Kent Conrad

Mr. CONRAD

Mr. CONRAD. Mr. President, as this conflict begins, all of us pray for a swift and decisive victory, and the safety of our brave men and women in battle. North Dakota has sent thousands of sons and daughters to wage this fight at home and abroad, including more National Guard members per capita than any other State. Along with the men and women from the airbases in Minot and Grand Forks, North Dakotans will bear a heavy burden in this conflict. I know they will be strong. I pray they will be safe. I have great confidence that the fourteen B-52s deployed from Minot Air Force Base and their crews will turn in a brilliant performance, once again demonstrating the awesome power and effectiveness of these reliable planes and their expert crews. B-52s made a huge contribution to our success in Afghanistan, helping to turn the tide quickly against the terrorists. They were decisive in the last gulf war, and I know they will again play a key role. The Grand Forks base is operating at a greater tempo than at any time in its history, flying its massive tankers and providing the air bridge that allows our forces to operate against an enemy halfway around the world. Our National Guard members have been called up to bases inside the United States, ready to support operations on the ground, and we hope, the operations that will be necessary after a victory. The Guard units have been drawn from Fargo, Bismarck, Grand Forks, Edgeley, Grafton, Rugby, Wishek, Cando, Carrington, Mayville, Oakes, and Wahpeton. There is hardly a town in my State that has not seen at least one of its citizens called up to serve. They have left their jobs and their families to do their duty in defense of the Nation. I could not be more proud of the tremendous contribution the men and women of my State are making, their dedication and their patriotism. I had hoped for a peaceful solution, but today we are at war. Like all Americans, my thoughts and prayers will be with our troops and our allies in the difficult hours to come. My greatest hope is that the conflict will be settled quickly, with minimal loss of life, and that stability will be restored to the region. As the conflict continues, I stand with my colleagues united behind our troops here at home and overseas. With my family and my colleagues I pray for the men and women who now stand in harm's way. May they be granted a swift victory, and may the sacrifices of this war lead to a safer and more peaceful world.

Mr. CONRAD

Mr. CONRAD. Mr. President, in these moments while we are asking colleagues to come to the floor to offer their amendments--and I understand a Senator is on his way to the floor--I also understand we may be turning to the resolution on Iraq at 2. Instead of having this time wasted, I thought I would review, from my perspective, what has happened to our budget condition over the last several years, where we are headed, and why it alarms me so much. My colleagues will recall that 2 years ago we were told there were going to be $5.6 trillion of surpluses over the next decade. It was in that context that President Bush sent Congress a budget that had a $1.7 trillion or $1.8 trillion tax cut. He said at the time that he would only be taking 1 of every 4 surplus dollars for tax reduction, and he said he would still be able to fund a strong buildup for national defense, that he would be able to fund the priorities of education and health care, that he would be able to have a maximum paydown of the national debt, in fact he would be able to virtually eliminate the national debt, and that he would also be able to protect the trust funds of Social Security and Medicare. Unfortunately, that proved to be overly optimistic. Many warned at that time that it was unwise to be betting on a 10-year forecast, that you cannot count on a 10-year forecast. You cannot bet the ranch on the revenue coming in as anticipated. We all know what has happened. With the tax cut implemented at the time, with the economic slowdown, with the attack on America, with the additional tax cuts proposed by the President because now he has proposed an additional $1.6 trillion of tax cuts, and with the associated interest costs, the total cost of those tax cuts would be $1.96 trillion. When that is put together, we are back in the deficit ditch and by over $2 trillion. Where did the money go? Over this period, most of it went to the tax cuts, both those that had been implemented and those proposed. The second biggest chunk of the money, 27 percent, went to additional spending as a result of the attack on the country. Virtually all of this has increased defense spending and additional homeland security spending. The next biggest chunk is revenue coming in below expectations not related to the tax cut--in other words, the total revenue below what we would have had without the tax cuts and without the overestimations of revenue. The revenue change is 64 percent, but only about two-thirds of that is from the tax cut. The other is from the models not predicting accurately what revenue would be raised for various levels of economic activity. The smallest sliver, the smallest part, is the economic downturn. Most alarming is the long-term outlook. The long-term outlook, according to the President's own analysis, from his analytical perspectives, page 43 of his budget document, shows what happens if we implement the President's proposals for spending and tax cuts. What one sees should alarm everyone. It shows these are the good times with respect to deficits. The deficits we are running now are record amounts. We have never had a budget deficit over $290 billion, even including Social Security, not over $370 billion. This year we will have a budget deficit of over $500 billion. This chart shows--and again it is from the President's own analysis-- the situation will get much worse as the baby boom generation starts to retire because they will put pressure, of course, on Medicare and Social Security, programs for which they are eligible, programs on which they are counting, and we are going to have over 75 million people who are in that baby boom generation. That will double the number of people eligible for those programs. Look what happens then. If we adopt the President's policy, his tax cuts, and his spending policy, when the baby boom generation retires, according to the President's own documents, the deficits absolutely explode. Is this a course we should be on? I don't think so. This is a course for deficits and debt that is utterly unsustainable. This is a course that I believe, and I predict today, will lead to dramatic cuts in Medicare, in Social Security, and in virtually every other part of the Government. I am the first to acknowledge there are items in the Government we should cut. There is waste in Government, there is fraud in Government, there is abuse in Government, no question about that. But we have been hunting waste, fraud, and abuse a long time, and we will need to continue that, and we will need to do a much better job of it because where we are headed is totally unsustainable. If anyone doubts this will lead to massive cuts in Medicare and Social Security, look at the House budget resolution. It proposes $470 billion of cuts in mandatory programs. That is Medicare and that is Medicaid. It proposes another over $200 billion of cuts in domestic discretionary programs that are not defense related. The course we are on is a disaster for this country, of mounting deficit, of mounting debt, right before the baby boom generation retires. And this is the sweet spot because right now the trust funds, especially the Social Security trust fund, are generating billions of dollars. This year alone there are $160 billion of surplus and we are taking every dime of it under the President's proposal and using it to pay for tax cuts and other expenses of Government. Some people say that does not matter; the trust fund is still whole because it is being credited with the amount of money coming in. It is true, the trust fund is being credited. It is also true that the only way those pledges, those IOUs are going to be paid back, is if we have sufficient resources to do so at the time those bonds come due. That depends on the size of the economy. That depends on the strength of the economy. That depends on the economic growth we experience between now and then. This is something upon which many agree. That is a fundamental truth that our ability to redeem those obligations depends on the size of the economy, depends on how good a job we have done growing the economy in the interval. That goes to the question, How do we best secure economic growth? This is where we have a profound difference. Many on our side believe it is best done by providing a stimulus to the economy now, and the stimulus can be either tax cuts or additional spending. Either one of them provides stimulus. There are many economic models that suggest spending is actually somewhat superior to a tax cut because all of the spending dollars go into the economy. When you do a tax cut, some of the dollars go into the economy but some are saved. To the extent they are saved, that does not provide immediate stimulus. Our friends on the other side believe the most effective way is tax cuts, that tax cuts will encourage greater economic activity. I say to them, on a factual basis, it is clear spending and tax cuts, either one, stimulate the economy. All of that has to be in a context. The context is, What is the long- term balance of revenues and expenditures? When you have an imbalance, when you are spending more than you are taking in, you run deficits. Deficits over time have a negative effect on the economy. Why? Because when you run budget deficits, the Federal Government has to borrow money. When the Federal Government borrows money, it is in competition with the private sector for borrowing money and that puts upward pressure on interest rates, especially at a time of economic growth. We have looked at what the President calls a growth package. Not only have we looked at it but economists we respect have looked at it and they have concluded, and many of us have concluded, it does not promote growth. It will actually inhibit growth. Why? Because the tax cuts are not paid for. They are not paid for by spending reductions under the President's plan. They are paid for by borrowing the money. That means increasing the deficit, increasing the debt. It is the dead weight of those deficits and debt that are harmful to economic growth. I say harmful, because to the extent you run budget deficits, that reduces the pool of societal savings, that reduces the pool of money available for investment, and you have to have investment to grow. Many believe the President's plan is not a plan of economic growth, that it is a plan that will hurt economic growth because it will explode deficits and debt. That is not the only problem with the President's plan. It will force choices in the future that will require deep cuts in Medicare, in Social Security, in funding for education, in funding for law enforcement because there is no other possible outcome when, if you adopt the President's plan, you run deficits of this magnitude. This is not Kent Conrad's chart or the Democrats' chart; this is the President's chart. What he says is: If you adopt my policies, you never escape from deficit. And the deficits, once we get past this period when the trust funds of Social Security and Medicare are producing surpluses and those trust funds turn cash negative, which will happen in the next decade, the deficits will explode. The debt will explode and a future Congress and a future President will then face truly difficult choices. I thank my colleagues for their patience in listening to this. I yield the floor.

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

Mr. CONRAD. Five hours 9 minutes. I thank the Chair. So we have just over 5 hours remaining. I alert my colleagues and their staffs that if they have amendments they want to offer, this is their chance. Time is going to run out, and then we will vote on the amendments that are pending at the time until we have disposed of all of those amendments. So if people want to have a chance to debate and discuss their amendments, time is running out. This is their chance. I urge my colleagues to take advantage of that opportunity. I yield the floor and suggest the absence of a quorum.

Mr. CONRAD. I thank the Senator from Nevada for his kind remarks. I will take this moment to alert our colleagues, who may be listening back in their offices, of the circumstance we face. The other side now has yielded back all of their time. We are down to some 5 hours--might I inquire of the Chair how much time we have on this side?

Mr. CONRAD. I will yield to the Senator from Nevada. As I do, let me say how much I appreciate the partnership of the Senator from Nevada in this endeavor of working on a budget resolution. His patience and willingness to work with others to try to accomplish legislative results are legendary in the Chamber. We appreciate very much his hard work.

Mr. CONRAD. Mr. President, first, there has now been agreement on a resolution with respect to Iraq. At least we had a caucus and there is agreement on the wording of the resolution. I hope very much we get on with that sometime soon. I personally think it is surrealistic to be talking about other issues and not talking about Iraq. I hope when we get on to the discussion of the war with Iraq, not for the purpose of delay, because we could dispense with that discussion hopefully throughout the day and perhaps tomorrow morning go back to the budget and complete the budget by early next week, which is long in advance of when we need to finish it, but to have our country at war and not be discussing that when the resolution has now been completed strikes many of us as incongruous. With that said, we are still on the budget. Let me go to the question of the amendment I have already announced I will send to the desk. The amendment I will be offering is on funding IDEA. We see that in 2002 and 2003, we enacted $2.5 billion. Full funding for that period would be $24.4 billion. When we say ``full funding,'' that is not really full funding. That is funding the commitment the Federal Government made to provide 40 percent of the cost of that legislation, a commitment that we have never kept. As a result, we forced up local property taxes all across the country. The budget that has come before us in 2002 is far short of meeting the Federal commitment in 2003 and in 2004. The chairman of the committee has indicated they increased IDEA--and they did, that is absolutely correct--by $1 billion. That is a move in the right direction, and we applaud it. But we are still so far below what we promised when we passed the legislation. I say to my colleagues, when the Federal Government tells the States and all these local units all across the country, we are passing this legislation and as part of the bargain we will fund 40 percent of it--40 percent--and then we never come anywhere close, that is not a good way for the Federal Government to do business. That damages our credibility and it also forces local jurisdictions to raise local property taxes. The budget we have before us on education is the smallest increase we have seen in 8 years. There are increases, absolutely; that is true. There is an increase. Our colleagues on the other side like to concentrate on those areas that have increases. They often do not say they have funded many of those increases with corresponding cuts. The overall increase is $1.1 billion, and that is by far the lowest increase for education in 8 years. My own strong belief is education is the priority. After defending the Nation, which is our No. 1 priority--that is our No. 1 responsibility--I believe education is right at the head of the line. Maybe I believe that because I was raised by my grandparents. My grandmother was a schoolteacher, and my grandfather, who only had an eighth grade education, had profound respect for education. Certainly my grandmother did. She drummed it into all of our heads: If you want to make the most of your opportunity in life, get the best education you can. My grandparents were deadly serious about it. They were so serious. They were middle-income people, but they made sure they set aside funds to help every one of their grandchildren, 13 grandchildren, get an advanced degree. Not just a college degree, but every single one an advanced degree because they saw education as the way to open the door to opportunity. That is what we ought to be doing with our education funding. This budget doesn't do it. This budget puts the priority, the overwhelming priority, on tax cuts. Of the money above baseline in this budget, 74 percent is for tax cuts; 74 percent of the money above the baseline. That is above the normal spending and the normal taxes. Seventy-four percent of the change above baseline is for tax cuts. That is the priority in this budget. I do not think that is the right priority. I hope my colleagues will give serious consideration to this amendment. It costs $73 billion over 10 years, and it is paid for by reducing the $1.4 trillion tax cut by a like amount.

Mr. CONRAD. Mr. President, I think it is good we have a few more amendments in the queue. I ask Senator Nickles and the staff to review the other amendments and maybe we can get those lined up. We will improve the operations if we can get those lined up. I thank the chairman for his courtesy.

Mr. CONRAD. Both have been dispensed with?

Mr. CONRAD. Before that.

Mr. CONRAD. What was that last request, if I can inquire? I missed that last request.

Mr. CONRAD. It would be the amendment which Senator Feingold discussed, which is the amendment for a $100 billion war reserve fund so that the war is paid for and the resources are available in this budget.

Mr. CONRAD. Fair enough.

Mr. CONRAD. Reserving the right to object, what will that do to the sequence of votes? We would not want the Schumer amendment to lose its position; that we would vote on that prior to the Brownback amendment.

Mr. CONRAD. Why don't we do that, and if we can get agreement on that, we will be happy to agree to Senator Brownback sending his amendment to the desk as well.

Mr. CONRAD. I would if we can get agreement to send Senator Feingold's amendment as well.

Mr. CONRAD. Mr. President, I am happy to yield 5 minutes to the Senator from Illinois.

Mr. CONRAD. I thank the Senator. And I can only say, I have been completely ineffective at stopping what I think is a rush to deficits and debt and, ultimately, decline. I believe it is profoundly wrong--profoundly wrong--to run up these budget deficits. Unfortunately, the budget that the President of the United States sent to us and the budget that has come out of the committee will dramatically increase our budget deficits. As the Senator has indicated, we are going to have a deficit, if the President's budget is adopted, of over $500 billion this year and will never have a budget deficit below $400 billion any year for the rest of this decade under the budget the President sent us. Under the budget that has come out of the committee, we will never have a deficit under $300 billion. On this chart is the President's budget. One can see we have red ink as far as the eye can see, over $500 billion this year, over $400 billion in every year for the rest of this decade. Here is what happens to the gross Federal debt. The gross Federal debt is going to go from $6 trillion, in 2002, and is going to reach $12 trillion by the end of this budget period. That is the consequence of the President's budget. What I think should sober us all is that the cost of the President's tax cuts explodes at exactly the time the cost to the Federal Government of the retirement of the baby boom generation explodes-- deficits and debt. These are not my projections. These are official reports of the Congressional Budget Office and the President's own budget documents. Here is the President's own budget document as shown right here. This is the long-term outlook if the President's policies are adopted. It shows that we are in the sweet spot now. This is where we are now. And although these are record deficits, the biggest in dollar terms we have ever had, if we adopt his policies, it is going to get much worse because, as I indicated, the cost of his tax cuts explodes at the very time the cost of the retirement of the baby boom generation explodes. That is not a projection. We know baby boomers have been born. They are alive today. They are eligible for Social Security and Medicare. There are going to be 77 million of them--about double the number we have eligible today. That is what we face as a consequence of this budget. I think it will be a significant mistake. I want to, for a moment, discuss an amendment I will be offering for our colleagues to deal with the promise the Federal Government made on IDEA; that is, the Individuals With Disabilities Act. We made a promise to local governments that the Federal Government would fund 40 percent of the cost. It was a promise we have never kept. As a result, property taxes are higher in every jurisdiction of America. I will offer an amendment to keep the promise of IDEA, and to pay for it, and to pay for it by reducing the tax cuts that are part of this legislation. The legislation before us has $1.4 trillion in tax cuts. The associated interest costs another almost $300 billion. So the total cost of this tax cut, in this measure, is $1.7 trillion. The legislation I will offer to keep the promise on IDEA is a fraction of that, a small fraction of that--around $70 billion over the next 10 years. The Federal Government made a promise, when the legislation was adopted, that we would fund 40 percent of the cost. My colleagues know that we are only doing about half as much as we promised. What does that mean? That means the local districts get stuck with the bill. That means pressure is put on local property taxes. In my own State, now the annual property tax is about 2.5 percent of the value of the property. That is a very burdensome tax. In part, it is a result of our not keeping a promise and shoving the burden off on local school districts. That is not something we should do. If we make a commitment, we ought to keep it. I am going to give our colleagues a chance to keep the promise that was made on IDEA, and to fund it out of the tax cut. We are still operating under an agreement in which we are discussing amendments but not sending them to the desk at this point. We will do that at an appropriate time. But I wanted to alert my colleagues that I am going to offer an amendment on IDEA. I am going to offer it in a way that is paid for. I am going to offer it in a way that is not at the top end of the range, by any means. It is going to have a cost of between $70 and $80 billion over 10 years. We will pay for it by reducing the $1.4 trillion tax cut. A budget is about choices. A budget is about priorities. I believe that ought to be a priority for this body and for this country. I believe we ought to keep the promise that was made to local school districts when the legislation was passed. I believe we ought to rejigger the priorities of the budget resolution that is before us, reduce the size of the tax cut, keep the promise of IDEA, and take pressure off local property taxes because that is exactly where the burden is borne when the Federal Government does not keep its promise. With that, Mr. President, I yield the floor.

Mr. CONRAD. Bill Guy was a very close friend of my family and somebody who has been a mentor to me in public service. Bill Guy was a balanced budget Democrat. He believed in balanced budgets and he believed in fiscal responsibility. He was proud to stand with the Senator from South Carolina during that time of dramatically rising deficits. To him it was a threat to the economic security of the country and he thought the Senator from South Carolina had the best plan. I think if anybody looks back objectively at that time, one will see in fact the Senator from South Carolina did have the best plan. If it had been adopted at the time we would have avoided much of the debt now facing the country.

Mr. CONRAD. I thank the senior Senator from South Carolina for his leadership. One of the people who inspired me to run for the Senate was the Senator from South Carolina. I don't think I have ever told the Senator that. But when the Senator from South Carolina was running for President of the United States, our former Governor, Bill Guy, endorsed Senator Hollings.

Mr. CONRAD. Mr. President, I thank the Senator from Maryland for her excellent amendment. We appreciate very much her presentation and the thoughtfulness and the energy that she has put into this amendment. I hope my colleagues will pay close attention to what she has offered. Next, I am going to yield 30 minutes to the senior Senator from South Carolina. Let me say that if there was an award in this body for Mr. Fiscal Responsibility, it would be the senior Senator from South Carolina. In the time I have been in the Senate, nobody has been more serious, more dedicated to balancing budgets, to paying down debt than the Senator from South Carolina.

Mr. CONRAD. Mr. President, I salute the Senator from Wisconsin. I think it is absolutely bizarre that we have the budget before us and we have nothing to pay for the war in that budget. The reason given was that operations had not commenced. Well, operations have commenced. And not to set aside funds for the war makes no earthly sense. How can that possibly be defended? We are at war. We have already spent tens of billions of dollars on that conflict, and now to suggest we put our head in the sand and say there is nothing going on defies reality, defies common sense. I very much hope the amendment of the Senator from Wisconsin is adopted. I yield 5 minutes to the Senator from the State of Maryland.

Mr. CONRAD. Yes. I yield 1 minute to the Senator from Wisconsin.

Mr. CONRAD. Mr. President, I yield 5 minutes to the Senator from South Carolina.

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