from Pennsylvania wants to act as though these amendments were all 10-year amendments. False again. Half of these amendments were for 1 year. What the Senator from Pennsylvania has done is very conveniently taken 1-year amendments and multiplied to make them 10-year amendments and then cumulate them to act as though they were a package. Wrong, wrong, wrong. What is most wrong, he asserts they were not paid for last year. He ought to have done his homework better before coming out and making an assertion like that because even the least bit of research, even the least bit, would have demonstrated that is a false statement. Let's go to the amendments that were offered. I have a list of all of the amendments. We can see whether the statement of the Senator from Pennsylvania was correct. He says the amendments were not paid for. Let's go down the list. An amendment by Senator Biden to restore the COPS Program was a 10- year amendment and costs $1 billion. It was fully paid for, plus $1 billion to reduce the deficit. An amendment by Senator Kerry on HIV/global AIDS cost over 10 years about $800 million. Completely paid for, plus an additional amount to reduce the deficit. We can go right down the list. Every single one of the Democratic amendments was completely paid for--in most cases, more than paid for-- so the deficit would be reduced as well. The chart of the Senator from Pennsylvania is wrong. Factually wrong. He ought to come out here and correct the record. As I say, I will put this entire list in the Record because it demonstrates all of the Democratic amendments were paid for, countering the assertion of the Senator from Pennsylvania--and more than paid for. So if you did cumulate them, it would reduce the deficit $687 billion. It is not right to cumulate. They were not offered as a package but individually. There was an amendment by Senator Dorgan for veterans, to give greater budget resources for veterans health care, for $1 billion. But that was completely paid for, plus an additional amount to reduce the deficit. That is the fact of the matter. These amendments were offered not as a package, they were offered individually. So this amendment was offered. It was defeated. Then we offered another amendment on rural health care. That amendment was defeated. Then we offered another amendment. The idea you can combine them as a package is false and misleading. Then the Senator from Pennsylvania has another chart on the appropriations bills. This is my favorite because this is another complete fabrication. The Democratic amendments to the Omnibus appropriations bill were offered individually, not as a package. You cannot accumulate them. No. 2, the Democratic amendments were for 1 year, not 10 years. They just took 1-year amendments and multiplied them by 10. They were not 10-year amendments. They were 1-year amendments. No. 3, if you did total them and take out the duplication, they totaled $37 billion, not the $500 billion asserted by the Senator from Pennsylvania. That is an absolute fiction, a concoction. It has absolutely no merit. What is really interesting is what the Republicans did. Our amendments, if you can total them--which you should not do because they were not offered as a package--but if you did, they were $37 billion. But do you know what the Republicans did when they recaptured control? They went into a conference committee, locked out the Democrats, and they came back and increased spending by $63 billion. Let's look at the difference between what they are saying and what they did. Here are the amendments we offered to the Omnibus appropriations bills. Each one of them was offered individually. We offered improvements in homeland security. It would have cost $5 billion. That was defeated. So that money was still available. We then offered an amendment to improve education. That was defeated. It would have cost $6 billion. What the Senator from Pennsylvania has done is add up all these. They were not offered as a package. They were offered individually. They were 1-year amendments, and he multiplied them as 10-year amendments. What is interesting is, if you did add them all up, they do not cost $500 billion; they cost $37 billion. But look what our friends on the Republican side did when they captured control and wrote the final Omnibus appropriations bill. They went into the conference committee and came back with $63 billion of add-on--$63 billion--trumping us almost two to one if you did accumulate our amendments.

Mr. CONRAD. I apologize; I meant to say when the recession started. I think the Senator from Pennsylvania said the recession started during the Clinton administration.

Mr. CONRAD

Mr. CONRAD. I thank the Chair. I thank my colleagues. Mr. President, let me be clear. The amendment I am offering says this: No new mandatory spending, no new tax cuts unless they are paid for until we stop using Social Security money for other purposes. It guards that budget discipline with a supermajority point of order. That is how we have worked in the past with the pay-go provision, focused on mandatory spending and on the tax side of the ledger. It is not different from what we have done in the past. Some have said it does not discipline discretionary spending. We have never disciplined discretionary spending with this kind of mechanism. We have done that with spending caps, and we have in place today a spending cap. I have supported spending caps to discipline the discretionary side of the spending. Remember, mandatory spending is two-thirds of Federal spending, and we have nothing in place now to protect us on the revenue side or the mandatory spending side. That is what this amendment does. If we look at the President's budget, it is very interesting what we see. Over the next 10 years, he is taking every penny of the Social Security surplus and using it to pay for other items. What are the other items he is paying for? One is his income tax cuts. There will be a $2.4 trillion Social Security surplus over the next 10 years. By the way, it is not surplus at all. It is a misnomer because we are going to need that money when the baby boomers retire. But he is taking that money that is in surplus for the moment and using it to pay for other programs, including $2.5 trillion of income tax cuts. Income tax cuts are primarily going to the wealthiest among us. If we look at who benefits from the Bush income tax cuts, what we see is the top 1 percent, those earning over $337,000 a year, get 33 percent of the benefit. Our friends on the other side will say they pay more taxes. Indeed, they do, but they do not pay 33 percent of the tax burden in this country. They pay about 23 percent of the tax burden in this country. They have gotten a disproportionate benefit. If we look at who benefits from Social Security, we see that two- thirds of retirees rely on Social Security for more than half their income; 31 percent get at least 90 percent of their income from Social Security; 33 percent get 50 to 89 percent of their income from Social Security; 36 percent get less than 50 percent of their income from Social Security. The big problem we have is shown on this chart. This shows the Social Security and Medicare trust funds that are now in surplus. Those surpluses are being used to pay for other items. The red bars show the cost of the President's tax cuts. What one can see is, as the trust funds go past negative, the expense of the President's tax cuts explodes, driving us right over a cliff into deeper and deeper deficit and debt. That is what has led the head of the Federal Reserve to urge cuts in Social Security. The head of the Federal Reserve has come before Congress and has said: You are overcommitted. You are spending way more than you are taking in, and this is going to lead to an incredible crunch. He said to us: One of the things you ought to consider is cutting Social Security benefits. The President said to us repeatedly that Social Security funds should not be used to fund other expenses of Government. In his 2002 budget blueprint, the President said: None of the Social Security surplus will be used to fund other spending initiatives or tax relief. That is a broken promise. In 2001, in a radio address, the President said: Every dollar of Social Security and Medicare tax revenue will be reserved for Social Security and Medicare. In a radio address on March 3, 2001, the President said: We're going to keep the promise of Social Security and keep the government from raiding the Social Security surplus. That is exactly what he is doing. That is why this amendment is important. I urge my colleagues to support it.

Mr. CONRAD. I yield 10 minutes off the resolution to the Senator from Wisconsin.

Mr. CONRAD. Mr. President, as always, the chairman of the committee has been very articulate in his defense of his budget. The problem is he is defending the indefensible when it comes to the question of funding for veterans medical care. Yes, there have been increases in funding for veterans medical care. I think the chart the Senator from Colorado had up showed veterans medical care back in 1990 was about $15 billion, and now in that period of time--14 years, actually 15, to 2005--it is almost double, not quite. Medical inflation in that period of time would lead to a doubling alone--only medical inflation. Is that the only factor forcing up costs for veterans medical care? No. Let's recall in 1996 this Congress voted to expand eligibility for veterans medical care. In 1996, there were 100,000 in categories 7 and 8, and by 2003, the number eligible increased from 100,000 to 1.3 million. In categories 1 through 6, there were 2.6 million people in 1996. By 2005, that will increase to 3.7 million people. The fact is, the increases for veterans medical care are not keeping pace with the demands. The chairman of the committee talks about facts. I agree. Let's talk about facts, and the facts are that medical inflation over that period of time has doubled the cost to provide the same coverage to the same number of people. We have not quite doubled the amount of money. It is not just a matter of medical inflation for the same number of people. The number of people eligible has been dramatically expanded by action of this Congress. Again, in 1996, we dramatically increased eligibility, and the number of those in categories 7 and 8 that was only 100,000 of the workload in 1996, by 2003 had increased to 1.3 million. That is an increase of more than tenfold. In categories 1 through 6, 2.6 million people were eligible in 1996. By 2005, that is expected to reach 3.7 million people. That is an increase of almost 50 percent. The reality we are confronting is not just numbers on a page. The reality we are confronting is, Are we providing adequate resources for the medical care of the Nation's veterans? The Nation's veterans have looked at the President's budget and have said it is inadequate. They have said it is inadequate to the tune of about $3 billion. That is why Senator Daschle is on the Senate floor saying we ought to increase veterans medical care by $2.7 billion. He has said we ought to pay for it, and we ought to pay for it by looking to those who are fortunate enough to be earning over $1 million a year and ask them to give up 10 percent of their tax cuts. Their tax cuts in 2005 are going to cost $27 billion. The Senator from South Dakota is asking our colleagues to go to those who are the wealthiest among us, earning over $1 million a year, and ask them to give up 10 percent of their tax benefits in that year so we can more adequately fund veterans medical care. That is a reasonable request. I note the Senator from Wisconsin is in the Chamber, and I ask him how much time is he seeking.

Mr. CONRAD. Mr. President, first, I ask unanimous consent that the following Members be added as cosponsors to Senator Daschle's amendment: Senator Boxer, Senator Feingold, Senator Reid of Nevada, Senator Lincoln, Senator Dorgan, Senator Graham of Florida, Senator Rockefeller, Senator Leahy, Senator Johnson of South Dakota, and Senator Kerry.

Mr. CONRAD

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

Mr. CONRAD. Madam President, the chairman has indicated to me he will return in a few minutes and begin his presentation at that time. Rather than have the time be lost, I will say a few words now. In addition to being concerned about the President's plan to explode the deficits and the debt, as I look at the President's plan I also see what I believe are misplaced priorities. Let me discuss just a few. As this chart shows, the Bush plan cuts No Child Left Behind, but that cut saves very little in comparison to the cost of the tax cuts for that same year going to the most wealthy 1 percent. Let me just be very clear. The President's plan shorts No Child Left Behind by $9.4 billion in this fiscal year, 2005. We passed legislation here that gave increased responsibility to the States, increased the expenses of the States, and in exchange we said we would cover the costs. The President's budget fails to do that. It fails to do it by $9.4 billion for 2005. But in that same year the cost of the President's tax cuts for the most wealthy 1 percent, those who earn over $337,000 a year, are $45 billion, five times as much as the money needed to keep the promise of No Child Left Behind. I must say I am in this category. My wife and I are in the top 1 percent. I would be happy to give up part of my tax cut. I would be happy to have it reduced by 20 percent to keep the promise for No Child Left Behind. The same is true in other categories--veterans medical funding, for example. The President's budget is $521 million short of providing funding for veterans medical care in 2005 that should be in place to fund it at the same level as last year. It would take $521 million to bring it up to what we did last year for veterans medical care. In that same year, the President's tax cuts cost $45 billion for the wealthiest 1 percent, those earning over $337,000. That is 90 times as much as the money necessary to restore the funding for veterans medical care. I must say I don't understand these priorities. It doesn't stop there. This is President Bush's plan for cutting firefighting funds. It would cost $246 million to restore the money. Again, in 2005, in comparison, the President has $45 billion in tax cuts going to the wealthiest 1 percent, those earning over $337,000 a year. That is almost 200 times as much as the money necessary to restore the cuts to the firefighters. We talked a lot about homeland security. Firefighters who are the first responders, the police who are first responders, ought to be high up on the list of our priorities, and certainly veterans health care. We have just sent thousands of men and women half a world a way to defend this country. Then we cut their medical care. I don't think these are the priorities of the American people. It doesn't stop there. The President plans to cut COPS funding to put police on the streets. The COPS program has put 100,000 police on the streets in this country. The President proposes deeply cutting COPS funding. It would cost about $700 million to restore that funding for 2005. Instead, the President says it is more important to have $45 billion of tax cuts for the wealthiest 1 percent. I do not think that is the priority of the American people. When we look at these programs individually, we can see the Bush budget cuts the COPS program by 94 percent. This is the amount of money we provided in 2004. We provided $742 million to put these police on the streets. The President proposes cutting that down to $44 million. He is cutting it by almost $700 million at the same time, saying, No, it is more important to have $45 billion of tax cuts for the wealthiest 1 percent, those earning over $337,000 a year. My own belief is the COPS program ought to be funded. I believe we are safer because there are 100,000 more police on the streets. The President, with these deep cuts--cutting the COPS program 94 percent-- is going to take police off the streets. When we have a terrorist threat in this country, as we do, why would you take police off the streets? Why would you take police off the beat? It makes no sense to me. As I say, it doesn't stop there. Here is the President's plan for firefighters. He cuts that program 33 percent. Again, firefighters are first responders. I can remember well September 11 when the Pentagon was attacked. I remember watching the television. I remember seeing all those first responders. Who was it we asked to respond to the disaster? Firefighters, police, and EMTs. Those are the people who were there to help those who had been hurt. The President's answer is cut the COPS program 94 percent, cut the firefighters 33 percent, and cut port security 63 percent. We provided $125 million last year for port security. The President wants to cut that by almost two-thirds, down to $46 million. We know we are only inspecting about 4 percent of the containers that come into our ports. We know we need to do more. We know we need to do more to secure the ports. In fact, those who are involved with the ports of the country say we ought to have $5 billion for port security. Obviously, we can't afford $5 billion. But on the other hand, does it make any sense to cut what we are doing now by 63 percent? I don't think that makes much sense in the light of what we face in terms of a terrorist threat to the country. Earlier I was talking about the tax cuts the President put in place and the distribution of those tax cuts. Again, I want to make clear I proposed in 2001 much bigger tax cuts on the front end than the President proposed. You will recall the President's initial two proposals would have very small tax cuts in the initial years, and much more in the outyears. I thought he had it upside down and backwards. I thought we should have more tax cuts on the front end to give life to the economy and much less in the long term so we could prepare for the retirement of the baby boom generation and not undermine Social Security and Medicare and national defense. The President largely got his way, with some exceptions. Here is what we see as beneficiaries of those income tax cuts. Of the income tax cuts, 68.7 percent of the benefit goes to the top 20 percent, and 33 percent of the benefits--almost a third--go to the top 1 percent. Those are people earning over $337,000 a year. I believe one of the reasons we are not seeing the kind of job creation we might have otherwise seen is the President shows the wrong mix of tax cuts. He has it much too weighted to the top end and not enough to the middle class who are the ones who would spend the money and really fuel the economy. This next chart shows in a little different way who benefited from the 2003 tax cut. Net tax cuts under the tax act passed in 2003 for upper-income individuals was 67 percent of the benefit, according to the Joint Committee on Taxation. Low- and middle-income people got 29 percent, and businesses 3 percent. Again, I think the President chose the wrong mix of tax cuts. There is no question that stimulus is what the economy needs when you have that kind of slowdown. Stimulus can be either spending or tax cuts. I believe we ought to do both. We have economic weakness and we spend more money--a 20-percent increase from 2001 to 2003 in Federal spending, most of it for defense and homeland security and responding to the effects of September 11, but we also cut taxes. That is a strategy that makes sense at a time of economic weakness. The problem with what was put in place is the taxes were so directed to tax reduction, so directed at the wealthiest among us, the highest income, that we didn't get the same bang for the buck in terms of economic growth and job creation we would have gotten had we targeted more to middle-income individuals and lower-middle-income individuals who would more likely have spent the money. This is a very interesting chart. I hope my colleagues will have a chance to see a lot of this chart in the coming days. This is how the tax benefits stack up--the average tax cut in 2006. Middle-income people got an average $566. This is the combined effect of the 2001 and 2003 tax cuts. Middle-income people got an average of $566. But look at what happened. Those earning over $1 million a year got $140,000 on average in tax cuts. If these bars were proportionate, the bar showing what the people earning over $1 million get would have to go 35 feet higher. I don't know how high the Chamber is here, but 35 feet would be a long way up in the air to show the comparable tax cuts going to those earning over $1 million compared to what the middle- income people get. Middle-income people got $566. People earning over $1 million got $140,000 in tax cuts on average in 1 year. If we were going to have the comparison done in a proportional way, the bar showing what those earning over $1 million are receiving for the year would have to go 35 feet high compared to this little bit at the middle income. Again, I believe one of the reasons we are not seeing the job recovery all of us would like to see is the President simply has the wrong mix of tax cuts. This chart shows it a different way. A typical taxpayer, one right in the middle of the income distribution in the country, under this scenario got $685. This is from the Center on Tax Policy, the average tax cut in 2004. In 2004, those earning over $1 million got $127,000 in tax cuts. That is a stunning difference. The Bush income tax cuts give three times as much benefit to the top 1 percent as the middle 20 percent. Looking at the middle 20 percent of the people in the income distribution in this country, they have 11 percent of the benefit of the President's tax cuts. The top 1 percent got almost three times as much. In fact, they did get three times as much for those earning over $337,000 a year. I asked my staff to go back and look at how the top 1 percent of our country has done compared to the rest of the American people. Here is what we found looking at increases in average aftertax income from 1979 to 2000. Those in the top 1 percent improved their condition by $576,000, the middle 20 percent, $5,500. That is 100 to 1. The people who have benefited by the economic growth are the top 1 percent. That is fine. I am all for that. We all want people to be able to succeed. That is what opportunity is about. That is what freedom is about, the ability to do better, do better for your family, do better for yourself. Great. But when we come along and make tax policy and we look at those people having been the greatest beneficiaries of what has occurred on a basis of 100 to 1 and we in this tax policy say that is not good enough of a difference, we want to turn around and give those earning over $1 million a year a $140,000 tax cut on top of it in 1 year and the middle-class people get $500. How is that fair? It eludes me how that is fair. I don't think it is fair. Not only is it not fair, but it is not good economic policy. Why not? Because the middle-income people are the ones who spend the money. We need people to spend money to get the economy moving. People in the higher income categories are the least likely to spend it. They are much more likely to save and invest, which is good to do, but that is not what primes the pump. That is not what gets the economy moving. When I look at who got the biggest benefit, many times friends on the other side of the aisle say, Hey, wait a minute, the wealthiest folks pay most of the taxes. That is exactly right. That is true. The wealthy people do pay more of the taxes. We have a progressive tax system, so higher income people pay a greater proportion of taxes, but they do not pay the same share. They do not pay as much more as we gave in the tax cut side of the ledger. As I indicated, they got 33 percent of the President's tax cuts, but they paid 23 percent of the income and payroll taxes. This is the wealthiest 1 percent. They got 33 percent of the benefit, but they paid 23 percent of the taxes. I don't think it is fair on any basis what the President chose as the mix of tax cuts and I don't think it is good economic policy either. It is stark when we look at the top 1 percent, those earning over $337,000 a year. They got 33 percent of the benefit of the tax cuts. The bottom 60 percent in this country got 15 percent of the benefit. Our friends on the other side will say, Hey, wait a minute, the higher income people pay more. Yes, they do, but they do not pay 33 percent of the taxes. Our friends on the other side want to talk about income taxes. They forget that people do not only pay income taxes; they pay income taxes; they pay payroll taxes. The fact is, three- fourths of the American people pay more in payroll taxes than they pay in income taxes. Yet all of the relief has been to income tax payers and done in a way that gives an overwhelming benefit to the highest income tax payer, those earning over $337,000 a year. The disparity is even bigger when we look at those who earn over $1 million a year. As I showed, those earning over $1 million a year got the cake. We talk about the crumbs and the cake. Here is the cake. Those earning over $1 million a year, for 2006, will get a $140,000 tax cut in that year alone. Here is what the middle-income folks in the country are going to get: $566. There is something wrong with this plan. Again, when we look at what has happened from 1979 to 2000, the change in share of pretax income, this chart is quite stunning. It is the reason there is a lot of anger in the country, I believe. There is much more anger in the country than I think is generally understood by people in Washington. The reason is middle-income people in this 20- year period have actually lost ground. They are worse off in their share than they were in their pretax income shares in that 20-year period. The middle-income people have actually lost share, 15 percent. Their pretax incomes have gone down. Look what has happened to the top 1 percent. Their pretax income has gone up 91 percent. We heard Senator Edwards from North Carolina in his Presidential campaign talking about two Americas. The reason that got such a tremendous response is because there is a lot of truth in what he is saying. There are two Americas developing: those who are well-to-do, those who are secure, those who are fully competitive in this global environment; and then middle- income people, who all of a sudden are finding themselves in competition with people who are earning 25 cents an hour in some other part of the world. We are faced with a circumstance that is changing very dramatically. I met a man who is involved with one of the major industries in the country at a breakfast I attended several weeks ago. He said, Senator, something is changing structurally in this country. Something is happening that is very dramatic. In the business I am in--he is in the machine tool business--at this stage of an economic recovery, we should find our order books filled. We should see dramatic increases in orders. Senator, that is not what we are finding. Yes, economic growth has improved. We saw 4 percent the last quarter, 8 percent the quarter before that. But, he said, our order books are not filling up in the machine tool business. Something structurally is changing here. There are jobs being created, but not jobs in this country. There is business being created, but it is not business in this country. The jobs are being created in China. The jobs are being created in Mexico. Jobs are being created in India. Business is being created to some extent in this country because we see strong economic growth here, but it is not as it should be in this stage of recovery. I believe part of it is we have adopted a flawed policy. We have helped with tax policy the very people who have already done extremely well in the last 20 years. Those who are the most educated, the best trained, are doing extremely well. That is great. I am all for that. I hope very much everybody gets into that category. That is what opportunity is about. Through our policies, we are helping the very people who have already done the best, and we are not doing much for the people who are falling behind. Chairman Greenspan says we ought to focus on education because if we are going to compete in this global environment, we must have the best trained, best educated workforce. Yet in this budget, the President cuts No Child Left Behind $9 billion. Does that make sense for our country? Does it make sense to cut education for what was promised by $9 billion when in that same year we are giving the top 1 percent a $45 billion tax cut? Does that make sense? Is that good judgment to strengthen our country for the future? I do not think so. If we look at what has happened, again, from 1979 to 2000, to those in the middle 20 percent, their share of pretax income has dropped. Look at what has happened to the top 20 percent. Their share has almost tripled. If people are not paying attention, they are going to get swamped. There is anger in this country because when Senator Edwards talks about two Americas, he is exactly right. Those at the top are doing better and better. I am delighted they are doing better. But those in the middle, they are falling behind. Why? Because this global economy is great for the people who are the best educated and the best trained. That is why we, as a society, ought to make certain we are doing everything we can to make Americans the best educated and the best trained because if you are not, you are not going to be able to compete. You are not going to do well in this global competition, and your share of the national income pie is going to get cut. Those who are well educated and well trained are going to prosper. They are going to soar. We have to somehow fashion a policy that gives all Americans a chance to compete and to do well and to be winners. We hear a lot from the other side that the biggest beneficiaries of the top rate cut are the 23 million small businesses; that is where most of the jobs are generated. I agree, most of the new jobs are generated by small business. But I do not agree that the top rate cut benefits most businesses. In fact, only 2 percent of businesses qualify for that top rate. Ninety-eight percent got no benefit from the top rate cut. I hope very much as this debate goes forward that we think very carefully about what we are doing because it is abundantly clear, while there is economic recovery underway, it is an uneven economic recovery. It is a recovery that is not generating jobs in the same way we have seen in the nine previous recessions. We are 5.4 million jobs behind where we typically have been in other recoveries since World War II. Something is wrong. Something is not going right. I believe one part of that is the tax policies that have been put in place that have benefited primarily the top 1 percent. The top 1 percent got a third of the benefit--those earning over $337,000 a year. Those are the very people who have done the best in the last 20 years on every scale. They have increased their incomes by over half a million dollars. They have seen their pretax income go up 91 percent, while those in the middle have seen theirs shrink. I think that is right at the heart of why we see a jobless recovery underway. The people who are the very ones who would spend the money are not getting the money. The people who are getting the money, under the President's plan, are the wealthiest among us. They are the least likely to spend it. They are the most likely to put it in the bank. And while savings is a good thing, and I am delighted to always see people save because that helps investment for the future--and we need to have more savings in order to have more investment, to have more growth for the future--in the short term, to get people back to work and to fuel the economy, you need people spending money. The people most likely to spend money are the people in the middle class. Of course, we have also seen somebody else spend money. That is Uncle Sam. Uncle Sam has been spending a lot more money. From 2001 to 2003, Federal spending went up 20 percent. From 2001 to 2004, Federal spending has gone up almost 30 percent. Where is the increased spending going? Ninety-one percent of the increased spending is going in just three areas. Most of it is defense. The next biggest is homeland security. The third biggest was a response to the attacks of September 11--rebuilding New York, bailing out the airlines, and the international programs that have been adopted to deal with the crisis in Afghanistan and Iraq. That is where the increased spending has occurred. We will hear a lot from the other side that spending is out of control. It really is not. We have seen a big bump up in the 3 years of this President, but where has it been? The increases have been for defense, homeland security, and the response to the September 11 attack. The place where the deficits have really opened is on the revenue side. It is the revenue side of the equation that has collapsed. We are going to have the least revenues as a share of gross domestic product since 1950. So if we are going to be honest and straight with the American people about diagnosing the problems we have, we have to address the circumstances as we know them, as we face them. Let me just quickly say, on the revenue side of the equation, I know a lot of people's impulse is, well, if you are talking more revenue, you are talking tax increases. That would not be the first place I would look for more revenue. The first place I would look for more revenue would be the tax gap, the difference between what is owed and what is being paid. I met with the head of the Revenue Service in the last 2 weeks, and he told me the tax gap, as of 2001--the difference between what is owed and what is paid--was $255 billion in that year alone. We ought to have a concerted effort to go after those who are not paying what they legitimately owe under this Tax Code--those companies, those individuals who are dodging what they legitimately owe, to the tune of $255 billion in 2001 alone. It is totally unfair to the rest of us who pay what we legitimately owe to let others--a small percentage--escape what they owe. A previous Revenue Commissioner did an analysis and said the rest of us paid 15 percent more because of that small group of companies and individuals who are not paying what they legitimately owe. I hope we shine a bright light on this tax gap because I believe it is the first place we ought to look to start to fill in this revenue hole that has been created. Instead of going to a tax increase, the first thing we ought to do is close the tax gap so everybody can be assured everyone else is paying what they fairly owe under the law. I thank the Chair and yield the floor. I ask the Senator, are you ready to proceed or should I put in a quorum call?

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

Mr. CONRAD. Madam President, I suggest the absence of a quorum.

Mr. CONRAD. Thank you, Madam President. I join the chairman of the committee in reminding our colleagues that this will be a long week with many amendments. I am very hopeful that we on our side can find a way to get more amendments considered on the front end more quickly--the chairman and I discussed this and I think we are of like minds on this--rather than having a big crush at the end. Maybe if we spent less time on amendments on the front end and more votes on the front end we could eliminate some of that gridlock at the end. I think the chairman is entirely correct. That would be good for the Senate. It would be good for the disposition of these amendments and a better way to reach a conclusion. The President has sent us a budget. I want to talk about that in part and then later on to talk about the chairman's mark. First of all, I want to discus the budget the President sent to the Congress. In the President's budget, it spends $991,000 a minute more than it takes in. That is truly a stunning statistic. Every minute, under the President's plan, this country spends $991,000 more than it takes in. In 2001, the President told us: Tax relief is central to my plan to encourage economic growth, and we can proceed with tax relief without fear of budget deficits, even if the economy softens. That is what he told us in 2001. Let us look at the result. We have seen the deficits absolutely skyrocketing. Here we are back in 2001, and we are still in the black. But look at where we have gone. So the President was wrong when he asserted that. A year after the President's first budget, he said to us: . . . [O]ur budget will run a deficit that will be small and short term. This is after we saw a return of deficits which the President said would not happen. In the second year, he told us: . . . [O]ur budget will run a deficit that will be small and short term. That proved to be wrong as well. We don't see deficits that are small and short term. We see deficits that are large and long term. In fact, this chart shows the operating deficits under the President's plan from this year going to the end of the budget period. You can see these are massive deficits, by far the biggest we have had in our country's history. In the third year, the President told us: [O]ur budget gap is small by historical standards. Let us look at in fact what has occurred with respect to that claim. You can see this goes back to 1969. It shows the deficits in dollar terms. It shows these are record budget deficits, the biggest we have ever had. So the President was wrong again. The President said at the end of last year: Now, we've laid out a plan that shows the deficit will be cut in half over the next five years, and that's good progress toward deficit reduction. We have to ask, Is the President going to be wrong again? This chart speaks to that. It shows, I believe, that the President will be absolutely wrong again, and wrong by a big margin. The President says in the fifth year the deficit will be $237 billion. But that is only the case if you leave out lots of items. If you leave out the $30 billion of additional war cost the Congressional Budget Office tells us we will still be facing in that fifth year; if you leave out the money needed to fix the alternative minimum tax, which was, as you know when it began, a millionaire's tax. Now it is rapidly becoming a middle-class tax. In fact, about 3 million people are now affected by the alternative minimum tax. By the end of this period, we will have 30 million to 40 million people affected by the alternative minimum tax. In addition, the President is not talking about the money he will be taking from the Medicare trust fund, or the Social Security trust fund. In that fifth year alone, the President will be taking $235 billion from the Social Security trust fund. That is much bigger than his entire projected deficit for that year. Every penny of this has to be paid back, and the President has no plan to pay it back. The same is true with the Medicare surplus--$22 billion he is borrowing from the Medicare trust fund, again with no plan to pay it back. Of course, we have the Congressional Budget Office reestimate. They have looked at the President's numbers and made a change. They think the number will be bigger than the President anticipated. If you add all of this up, instead of adding $237 billion to the debt in that fifth year, we believe under the President's plan he will be adding $600 billion to the debt. What we have, I believe, is a consistent pattern by the President to hide from the American people the full story of our fiscal condition. Here is just a few of the ways he is hiding the full effect of his plan. The first way he does it is he provides no new funding for ongoing operations in Iraq, Afghanistan, and the continuing war on terror, no new money past September 30 of this year. Does anybody seriously believe the war in Iraq, the war in Afghanistan, and the war on terror are going to end on September 30, which happens to be the end of the fiscal year? Does anybody believe that? That is what is in the President's budget. When we ask the President's representatives, they say: Well, it is hard for us to know what the cost will be. We can understand that. But the right answer is not zero, and the President is telling us there is no cost for the war on terror, no cost for the war in Afghanistan, no cost for the war in Iraq past September 30 of this year. The Congressional Budget Office tells us that, instead of a zero, we ought to be putting in $280 billion for these costs for the period 2005 to 2014. That is what they say the war cost will be going forward: $280 billion. The President has nothing. But that is not the only place the President is failing to tell the American people what we really face. The Bush budget also hides the full story on the cost of extending the tax cuts. The President has come before us and said: Make all the tax cuts permanent. I wish we could do that. But look at what happens. This dotted line shown on the chart is the first 5 years. The Bush budget only covers the first 5 years. But look what happens to the cost of the tax cut right beyond the 5-year budget window. The cost of the tax cut explodes. This is being hidden, in effect, from the American people. I think if they have a chance to see this information, they will realize the President has us on a fiscal course that simply does not add up. The deficits and debt absolutely skyrocket as we approach the retirement of the baby boom generation. It is not just the war cost or the cost of the tax cuts, but we also see the same pattern with the alternative minimum tax. The alternative minimum tax was the tax that was designed to catch millionaires, catch people who were filing and paying no taxes. Remember, back in the 1980s, we had that circumstance where Congress found there were a number of people making, at that time, $200,000 a year, and there were 22 of them who did not pay a penny of tax. In response to that, Congress put in place the alternative minimum tax. It affected a very small number of taxpayers. But it has not been adjusted since the time it was put in place, and now we have between 2 and 3 million people caught up in the alternative minimum tax. But we have not seen anything yet because by the end of this 10-year period, they are telling us 40 million people will be caught up in the alternative minimum tax. The old millionaires' tax is swiftly becoming a middle-class tax trap. The President deals with the problem only for the first year in his budget. He does not deal with the soaring cost over the 10 years, again hiding the full story from the American people. But perhaps the biggest place--the biggest place--the President is hiding the full effect of his budget policies is with respect to Social Security. The President, after pledging not to use Social Security to pay for tax cuts or other expenditures of Government, is now using, over the next 10 years, every penny of Social Security surplus. And remember, the word ``surplus'' is not accurate because the money is not extra. This is money that is needed when the baby boomers retire. It is surplus for the moment. That is money that should be used to pay down the debt or prepay the liability. Instead, the President is taking it to pay for tax cuts and other things. He is taking every penny of Social Security surplus, not just this year, not just next year, not just for the next 5 years, but for the next 10 years under the President's plan--and all of that at the worst possible time, right before the baby boomers begin to retire. Those funds will be needed to keep the promise made to them. Remember, in 2001, the President told us he was going to have maximum paydown of the debt. He said he would virtually eliminate the debt. Well, he was wrong again. Because we see the debt exploded. The gross debt of the United States was $5.8 trillion in 2001 when he took office. We now project--using his tax cuts, the alternative minimum tax reform that will be required, and the ongoing war costs; just making those three corrections--the gross debt of the United States will skyrocket to $14.8 trillion in 2014. You wonder, where is all that money coming from. We are running up this huge debt. Where is this money coming from? Well, we have already seen the President is borrowing $2.4 trillion from the Social Security trust fund--$2.4 trillion; every penny of the Social Security surplus. He is taking every penny available to borrow, and using it to pay for tax cuts and other things. But that is not the only place from which he is borrowing. He has borrowed already $545 billion from Japan, $149 billion from China; he has borrowed $69 billion from the so-called Caribbean banking centers; he has borrowed $58 billion from Hong Kong; he has even borrowed $43 billion from South Korea. I do not think this makes us stronger. I think this makes us weaker. And that is what has happened. The President is very fond of saying it is the people's money; we have to give it back to them. Well, that may have made more sense when there was a surplus, but now that you are in deficit, it is the people's money, certainly, but it is also the people's debt. Where is the money coming from to finance this debt? It is coming from borrowing. We are borrowing from ourselves. We are borrowing from the Social Security trust fund, the Medicare trust fund, under the President's plan, and we are borrowing from countries all around the globe, money that will ultimately have to be paid back, and the President has no plan to do it. Here are the implications of this policy. This is from a story that was in the Washington Post on January 26 of this year: ``Economists Worry About Long-Term Effects of Weak Dollar and Heavy U.S. Borrowing.'' Here is what it said in the article: Currency traders fretting over that dependency-- The dependency they are talking about is our need to borrow all this money, borrow from the budget deficit, now approaching $500 billion this year. We are also, in effect, borrowing from the rest of the world to finance our trade deficit, which is also about $500 billion a year. Currency traders fretting over that dependency have been selling dollars fast and buying euros furiously. The fear is that foreigners will tire of financing America's appetites. Foreign investors will dump U.S. assets, especially stocks and bonds, sending financial markets plummeting. Interest rates will shoot up to entice them back. Heavily indebted Americans will not be able to keep up with rising interest payments. Inflation, bankruptcies and economic malaise will follow. That is the risk the President is running with these enormous deficits as far as the eye can see. We have a circumstance where we have run deficits in the short term. That is more understandable. We have been wracked by an attack on September 11. We have had an economic slowdown. We have a war in Afghanistan and Iraq. I think we can all understand that we would expect to run deficits in that circumstance. The problem I see is the President's plan going forward. Because even when he sees economic recovery continuing, we are running deficits that are larger than anything we have seen in our country's history--not just for the next few years but the next 5 years and the next 10 years. When they said in the article that economists are worried about the long-term effect of the drop in the value of the dollar, here is what they are talking about. The dollar has declined more than 30 percent against the euro just since 2002. In other words, our currency has lost 30 percent of its value against the European currency in the last 2 years. That has enormous implications, both short term and long term. In the short term, it helps us celebrate abroad. If our dollar is worth less, it makes it easier for us to sell abroad. It makes it harder for us to buy from other countries, so that gives a boost in the short term to our economy. The problem is, if it continues for an extended period, then people who are investing in the United States in dollar-denominated securities may decide it is no longer advantageous to invest in dollar-denominated investments. They may decide it is time to diversify out of dollar- denominated investments. That could have a very serious and negative consequence on the American economy. From the Washington Post this morning, I urge my colleagues to look at the story about Warren Buffett--Warren Buffett, the second richest man in the world, somebody who is a patriotic American--indicating that he is betting against the value of the U.S. dollar. He has bet $12 billion against the value of the American dollar. I was just with a financial adviser, one of the most prominent financial advisers in America, who had a strategy meeting with one of America's wealthiest families. For the first time at their meeting, they decided to begin to invest in other than dollar-denominated investments because they believe the threat to the value of the American dollar to long-term American economic strength is being so undercut by these budget and trade deficits. We have to get serious about the long-term economic security of our country. Do not take my word for it. This is from the President's own budget document. It is the long-term budget outlook. If we adopt the President's spending plan and if we adopt the President's tax plan, this is what it shows. This is a very sobering chart. It tells us that right now we are in the budget sweet spot. Even though this represents a record budget deficit, the biggest we ever had, it shows things getting somewhat better on a so-called unified basis when Social Security money is being used to pay our bills. Look what happens in the long term as the baby boomers start to retire and the cost of the President's tax cuts explode: The deficits go right off the cliff, deficits that are utterly unsustainable and that fundamentally threaten the economic strength of the country. That is from the President's own budget document. That is their outlook of where this is all headed. This is a policy that cannot be justified over the long term. It is utterly unsustainable. If you do not want to trust the President's numbers--and I understand that after we have looked at the previous claims of what would happen-- this is what the Congressional Budget Office shows. It is exactly the same thing. This is their long-term budget outlook--again, a percentage of GDP so the effect of inflation has been taken out. They show, with the President's tax cuts, the need for alternative minimum tax reform, maintaining current spending policies, and, of course, the President is really increasing current spending because of the increases in defense and homeland security. Look what happens. The long-term deficits absolutely skyrocket. All of this is happening at the worst possible time, as this chart shows. This chart shows the tax cuts explode as the trust fund cash surpluses become deficits. This chart shows, in green, the Social Security trust fund. The blue is the Medicare trust fund. The red are the tax cuts, both those already passed and those proposed by the President. What this chart shows is right now the surpluses in the Social Security and Medicare trust funds are offsetting the cost of the tax cuts. Look what happens when the trust funds go cash negative in 2016 and 2017. At the very time the cost of the tax cuts explode, that combination drives us right over the fiscal cliff. This sets up a very difficult set of choices for the future. This is a joint statement by the Council on Economic Development, the Concord Coalition, and the Council on Budget and Policy Priorities. In the fall of last year, trying to help people understand what we will face in the future as a result of digging the hole so deep now, this is what they said: To get a sense of the magnitude of the deficits the nation is likely to face without a change in policies, consider that even with the full economic recovery that CBO forecasts and a decade of economic growth, balancing the budget by the end of the coming decade would entail such radical steps as: Raising individual and corporate income taxes by 27 percent; or eliminating Medicare entirely; We have had tough choices in the past. Wait and see what is to come. Three very serious groups are warning where we are heading. Continuing: Raising individual and corporate income taxes by 27 percent; or eliminating Medicare entirely; or cutting Social Security benefits by 60 percent. We have just had the head of the Federal Reserve, Chairman Greenspan, say we are overcommitted. He said we ought to consider cutting Social Security benefits. But he has not said cut Social Security benefits by 60 percent. That is what these three organizations are saying would be the options facing a future President and a future Congress if we stay on this current course. Or shutting down three-fourths of the Defense Department; or cutting all expenditures other than Social Security, Medicare, defense, homeland security, and interest payments on the debt including expenditure on the debt--including expenditures for education, transportation, housing, the environment, law enforcement, National Parks, research on diseases, and the rest--by 40 percent. I hope our colleagues are listening. I hope they are paying attention. We are on a course that is a reckless course. It is not a conservative course. It is a radical course. It is a course that is utterly unsustainable and will lead us into very serious trouble. If we look at what has happened to spending, it is important to know, again, if we look at total Federal spending, a share of GDP, and we go from 1981, we reached a peak in 1983 of 23.5 percent of gross domestic product going to the Federal Government and then it zigzagged. In 1991, we put in place a 5-year budget plan that took spending down each and every year as a share of gross domestic production. Then, in 1997, we passed a bipartisan plan that took us down even further, so that in 2001 we were down to 18.4 percent of gross domestic production. The Federal Government spending had come down very sharply in that 20-year period. Now we have had this tick-up, and this tick-up primarily has been for defense, homeland security, and the response to the September 11 attack, rebuilding New York, and bailing out the airlines. Even with that tick-up, we see we are still well below the spending levels of the 1980s and 1990s in terms of what the Federal Government is spending. If we turn to the revenue side, we see quite a different picture. On the revenue side, we can see the revenue side of the equation has just collapsed. In 2004, we now expect revenue to be 15.8 percent of gross domestic production. The revenue has just collapsed. We will have the lowest revenue as a share of gross domestic production since 1950. Spending is down substantially from where it was in the eighties and nineties, however up from where it was in 2001 because of the increases for defense. Ninety-one percent of the increases have been for defense, homeland security, and the response to the attacks of September 11. Look what has happened on the revenue side of the equation. The revenue side of the equation has collapsed. About half this is due to the tax cuts. The other half is due to the economic slowdown. Again, we have a real problem on the revenue side of this equation. The President said last month in a speech in Louisville: We've got plenty of money in Washington, DC, by the way. We do not have plenty of money to pay the bills. There is a lot of money here, there is no question about that, but we cannot pay our bills and we cannot come anywhere close to paying our bills. So when the President says we have plenty of money here, he certainly is right, these are very big numbers with which we are dealing, but we do not have enough money to pay the bills. We are going to hear from the other side that the President has done a good job with his budgets getting the economy growing again. If we look at the economic record of this President, what we see is, in terms of creating private sector jobs, this administration is the first one in 70 years to lose private sector jobs. It is pretty stunning. If you look back, every single President--President Roosevelt, President Truman, President Eisenhower, President Kennedy, President Johnson, President Nixon, President Ford, President Carter, President Reagan, President Bush 41, and President Clinton all had positive job creation in the private sector. We have to go all the way back to Herbert Hoover to see a President who has lost private sector jobs. That does not tell the full story because as we look at what has happened and compare it to history, what we see should be of concern to all of us. I asked my staff to go back and look at what has happened in the previous times when we had an economic slowdown. I asked them to look at the last nine recessions we have had since World War II and compare job recovery out of those recessions to what is happening now because I think this should alert all of us. Something is wrong, and we have to diagnose what it is. I have some ideas. I am sure my colleagues will have some ideas, but there is something very wrong happening. This is a chart of a fit line looking at what happened in the last nine recessions. We have a dotted red line, the average of nine recessions since World War II coming out of recessions. The bottom of the chart is the months after the business cycle peak. What we see is about 17 months after the peak, there is typically a strong job recovery. That is about 17 months after the business peak. Look at what has happened this time. We are now 35 months or 36 months past the business cycle peak, and still we see no substantial job recovery. In fact, we are now 5.4 million jobs short of the typical recovery. If we were comparing to just one time, I would be less concerned, but this is every recession since World War II, nine recessions, and if we compare what has happened in each of those to what is happening this time, something is wrong. Something is radically wrong. Typically in these other cases, 17 or 18 months past the business cycle peak, we started to see very strong job recovery. Here we are 37 months past the business cycle peak and we still do not see job recovery. As I indicated, we are 5.4 million jobs short of the typical recovery. In fact, it is not just of a typical recovery; it is of every other recovery since World War II. In the nine previous recessions, every other time, by this time, we would have been strongly recovering. It has not happened. Again, we are going to hear from the other side that things are pretty good. What we see here is the smallest share of the population is at work since 1994. Again, this is a warning signal to us. Madam President, 62.2 percent of the population is employed now. We see the percentage of the population employed down very sharply from 2000 to now--down very sharply. Only 62.2 percent of the population is employed. We have to go all the way back to 1994 to see a number that weak. It is not just that statistic which ought to concern us. We also see the longest average duration of unemployment in over 20 years--that is, if we look at how long people are unemployed, we find they are staying unemployed for a longer period than any time in the last 20 years. In other words, people are not finding jobs quickly when they become unemployed. When they are laid off, they are not finding jobs for extended periods of time. This side of the graph is over 20 weeks people have been waiting to find a new job. Again, that takes you all the way back to 1984 to see people having to wait so long to find other work. I also asked my staff to look at what has happened to real wages during the Bush administration and compare it to the previous administration. Here is what we found. If we go back to 1996, the average wages in the country were $485. By the end of the Clinton administration, it got up to $530. During the Bush administration, average wages have only gone up $8 a week. That is very weak in historical comparison. Again, it is another warning sign that the set of policies which are in place are not working appropriately. I know we will hear the other side talk about the stock market recovery that has taken place, and that certainly has been welcomed. It is much better than where we were. We need to remind ourselves where we are now compared to where we were. As this chart shows, the market recovery still leaves stock prices at 1998 levels. We have to go back 6 years to find the stock market at this level. Another point we have heard from the other side--and I am sure we will hear again--is don't worry, it is the surveys that are at fault; that is what is misleading us as to what is going on in terms of employment. They will say over and over that the household survey--we heard this in the Budget Committee debate--the household survey is the one to which we ought to be paying attention, but that contradicts their Commissioner of the Bureau of Labor Statistics in testimony before the Joint Economic Committee. The Commissioner said: The payroll survey is the best indicator of current job trends. That is what we have used here in these statistics. I am sure we will hear the other side argue, as they have in the Budget Committee, that the household survey is better. But the person who is in charge of the Bureau of Labor Statistics contradicts that and says the payroll survey is the best indicator of current job trends. If we look at the President's economic report that was issued on February 9, just a month ago, they said in that report: [W]e expect sort of an average jobs in 2004 to be 2.6 million more than jobs in 2003. This is the President's economic report. This is his prediction of what is going to happen, that there are going to be 2.6 million more jobs this year than last year. From here going forward, that would require the creation of 520,000 jobs a month. Let's do a little reality test. Here is what happened in February: The increase in jobs was not 520,000 for that month. It was 21,000. In the private sector, there were no new jobs. Every one of these jobs was a Government job. Of the 21,000 jobs created in February, every single one of them was a Government job. There were no private sector jobs created. The President's report says there are going to be 520,000 jobs created if we are going to meet their claim that there are going to be 2.6 million more jobs by the third quarter of 2004 compared to the third quarter of 2003. For that to come true, they would have to generate 520,000 jobs a month. In February, it was 21,000 jobs and not a single one of them was in the private sector. Every single one of these new jobs in February was in the Government. So the President's plan is not working. He told us in 2001 this plan would not create deficits. It has created the biggest deficits in our country's history. He told us it would create jobs. Here we are 3 years later. Where are the jobs? This is what consumers believe is happening. Consumers believe jobs are hard to get. Eighty-eight percent believe jobs are not plentiful or are hard to get. Only 12 percent believe jobs are plentiful. It is not just with respect to recovery. It is not just with respect to job creation. It is not just with respect to people having an opportunity to find a new place if they lose their old job. We are also seeing the wage growth of production workers starting to fall behind inflation. This green line shows the average hourly earnings of production of nonsupervisory workers. Let's look at this because it goes back to 2001. This is the 12-month percentage change. Back in 2001, we saw an average hour of earning increasing at a rate of over 4 percent. Since that time, it has been almost a steady downward pattern. We see now average wages are going up between 1.5 percent and 2 percent. The red line shows consumer prices, and this year we have now seen the lines cross, so that hourly average earnings are not keeping up with inflation. We are not seeing them keep pace with the increases in consumer prices, another warning sign this is a policy that is not working. This is our initial take on the President's budget. We think it is taking us in the wrong direction. Let me be clear. When the President came into office in 2001, on our side we proposed a much larger tax reduction in the near term than did the President. I know many people will be surprised by that, but it is a fact. We proposed a budget that had much bigger tax cuts in the short term, to give lift to the economy, than did the President. But we had much less in tax cuts over the 10-year period, about half as many, to avoid going into this deficit swamp. In retrospect, we were right. It was right to have tax cuts on the front end to give lift to the economy. The economy clearly needed it. It was a mistake for the President to propose these massive tax cuts going out for years into the future when we had the baby boom generation about to begin retiring. It is the combination of policies the President has pursued that we believe is a mistake. We believe, yes, we should have had tax cuts in the short term to give lift to the economy, although we would have chosen a different mix of tax cuts than the President did. Interestingly enough, the President adopted some of our suggestions, the 10-percent rate, the child care credit, reducing the marriage penalty, and we salute him for that. Those are policies many of us on this side agreed with. But the President also adopted dramatic cuts in capital gains and dividend taxation. These are taxation policies the Congressional Budget Office told us would give us very little bang for the buck in terms of job creation and economic growth. I think the Congressional Budget Office was right. I think that particular mix of tax cuts the President chose was not the right mix to give maximal lift to the economy in the short term. As we see going forward, the President's tax cuts are so large they fundamentally threaten our long-term economic security. That is where we have the significant difference. I am pleased to see members of the Budget Committee in the Senate and the House have not adopted the President's full tax cut proposal going forward. Now maybe it will occur in later years, past the 5 years. None of us can know that now, but at least in this budget cycle they are not endorsing the President's plan to have another trillion and a half dollars of tax cuts when we already have the largest deficits in the history of our country and we are about to have the baby boomers begin to retire, which will dramatically increase the expenditures of the Federal Government, because that is one thing we know. The baby boomers are not a projection; they are out there. They have been born. They are alive. They are eligible for Social Security and Medicare, and we are faced with a circumstance in which we have to start making very tough decisions. My own belief is we have to be tough on the spending side of the equation and we have to be tough on the revenue side of the equation. We have to slow the growth of Federal spending. On the other side of the equation, we have to do something about the revenue mess because the revenue this year is the lowest as a percentage of gross domestic product since 1950. When the revenue was high as the share of gross domestic product, the President said we needed tax cuts. Now that it is the lowest it has been since 1950, the President's answer is, more tax cuts. It does not matter what the problem is, this President comes up with the same answer: Tax cuts, tax cuts, and tax cuts that primarily go to the wealthiest among us. I have a chart with me which I will use later on that shows 33 percent of the tax cuts this President has proposed and those that have been enacted have gone to the wealthiest 1 percent, those earning over $337,000 a year. That is not a fair distribution of the tax cuts in this country. It is one reason we have a very weak job recovery, because the tax cuts that were selected were tax cuts that primarily went to the wealthiest among us rather than being targeted at middle- income people who would spend the money. So much of this money has gone to high-end people who save it. As meritorious as it is to save money, and I try to remind my daughter of this from time to time, that saving is a good thing, but when talking about getting an economy moving we need that money to be spent, we need that money to be moving in the economy. If we look at this economic recovery that has occurred, to the extent it has occurred, there are many factors. One of the biggest factors is the monetary policy of this Nation. The Federal Reserve has the most accommodative monetary policy in 40 years. It is a key reason this economy has recovered. We have combined debt in this country of over $20 trillion. So an accommodative monitoring policy, the lowering of short-term interest rates from 6.5 percent down to 1 percent, has been a key reason for the lift of this economy. The second key reason for the lift of this economy has been the stimulus both on the tax side and the spending side. The two of them are about equal over this 3-year period. If we look at the increased spending that has occurred--and it has been substantial since 2001--from 2001 to 2003, the Federal Government has increased expenditures by 20 percent. Of course, the tax cuts-- especially those geared to the middle class--have helped give lift to this economy. A third factor helping economic recovery has been the decline in the value of the dollar. That can have negative long-term consequences; but in the short term, a decline in the value of the dollar makes it easier for us to sell abroad, which helps our manufacturing industry and all those that export. It holds down imports because imports become more expensive. So that has helped give lift to the economy in the short term as well. Madam President, the bottom line is that I believe the fiscal course the President is taking us on--not so much in the short term, although that is of increasing concern, but the longer term proposals by the President are truly dangerous to the economic security of our country. The deficits are too large. They are too long lasting. They explode as the baby boomers retire and the full cost of the President's tax cuts become clear. I believe we have a responsibility to alter that course. I believe it will become more and more clear in the months ahead that the course we are on is utterly unsustainable and fundamentally reckless. That is why we simply must change course. I thank the Chair and yield the floor.

Mr. CONRAD. Ten or 15 minutes. And then for the information of our colleagues, I ask the Senator from Washington, how much time would she like?

Mr. CONRAD. I might say for my part I always enjoy visiting with the Senator from Utah and his questions. He thinks about these subjects in a very careful and disciplined way. I always enjoy these chances to have a serious discussion and a serious debate that is all too lacking in the Senate. Just momentarily, because I know the Senator from Nevada has a presentation he would like to make, and I know the Senator from Washington also has something, for the record I will provide the other side of the story with respect to something Senator Allard presented. Senator Allard was making the argument that those at the highest income levels are actually going to bear a greater proportion of the total tax bill going forward than they did before the tax cuts. The analysis we have seen by others reaches a different conclusion. Let me share that with my colleagues. This is done by the Tax Policy Center which is run jointly by the Urban Institute and the Brookings Institution. Their conclusion is those with very high incomes will be paying a smaller share of total taxes as a result of the Bush tax cuts. Let me give three examples. Those with taxable incomes above $1 million who constitute 0.2 of a percent of taxpayers would pay 12 percent of total taxes in 2006 without the Bush tax cuts. With the tax cuts, these same pairs will pay 11.2 percent of total taxes in that year. This includes not only income taxes but payroll taxes. Second example. Those with taxable incomes above $500,000, who constitute one half of 1 percent of taxpayers, would pay 17.4 percent of total taxes in 2006 without the Bush tax cuts. With the tax cuts, these same taxpayers will pay 16.4 percent of total taxes in that year. Finally, those with taxable incomes above $200,000, who constitute 2.4 percent of taxpayers, would pay 30.7 percent of total taxes in 2006 without the Bush tax cuts. However, with the tax cuts, these same taxpayers will pay 30.1 percent of total taxes in that year. The Senator from Colorado was arguing that those who are at the high incomes will pay more of total taxes as a result of the Bush tax cuts. This independent analysis by the Tax Policy Center reaches just the opposite conclusion. When you look at income taxes and payroll taxes, higher income people, those at $1 million, those at $500,000, those at $200,000, all will pay less than they would have paid without the tax cuts. Finally, looking at it in a different way, under the Bush income tax cuts, the top 20 percent of income earners got 68.7 percent of the benefit. More striking, the top 1 percent of income earners, those earning more than $337,000, got 33 percent of the benefit of the Bush tax cut. That is much more than any other income class. Finally, looking at 2006, how the tax benefits stack up, in that year, middle-income taxpayers, those who are right in the middle of the income stream, the 20 percent right in the middle, will receive an average tax cut of $566. Those with incomes over $1 million in 2006 will get an average tax cut of $140,369. If these bars were actually proportionate, the bar representing the tax cuts received by those with over $1 million of income would have to be 35 feet tall. It would have to be 35 feet tall in order to compare proportionately with what the middle-income taxpayers will receive in that year. I thank my colleagues and yield the floor so the Senator from Nevada can speak. I ask the Senator, will you give us an idea how long you intend to speak?

Mr. CONRAD. I would be happy to review the Senator's returns and render another judgment.

Mr. CONRAD. I am fully aware of that. I say to the Senator the Chairman of the Federal Reserve Board has also told the Congress to consider cutting Social Security benefits. That is part of the logic of where it all leads. The 75-year shortfall in Social Security is one- third the 75-year cost of the President's tax cuts. To suggest these two things are not related is to avoid reality--an unpleasant reality, but, nonetheless, a hard fact we have to cope with. The fundamental problem we have here is our appetite for spending is greater than our appetite to tax ourselves to pay for it. I believe it is going to take an approach on both sides of the equation. I believe we are going to have to restrain our impulse to spend, and I believe we are going to have to be more disciplined on the revenue side of the equation. The revenue side of the equation is what has really fallen out. We now look at this year and we see revenue will be at the lowest percentage of gross domestic production since 1950. While it is true we have seen an up-tick in spending largely because of the needs for additional money for defense and homeland security and responding to the September 11 attacks, it is still true even with that increase in spending that we are well below the levels of Federal spending in the 1980s and the 1990s as a share of our national income. As I diagnose this problem, I come to a different conclusion than the Senator from Utah. I share with the Senator the conclusion we have to discipline spending. I also believe we have to work on the revenue side of this equation. I say the first place we ought to look is not to a tax increase but to the tax gap, the difference between what is owed and what is being paid that the revenue commissioner now tells me for 2001 was $255 billion for the 1 year alone. We have not had any serious aggressive effort to go after this tax gap. I was also told by the former revenue commissioner that he anticipates those in the vast majority who pay what they legitimately owe are paying 15 percent more because we have some--both companies and individuals--who are failing to pay what they legitimately owe. I am confident the Senator from Utah pays what he legitimately owes. I know I do.

Mr. CONRAD. Mr. President, I thank my colleague from Nevada. He is also a valuable member of the Budget Committee. I enjoy these discussions with him. He is thoughtful. We disagree, but we will have a chance to talk about some of those disagreements as we go through the debate. I am going to take a moment to talk about some of these issues now, but I believe he does share a fundamental commitment to the notion that we have to get these deficits down. We may have some differences about how to do that. I believe we have to both restrain spending and work the revenue side of this equation. I don't think it is going to work without that. Let me start with a little different take on what has caused this dramatic flip in where we are with respect to deficits and what we earlier projected to be surpluses. We have had, for the period from 2002 to 2011, a $9 trillion reversal. As we look at the causes, here is what we see. The tax cuts are 33 percent of the difference. The Senator from Nevada had a chart. I think it showed 23 percent. I don't quite know what the difference is, although I will bet in his chart he did not include the additional debt service as a result of the tax cuts. My recollection is it was 23 percent in his chart. We may also have a different timeframe. Our analysis from 2002 to 2011 is that 33 percent of the disappearance of the surplus was from tax cuts. The second biggest reason was technical changes, primarily lower revenues--lower revenues that were not caused by the tax cuts; lower revenues that were because the projections were overly optimistic. The third biggest reason was other legislation. It is spending. Most of the spending went to increased defense spending, increased homeland security spending, and the response to the 9/11 attack, rebuilding New York, the airline bailout, and the rest. Only 8 percent of the disappearance of the surplus for the years 2002 to 2011 is the result of the economic downturn. In our analysis, the biggest reason for the disappearance, the biggest single reason, is the tax cuts. I am much less concerned about the tax cuts in the short term. I think all of us know you have to run deficits in the short term with an economic downturn, with the attack. It is the longer term policy of continuing to run these deficits that is truly dangerous and reckless. When we look at where the increase in spending occurred, we can see that 91 percent of it is in these three areas: The increase in defense spending, which is by far the biggest, the increase in homeland security, and the response to the attack. Here is what has happened to the debt under the President's plan. The debt is taking off like a scalded cat; again, right before the baby boomers retire. The problem I see with the budget the President has put before us is there is no real progress on reducing the increases in the debt. The President says he is going to cut the deficit in half, but that is only because he leaves out whole areas of expenditures. But if you look at increases in the debt, what you see is quite a different picture. The debt keeps getting increased under the President's plan by $600 billion a year, each and every year, for as far as the eye can see. At the end of the budget period it is increasing by $700 billion. The Senator from Nevada says we have to get back to reducing the deficit so we stop accumulating debt and so we are in a position to start paying down debt. That isn't where the President's plan takes us. This is from the President's own budget document. What it shows is record deficits, the biggest deficits in dollar terms we have ever had, a slight improvement in terms of the so-called unified deficit where all the funds are jackpotted, Social Security money is used to pay for tax cuts and other expenditures. But then look what happens. As the baby boomers retire and the President's tax cuts explode in cost, we are taken right over the cliff. That is the problem with the President's plan. It doesn't add up in the long term. It does not add up in the short term, and it takes us in a very reckless direction, one in which we will not be able to meet the long-term obligations of the country. With that, I yield the floor and thank the Senator from Washington for being here this evening and for her invaluable contributions to the deliberations of the Budget Committee.

Mr. CONRAD

Mr. CONRAD. Mr. President, let me add my voice to the Chairman's voice on the question of amendments. We have gone back and looked over past budget resolutions, and we have seen that there has been substantial duplication in amendments, all of them included in what the chairman calls a vote-arama. We believe if we all use a little more discipline we can reduce the number of amendments considered and still have a thorough debate on the key issues and the key differences between us. I am urging my colleagues to think if they have an amendment that is on No Child Left Behind, that they group together with other Senators who might be similarly inclined and offer an amendment together rather than three or four different amendments on the same subject. I ask our colleagues that we have a good, full debate, we use this week well, we express the differences between us in a responsible way, but at the end, that we do not have a whole series of relatively minor amendments or repetitive amendments so we can have the best expression of the Senate's position on the budget. I yield the floor.