Kent Conrad

Mr. CONRAD

Mr. CONRAD. Mr. President, I ask that we go into a quorum call and the time be charged equally.

Mr. CONRAD

Mr. CONRAD. Mr. President, I say to my colleague, who not only do I respect but for whom I have genuine affection, when he says this is just a question of spending versus tax cut, he knows better. Those are not the choices. They really are not. The choices are tax cuts, spending, and addressing debt. The real difference between our two plans--the biggest difference--is they have twice as much for tax cuts and we have twice as much for debt reduction. That is the real difference. Yes, we also have some additional spending for prescription drugs, education, agriculture, and a prescription drug benefit because we think those are the priorities of the American people. But let there be no doubt, the fundamental difference between us is we are for more debt reduction; they are for more of a tax cut. That is where it lies. I yield the floor.

Mr. CONRAD. I ask unanimous consent for 1 minute.

Mr. CONRAD. Mr. President, I commend the Senator from Michigan who is a valued member of the Senate Budget Committee. She is new to this body, but she is certainly not new to the issues because she served with distinction in the House of Representatives and was a leader on many of these issues in the House of Representatives. She brought that knowledge and that commitment to the issues to the Senate. There has been, really, no new member of the Budget Committee who has been any more responsive in terms of commitment to the work of the Budget Committee than the Senator from Michigan. She cares deeply about getting our fiscal house in order and keeping it there. She cares deeply about the right priorities for the country, including improving education and providing a prescription drug benefit. She has made a very valuable contribution to the work of the committee. I think she was disappointed, as I was, that we did not have a markup in the Budget Committee. We did not even attempt to mark up a budget for our colleagues, which is unprecedented. But I want to say she has made a valuable contribution during the deliberations of the committee and the set of hearings we had and in producing the Democratic alternative. I thank her very much for those contributions. Senator Dorgan from North Dakota is in the queue for time to speak, and I yield him 10 minutes off the resolution.

Mr. CONRAD. Mr. President, reserving the right to object, we have a unanimous consent agreement in place. The unanimous consent agreement provided for time for the Senator from Texas, and then we were to go to the Senator from Massachusetts, and then back to the Senator from Tennessee. I think what has been suggested would be out of order.

Mr. CONRAD. I repeat my unanimous consent request and we reserve 5 minutes off the amendment for the Senator from Montana.

Mr. CONRAD. Off the resolution.

Mr. CONRAD. The Senator from Montana had previously requested and, as I understood it, reserved 5 minutes off the amendment. All of these other times are off the resolution on our side. On the Republican side, I am assuming they will be off the amendment.

Mr. CONRAD. Twelve minutes to the Senator from Tennessee, and then come back to the Senator from Michigan for 10 minutes.

Mr. CONRAD. I amend the unanimous consent request to 10 minutes for the Senator from Florida, then 15 minutes for the Senator from Texas, then back to our side for 15 minutes to the Senator from Massachusetts. How much time does the Senator from Tennessee want?

Mr. CONRAD. There were no requests on the Senator's side. We can certainly do that.

Mr. CONRAD. We will be happy to provide the Senator an additional 10 minutes off the resolution.

Mr. CONRAD. Mr. President, may I indicate that Senator Graham's time will come off the resolution.

Mr. CONRAD. Mr. President, I listened to my colleague. First of all, let me say that I have enormous respect for the chairman of the committee. He is a good chairman. He is a fair chairman. But we do have a significant difference of opinion with respect to the budget that is before the country. The chairman believes that the size of this tax cut is the appropriate way to go. He tries to poster it as a question of spending versus tax cuts. But that is the old debate. That is the tired debate. It doesn't relate to the facts of their budget. It is not the proposal that we have made. The fundamental difference is we have reserved 70 percent of the money for short-term and long- term debt reduction. They reserve, under the President's plan, about 35 percent of the money for debt reduction. The fundamental difference is not a difference between taxing and spending. The fundamental difference is a question of do we do more debt reduction as we advocate or more of a tax cut as they advocate? We have a substantial tax cut but one that is half as big as theirs because we reserve the difference for money to deal with our long-term debt that is primarily Social Security. We say: Look, we have had the Comptroller General of the United States come and tell us the situation we face. The Social Security and Medicare trust funds face cash deficits as the baby boomers retire. Yes, we are in surplus today, but we are headed for deficits tomorrow. We say in our plan that we ought to set aside some of their money they want to use for a tax cut to deal with the long-term debt crisis facing our country. That is the difference. That is the big difference between their plan and our plan. They want it all for a tax cut. We want half of it for a tax cut, and we want half of it to begin to deal with our long-term debt crisis that is facing this country. If we want to strengthen Social Security for the future, we have to have resources to do it, whether it is individual accounts as many on their side advocate, and some on our side, or whether it is the Social Security Plus plan advocated by Vice President Gore in the Presidential campaign or whether it is the privatization plan that their President advocates. From where is the money going to come? The chairman of the committee puts up a chart. You can't find a single dime set aside to strengthen Social Security for the long term-- not one thin dime. You can't find a penny to deal with this long-term debt problem, not a penny. That is the difference between us. We reduce the size of the tax cut so that we have resources to strengthen Social Security for the long term to deal with this long- term debt crisis. Look at what we are told. The Social Security and Medicare trust funds start to run into massive deficits in this second 10-year period. Let me conclude. When they say this is a question of the Democrats just wanting to increase spending, no, this isn't a question of Democrats just wanting to increase spending. Let's go to the facts. The facts are under our plan the Federal role will continue to shrink. Last night the Senator from Texas said facts are stubborn things. Indeed they are. Here is our spending proposal. The role of the Federal Government would continue to decline. In fact, it would go to the lowest level since 1951 under our proposal. This is not increased spending. This is reducing the role of the Federal Government so more resources can be dedicated to debt reduction--both short-term and long-term under our plan. That is the fundamental difference between these plans. Our friends on the other side want to take all of the non-trust-fund money and put it out for a tax cut. We say, no, that is not wise. Yes, half of it could be used for a tax cut, but half of it ought to be used to deal with our long-term debt crisis; that we ought to strengthen Social Security for the long term. That is the fundamental difference between these plans. And it is a profound difference. It recognizes, No. 1, the uncertainty of the forecast. Any 10-year projection is uncertain. More than that, it recognizes that at the end of this 10-year period, the baby boomers start to retire. These surpluses turn to deficits, and we have an obligation to deal with that long-term debt. We have reserved $750 billion for that purpose. That money could go into individual accounts. When they talk about money going back to the people, you add up our tax cut and the money that is available to deal with long-term debt, which happens to be the people's debt--we talk a lot about the people's money; it is also the people's debt--you have the people's short-term debt and the people's long-term debt. We say let's reserve 70 percent of the money to deal with the people's short-term and long-term debt. Our friends on the other side want to take all the non-trust-fund money and use it for a tax cut. They don't want to reserve one single dime to deal with this long-term debt crisis facing the country, not a penny. There is no money reserved for the long-term debt situation of the country. They will say we reserve the Social Security trust fund money. Good. That is a good start. But what do you do next? What do you do after you reserve the money for the Social Security trust fund and the Medicare trust fund? Do you provide a single dime? Is there a single penny in there to deal with the long-term crunch that we all know is coming? No, not a penny. They are getting ready to take it out of the Social Security trust fund, which, of course, will just move up the date of insolvency for the Social Security trust fund. We say reserve every penny of the Social Security trust fund for Social Security, every penny of the Medicare trust fund for Medicare, and out of what is left take $750 billion to strengthen Social Security for the long-term to deal with the long-term debt that is facing this country. This isn't a question between taxes and spending. No. It is part of it because there are places where we think more resources could be reserved for a prescription drug benefit, to improve education, and to strengthen national defense. But we also believe most of this projected surplus ought to be dedicated to debt reduction, short term and long term. And we do twice as much as they do. That is a simple truth. That is the simple difference. It is a big difference for the future of this country. We are going to go to our first amendment and Senator Baucus.

Mr. CONRAD. Mr. President, there were a couple of statements made by my colleague from Missouri that I think require a response. First, with respect to how much debt can be retired, the President has said only $2 trillion of publicly held debt can be retired. But when we examined the budget offering by my colleagues on the other side, we saw they have reduced the debt by $400 billion over that. Perhaps at some point we could get a clarification on how much debt they intend to pay down because while the President has repeatedly said there is $1.2 trillion that can't be retired, when we examined the budget documents from our colleagues on the other side, we saw they have paid all but $800 billion of publicly held debt. So there seems to be some conflict within the troops on the other side. Which is it? Is it, as the President says, that there is $1.2 trillion you cannot pay down, or is it as the budget document that has come from our colleagues on the other side says, which is, no, it is not $1.2 trillion, it is $800 billion? I think the $800 billion comes closer to the truth, by the way, than the President's assertion that you can only pay down $2 trillion of the publicly held debt and that there is $1.2 trillion that can't be retired. Again, the budget document that has been provided by the other side says they are prepared to pay publicly held debt down to the level of $800 billion. The second point: When we do an analysis, a detailed cashflow analysis on paydown of debt, we find that if you save all of Social Security and Medicare trust funds, you have no cash buildup problem until 2010. There is no cash buildup problem until 2010. So all this talk about you are going to be paying premiums and you are going to be paying foreign debtholders more than they should be paid, that just does not match the facts. That whole scenario arose out of the notion that we do not have a tax cut, that we do not have any additional spending initiative. But under both plans, under the Republican plan and our plan, there are significant tax cuts and there are spending initiatives. The fact is you have no cash buildup problem until the year 2010, and you may well not have it then because this 10-year forecast may not come true. So I hope we are not debating kind of in the fog with respect to paying down debt and that some are trying to pay down more debt than is available to pay down. Certainly that is not the case based on the testimony received in the Senate Budget Committee. Finally, on the estate tax, a point that my colleague made on the other side, we do have a difference on the estate tax. We believe it ought to be fundamentally changed, that it bites at much too low a level on estates. We believe that ought to be substantially changed. We believe a couple ought to be able to preserve $4 or $5 million without having any estate tax; a small business or a farm, $8 or $10 million without paying any estate tax; and we think we ought to phase in those dramatic increases very quickly. It is interesting; the proposal on the other side does not relieve a single estate of taxation in the next 10 years. Their proposal cuts the tax rates on the wealthiest estates first. I call it the upside down approach. Instead of expanding those estates that are not subject to taxation, our Republican friends have a proposal that cuts the rates on the wealthiest estates first, does not relieve a single estate of taxation over the next 10 years, and makes this promise out there: Well, just be patient; at the end of 10 years we will eliminate it. We will eliminate it. We will eliminate it in the second 10 years right when the baby boomers start to retire and the cost of elimination is $750 billion for that second 10-year period. I say to my colleagues I do not think it will ever happen. What will happen is, if we go that route, they will come up with another name for another tax and they will put it on and people will have lost the opportunity in this 10-year period to have our plan pass. Our plan, which would dramatically increase the exemptions for estates, our plan, which would shield $4 or $5 million for a couple, $8 or $10 million for a small business or farm so that they do not pay any estate tax, is significant. It would relieve 40 percent of estates from taxation in the first year. Forty percent of currently taxable estates would be relieved of taxation in the first year. We would relieve two- thirds of all taxable estates from any taxation over the 10 years of this budget plan. Contrast that to what the Republicans have. They do not relieve a single estate of taxation in the next 10 years. They cut the rates on the wealthiest estates first. I don't know where they came up with that plan, but I don't think that plan is going to enjoy much popular support. It certainly does not in my State. We are now ready to turn to amendments.

Mr. CONRAD. I tried to make clear in my presentation, and I know the Senator wasn't here, there are two different sets of numbers. One is the President's number from the Office of Management and Budget. He says there is $500 billion in the Medicare trust fund Part A. The CBO says $400 billion or the specific amount of $392. That is the difference. I have tried to be clear throughout on those differences, that it is a difference between the agencies. The CBO that we must use says $400 billion, and the President's Office of Management and Budget says $526 billion. That is the difference.

Mr. CONRAD. Will the Senator yield?

Mr. CONRAD. Mr. President, we have begun debate on the budget resolution, the budget resolution for the country for the next year. Under the rules of the Senate, we are also required to put it in the context and the framework of a 10-year budget, and so begins what is in many ways perhaps the single most important debate that we will have this year. It is the question of choices we make with respect to the priorities of the Nation. Our President has said on many occasions that it is the people's money; we ought to give the money back to the people. I think all agree that the President is exactly right when he says it is the people's money. Of course it is. That is exactly right. But I think we also understand that there are more choices than just giving the money back to the people by way of a tax cut. There are certain things that we do collectively as the people of a nation which we cannot do individually: for example, providing for our national defense. There are other things that we do as a society to make it a better nation. We have a Social Security system to safeguard our elderly. We have a Medicare program to provide for the health of our senior citizens. We have support for education because we all understand that is the Nation's future. We also have a national debt, a publicly held debt that, as we meet here today, is $3.4 trillion. But there is another debt that we don't talk very much about. That is the gross debt of the United States. That gross debt is $5.6 trillion. While we say many times we are paying down the publicly held debt, and that is true, it is also true that the gross debt of the United States is actually increasing. I think that confuses many people. The publicly held debt is that debt which is held by people outside of the Government. It is debt held by the public. And the public is not just the public here in America; the debt is also held abroad. It is held by Japan, by Germany, and by other countries. That is the publicly held debt, $3.4 trillion as we meet here today. But the gross debt of the United States is the debt not only owed to the public but the debt that is owed to other government entities. For example, the trust funds of the United States--the general fund of the United States owes the Social Security trust fund hundreds of billions of dollars. Under the President's proposal and under all other proposals, the way we are going to be paying down the publicly held debt is to take the surpluses that are in Social Security and use those to pay down the publicly held debt. Because the money is not needed by Social Security at the moment, and will not be needed for the next decade, that money is in surplus. It is those surpluses--the surpluses that are in the trust funds--that are being used to pay down the publicly held debt. While we pay down that publicly held debt, obviously we are creating another debt. The debt we are creating as we pay down the publicly held debt with trust fund moneys is a debt to the trust funds from the general fund of the United States. That debt is increasing. While we talk about surpluses, I think we should be ever mindful that these surpluses are temporary. When we get past this 10-year period, we are going to face, instead of surpluses, deficits. We know that. The Comptroller General of the United States has warned that we will face a demographic tidal wave when the baby boom generation retires. And then these surpluses turn to substantial deficits. With that in mind, the Democratic alternative to the budget proposed by our colleagues on the other side has adopted these fundamental principles. First, we protect the Social Security and Medicare trust funds in every year. Second, we pay down a maximum amount of the publicly held debt. Third, we provide for an immediate fiscal stimulus of $60 billion to give some lift to this economy. In fact, we believe that is what we ought to be debating on the floor of the Senate this week. We think we ought to be talking about the fiscal stimulus package. Instead of a budget resolution talking about the next 10 years, we ought to be talking about a fiscal stimulus package for this year. Fourth, we believe we should provide significant tax relief for all Americans, including rate reduction, marriage penalty relief, and estate tax reform. In addition, our budget reserves resources for high-priority domestic needs, including improving education, a prescription drug benefit, strengthening of our national defense, and funding agriculture. Those are very clear priorities of the American people. The American people tell us in meeting after meeting: We want you to improve education. We want you to invest in our kids. And they are right. Our budget responds to that call. They also say: We want a meaningful prescription drug benefit. We know that the pattern and practice of medicine have changed since Medicare was enacted and we ought to have a modernized Medicare, one that includes a prescription drug benefit. That is costly. But we have provided for it in our budget. And strengthening our national defense; there is broad bipartisan consensus that our defense must be strengthened. Additional resources must be provided. If they are going to be provided, they have to be in the budget. That is what we have done with our budget. Finally, we have provided $750 billion to strengthen Social Security and to begin to address our long-term debt. We think that is critically important. The budget on the other side provides nothing for this purpose--no dollars to strengthen Social Security for the long term. Not any investment in dealing with our long-term debt which is coming as certainly as night follows day. We believe these are the priorities of the American people that ought to be included in any budget. I will go to the specifics that demonstrate we have kept faith with those principles. We start with the projected surplus of $5.6 trillion. As I said last night, it is important that we remember this is just a projection. It may not come true. In fact, if there is one thing of which we are certain, it is the uncertainty of this forecast. Even the agency that made the forecast says it is highly uncertain. The people who made the forecast say to us there is only a 10-percent chance that number is going to come true--10 percent. They say there is a 45-percent chance there will be more money. They say there is a 45-percent chance there will be less money. Which way would you bet, after the events of the last 8 weeks since this forecast was made? Is the economy strengthening or weakening? Is it more likely the money will be less than forecast or more than forecast? I feel safe in predicting it is likely to be less than was forecast. Whether that is right or that is wrong, the reality is we know $5.6 trillion over 10 years is a very uncertain projection. When the forecasting agency made the estimate, they informed us, looking at their previous forecasts and the variance from what they projected and what actually came true, they said this could be anywhere from a $50 billion deficit to over a $1 trillion surplus in the 5th year alone, based on the previous variances in their forecasts. So it is highly uncertain. Then we take out the Social Security trust fund. We protect it. We protect the Medicare trust fund. That leaves us with a non-Social Security non-Medicare remainder of $2.7 trillion that is left. The Senator from Texas, Mr. Gramm, put up a very interesting chart last night. He started with the same projection of surplus, but when he subtracted out trust funds, he only subtracted out the Social Security trust fund. There was not any mention of the Medicare trust fund in his presentation. There was no mention at all. I guess that should not be surprising because he has argued there is no Medicare trust fund. He said there is no surplus in the Medicare trust fund. That is not what the law says. That is not what the actuaries say. That is not what the reports of the Congressional Budget Office say. That is not what the President's own budget document says. All of them make very clear there is a trust fund surplus in Social Security and there is a trust fund surplus in Medicare. Medicare Part A has a surplus of anywhere from $400 billion to $500 billion. The Congressional Budget Office says it is $400 billion. The President's budget document says it is over $500 billion. Medicare Part B is in rough balance over the 10-year period. The Senator from Texas says: Oh, no, Part B is in deficit. It is not in deficit. That is just not so. He tries to make the case by saying only 25 percent of the funding for Medicare Part B comes from premiums; 75 percent comes from the general fund. That has nothing to do with being in deficit. That has to do with the law that we have passed in the Congress. We have said 25 percent of the funding of Part B will come from premiums and 75 percent will come from the general fund. It has nothing to do with being in deficit. So the reality is there is a trust fund surplus in Medicare of $400 billion, according to the Congressional Budget Office--$500 billion according to the President's own budget documents. We believe every penny of it ought to be protected. It should not be raided for any other purpose. That is a fundamental difference between the budget offering on this side and the budget offering that we make. We believe this money should not be shuffled off to some contingency fund available for other uses. We believe it ought to be protected in each and every year. Of what is left, we believe a third ought to go for a tax cut. That would be a net tax cut excluding the interest cost of $745 billion over the next 10 years. We believe that is affordable. Then we believe about a third ought to go for these high-priority domestic needs. We have made very clear and very specific what those needs are: $311 billion for a prescription drug benefit. That funds a prescription drug benefit that would be available to all who are Medicare eligible. It would be on a voluntary basis. It would be a significant benefit--not the most generous, by any means, of those that have been offered on the floor of the Senate in various proposals but nonetheless a significant benefit. The President's proposal is half as much. But of course 75 percent of people who are on Medicare will get no benefit under the President's plan. We do not think that is a serious prescription drug benefit plan. We provide $193 billion for infrastructure and education. It is not enough to just talk about these as priorities. If they are priorities, they need to be funded, and no one is more important than education. Third, we provide $100 billion over the 10-year period for additional resources for our national defense because we think that is critically important as we go forward and, fourth, we provide another $140 billion for other mandatory and health care expenditures. A very big chunk of this is for health care expansion so more people can be covered. We do not make the specific decision in the budget resolution about how that should be done, but we provide the resources so it can be done. Then we take a third of the non-trust-fund money and use it to address our long-term debt: $750 billion to strengthen Social Security because that is the source of most of our long-term debt. This $750 billion is also available as a strategic reserve in case these projections aren't ready. Then the interest costs associated with the other elements of the plan, because anytime you cut taxes, anytime you spend money, that increases your interest cost because the money is not paying down debt. If we are not providing a tax cut, if we are not spending money, then we are using it to pay down debt. To the extent we pay down debt, we reduce interest costs. So if we use the money for other purposes, if we provide a tax cut as we do, or if we spend money on high-priority domestic needs as we do, then there is less money going to pay down debt and that means additional interest costs. Let me make the point that we are doing far more dedicating of resources to paying down debt than our friends on the other side of the aisle. The President has said he would dedicate $2 trillion to paying down debt and his $2 trillion comes from the Social Security trust fund. We have reserved all of that money from the trust funds for paying down publicly held debt, $2.5 trillion plus $400 billion for the Medicare trust fund. So we are dedicating more money to paying down the publicly held debt than is the plan on the other side. In addition, we have reserved $750 billion for the long-term debt. We have tried not only to emphasize the short-term debt and the publicly held debt but to also focus on the long-term debt facing our Nation. If you add the one-third of what remains after we protect the trust funds with the trust funds money which will go to paying down debt, we have a combined total of nearly $3.7 trillion out of the $5.6 trillion for paying down short-term and long-term debt. That is the fundamental difference between our plan and their plan. They have a much bigger tax cut. We have much more for paying down short-term and long-term debt. The Senator from Texas tried to say last night that the real difference is spending. No, it isn't. There are some differences in spending because we make more of a commitment to these high-priority domestic needs--education, prescription drugs, national defense, health care, and expansion. We spend more money in those high-priority areas. But that isn't the biggest difference between us. The biggest difference between us is that we have reserved over two-thirds of these projected surpluses for paying down short-term and long-term debt. The President has reserved about 35 percent of the money for that purpose. I have done this comparison chart to try to get at the heart of the differences between our proposal and their proposal. You can see from the GOP budget that while the President says he will only use $2 trillion to pay down publicly held debt, his budget numbers actually show that he is using all of the Social Security money for paying down publicly held debt. We do the same. On the Medicare trust fund, we have reserved all $400 billion. The President's proposal has taken that money and put it in an unallocated category. We will get to that as we go through this comparison. On tax cuts, the President proposes $1.6 trillion; we propose $745 billion. On spending, the President proposes $713 billion over the 10 years above the so-called baseline. We are at $743 billion because of the high-priority domestic needs of education, health care, prescription drugs, and national defense. Here is the place where there is a major difference. We have the strategic reserve to strengthen Social Security and deal with our long- term debt. They have nothing for that purpose in their budget. We have $750 billion. As I indicated before, the interest cost on the Republican budget is $472 billion; $490 billion in our plan. If you add up the totals in the Republican plan, it comes to $4.8 trillion, ours is $5.6 trillion, and they have left unallocated $846 billion. Let's remember that $400 billion of that is from the Medicare trust funds. They call it unallocated. It is fully allocated. It is fully committed. It is committed to the trust fund. By saying it is unallocated, by saying it is available for a contingency, they are opening up the Medicare trust fund for the raid--the raid that has gone on in the past, the raid we have been able to stop the last 3 years. They are getting ready to raid the Medicare trust fund all over again. If we take that out of their contingency fund, we are left with just under $500 billion. That is not enough to cover education, prescription drugs, national defense, and the alternative minimum tax reform that is made necessary by the President's tax cut plan because the President's tax cut plan which he advertises as costing $1.6 trillion actually will cost a great deal more than that because it will require us to change the alternative minimum tax. Currently, about 2 million people are caught up in the alternative minimum tax. The President's plan will put over 30 million people under the alternative minimum tax. Boy, are they in for a big surprise. They thought they were going to get a tax cut. They thought they were going to get a reduction. What they are going to get is caught up in the alternative minimum tax. Thirty-million taxpayers--nearly one in four taxpayers in our country--are going to be caught up in the alternative minimum tax under the President's plan. It costs $300 billion to fix. On top of his $1.6 trillion tax cut, it will cost another $300 billion to fix the alternative minimum tax. Then, of course, you have the interest cost associated with the President's tax cut and fixing the alternative minimum tax. That is another $500 billion. Now we are talking real money. The reported cost of $1.6 trillion, of course, is reestimated by the budget experts of the Congress. I can tell you that they reestimated just part of his plan and they found it costs much more than $1.6 trillion. Over in the House, they reestimated just part of his plan and it went up in cost by $126 billion. The $1.6 trillion plan, the $1.7 billion plan, then you have to fix the alternative minimum tax, which is another $300 billion, and then you have the associated interest costs, which is another $500 billion. Now you are talking real money--$2.5 trillion from their supposed projected 10-year surplus of $5.6 trillion. Unfortunately, $3.1 trillion of that, according to the President's numbers--because his is slightly different from the Congressional Budget Office number--$3.1 trillion of that $5.67 trillion is trust fund money. It is trust fund money--$3.1 trillion of $5.6 trillion is trust fund money. Then you take the President's tax plan; it costs $2.5 trillion when you include all of the costs. You can see he has used all the non- trust-fund money for his tax cut plan. That is the fundamental problem with the President's plan. That is the fundamental problem with trying to find a way to get his plan to add up. For just a moment I would like to talk about the question of reconciliation. Very soon we may face the vote on reconciliation. I think it may be one of the most important votes not just in this debate but it may be one of the most important votes in all of our service time in the Senate. It may be one of the most important votes that affects the role of this institution. Why do I say that? Reconciliation was created for deficit reduction. It was created to short-circuit the normal way of doing Senate business, giving Senators the right to extend debate and giving Senators the right to amend legislation. The reason Senators were given those rights was that our Founding Fathers believed it was critical to the constitutional functioning of the U.S. Congress. They created the House of Representatives with Members serving 2-year terms to respond to the heat of the moment, to respond to the public passion. They created the Senate to be the cooling saucer, to be the place where debate and amendment could prevent serious mistakes. That is the constitutional role of the Senate. It is absolutely critically important to the functioning of our democracy. Reconciliation sweeps all of that away. Reconciliation has special procedures that allow only 20 hours of consideration of legislation on the floor of the Senate--no extended debate, no right by every Senator to amendment. That is all out the window. That reconciliation process was put in place for a purpose. The purpose was the deficit crisis that was facing the country. It was designed to be a way to raise taxes and cut spending to reduce deficits. That is why reconciliation was put in place. It was not designed for programs to increase spending or to cut taxes. That is just the opposite of for what reconciliation was created. I repeat, reconciliation was created for deficit reduction. It would be a perversion of the reconciliation process to use it for spending or for tax cuts. That is not deficit reduction. That is the opposite of deficit reduction. That is for what reconciliation ought to be reserved. Everything else ought to be under the regular order of the Senate, permitting Senators the right to extended debate, permitting Senators the right to amend because that is the constitutional role for this body. To change that role is a fundamental threat to the constitutional structure of the Senate. Nothing could be more important in this debate because if we fundamentally make the Senate of the United States into the House of Representatives, we have fundamentally changed the nature of this institution. We have fundamentally--and perhaps for all time--altered what our Founding Fathers intended for the Senate. I remember so well back in 1993-1994, there was a different administration, there was a different hot issue of the moment; it was health care. A group of us, including the father of the distinguished occupant of the chair who was part of a group, a bipartisan group, were given the primary responsibility to write a health care reform bill. That administration very much wanted that legislation. It was their highest priority. But they knew they could not get it through the regular order. They could not get it through the regular Senate process. They could not get 60 votes to stop a filibuster. So they came to a group of us and asked us if we would support the use of the reconciliation process for a massive new spending program, a $138 billion spending program to expand health care coverage. And that group of us said: No. As much as we wanted to reform the health care system, as much as we wanted to expand coverage, we said that would be an abuse of the reconciliation process because it was not for deficit reduction, it was for new spending, and we could not go along with that request. We could not support it because it went beyond a procedural question. That was a fundamental question of the operation of this institution, a fundamental question of the operation of the Senate and its constitutional role. We could no more support the use of reconciliation for a spending program as we could for a tax-cutting program because neither were intended to be used under the special rules of reconciliation that reduced the rights of each and every Senator to extended debate and the right to amendment. In fact, under reconciliation we are limited to 20 hours on the floor of the Senate, and one side or the other can give back all of its time. They can give back 10 hours. Then you are down to 10 hours, 10 hours of debate and amendment on a bill that would provide a $2 trillion tax cut. Is that what our Founding Fathers intended? Is that what the Founding Fathers intended for the Senate, that there would be a limitation and a restriction on debate, on something that would provide a $2 trillion tax cut, that that should be limited to 10 hours of debate and amendment? I do not think so. I do not think that is what they intended. I do not think that is what they intended for a spending measure either. I do not think they ever intended you could only have 10 hours of debate and discussion on something that could spend hundreds of billions of dollars. No, no. That was not the role of the Senate. That fundamentally threatens the role of the Senate. That undermines the role of the Senate. That neuters this Senate. And if we neuter that role, we have fundamentally altered what our Founding Fathers intended. This goes way beyond the question of a tax cut. This goes to everyone's vision of what this Chamber should be about. I believe, as our Founding Fathers did, that the role of the Senate is to be the cooling saucer. This is where we should have extended debate. This is where Senators should have the right to offer amendments, and to have them voted on, and to have our colleagues ultimately held accountable as to their votes. There should be no rush to judgment. There should be no process that short-circuits all of the protections that are given to individual Senators so they can represent their individual States and protect the rights of a minority. When I am asked what the fundamental problem is with the budget plan that has been offered by the other side, I go back to this chart because, to me, the numbers tell the story. We start with a projected surplus of $5.6 trillion. But $2.6 trillion of that is Social Security; $500 billion is Medicare. Now, these numbers are slightly different than the numbers I used on my chart because I was using CBO numbers. We are required to do that in the Budget Committee. These are the President's numbers. Instead of a Social Security trust fund that the Congressional Budget Office says amounts to $2.5 trillion, the President says it is $2.6 trillion. The Congressional Budget Office says the Medicare trust fund is $400 billion; the President's office says $500 billion. This is the President's budget. So I am using the President's numbers. That leaves us with $2.5 trillion of non-trust-fund money. We take out the Bush tax cut--$1.7 trillion, as reestimated by the House--we take out the cost of the alternative minimum tax reform that will be required by his plan--it is not part of his plan, but it is required by it--that costs another $300 billion, the interest cost--$500 billion-- of the tax cut and the alternative minimum tax fix and the Bush spending proposals above the baseline of $200 billion. That adds up to $2.7 trillion, and the President is ``in the hole'' by $200 billion. Where does it come from? There is only one place I can find it can come from, and that is the trust funds. That is the problem with the President's plan. It does not add up. It is right into the trust funds before we ever get started. Mr. President, I see there are Members waiting to offer amendments. By prior agreement, I am going to stop talking for the moment, and we will have remarks from the other side of the aisle, and then we will go to the first amendment, which will be an amendment from our side on prescription drugs. With that, I thank the Chair and yield the floor. Mr. BOND addressed the Chair.

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

Mr. CONRAD

Mr. CONRAD. I think one of the most important things about this debate is the question of whether or not we learn anything from history. The chart I have put up behind me talks a little about history. It talks a little about history in this country from 1960 through 1999 and the increase in the gross Federal debt of the United States. You can see after 1990, the gross Federal debt of our country absolutely exploded. It exploded because we adopted a fiscal policy that was fatally flawed. That fiscal policy included a massive tax cut, a dramatic increase in defense spending, and was based on a rosy scenario economic forecast. All of those things conspired to put us in a deficit ditch that exploded the debt of the United States, and it took us 15 years to recover. I believe we are in danger of repeating that series of mistakes in a way that will take us back into deficit, back into the bad old days of raiding trust funds, and put us on a course that is not fiscally sustainable. The debt of our Nation quadrupled because of those failed economic policies. Curiously enough, many of the very same voices who were the architects of that failed plan are back today, advocating this one, the Bush budget plan. Many of the same people who were there at the birthing of the dramatic increase in the deficits and debt of this country are back again. You have to ask the question, Did we learn nothing in the 1980s? Let's first deal with the economic forecast that underlies this proposed budget. I indicated in the 1980s, when we saw the explosion of deficits and debt, one of the key reasons was a flawed forecast, an overly rosy set of economic assumptions. Once again I believe we face an uncertain forecast. This time it is a 10-year forecast. This time, the forecasting agency itself warns us of its uncertainty. We are told they have gone back and looked over their previous forecasts to see the variance between what they predicted and what actually occurred. What they have found is this chart that they have provided to us. I call it the fan chart. It is from the Congressional Budget Office. What it tells us is in the fifth year of this 10-year forecast we could have anywhere from a $50 billion deficit to more than a $1 trillion surplus based on the variances in their previous forecasts. That is how uncertain this forecast is. The Congressional Budget Office, which did the projection, tells us that this number of $5.6 trillion surplus that the Senator from New Mexico discussed has a 10-percent chance of coming true--10 percent. There is a 45-percent chance there will be more money, 45-percent chance there will be less money. This forecast was done 8 weeks ago. What has happened in the economy? Do you think it makes it more likely or less likely that the number will be greater or less than the $5.6 trillion the Congressional Budget Office tells us has a 10-percent chance of coming true? It seems pretty clear to me that this is a river boat gamble. This is betting the farm on a 10-year forecast that has very little chance of ever coming true. We are offering an alternative that we think is more cautious, more conservative, and more balanced. We take the forecast surplus of $5.6 trillion, and then we reserve every penny of the Social Security and Medicare trust funds for the purposes intended. That leaves us with $2.7 trillion remaining. We separate that amount into equal thirds: A third for a tax cut; a third for the high-priority domestic needs of a prescription drug benefit, strengthening our national defense, improving education, and funding agriculture; and, with the final third, we set that money aside for strengthening Social Security and dealing with our long-term debt because just as we have surpluses now in this 10-year period, we know that when the baby boomers start to retire these surpluses turn to massive deficits. We think it is only prudent and wise that we begin to prepare for that future--that we have a downpayment on this long-term liability that is building. As I indicated, we believe the top priority ought to be to aggressively pay down our publicly held debt. When we look at a comparison between the Republican plan and our plan, we see that they are leaving a greater share of the publicly held debt than are we. They leave $818 billion of publicly held debt at the end of this 10-year period. We leave less than $500 billion because we are more aggressively paying down the publicly-held debt than their plan. In addition, as I have indicated, we are reserving $750 billion to strengthen Social Security for the long term; they provide nothing for this purpose--a clear difference, and one that we think is a compelling argument for our alternative plan. We agree that we can afford a significant tax reduction. But our tax reduction is about half as big as the President's proposal. That is because, as I have indicated, we reserve more resources for debt reduction and we reserve more resources to strengthen Social Security for the long term. We still have a tax reduction of $750 billion over the next 10 years in comparison to the President's $1.6 trillion. We have other differences in priorities as well. As I have indicated, we reserve more resources for the high-priority domestic needs of prescription drugs, national defense, and education, as well as others. On prescription drugs, the President's proposal has $153 billion for a prescription drug benefit; we have $311 billion. Unfortunately, the President's proposal will only provide benefits to about 25 percent of those eligible. That is an inadequate prescription drug benefit. We believe if we are going to have a prescription drug benefit, it ought to be universally available, it ought to be voluntary, but it ought to have enough money behind it to do the job, and not just be limited to low-income people in this country. The same is true in education. While the Republican budget dedicates $21 billion over the 10-year period over the baseline, we have provided $151 billion. We believe this is America's top priority. And it is our top priority. We believe that ought to be reflected in the budget resolution. If we are going to meaningfully improve education for our kids, it is going to take resources. That is not the only thing it is going to take, but it is certainly going to take that. We provide those resources in this budget resolution. We also have provided more resources for our national defense. We believe it is very clear that we are going to require more dollars for defense. We provide them. The Republican budget resolution provides $68 billion in additional funding for defense over the 10-year period. We provide an additional $100 billion in our budget resolution. Our budget also provides environmental protection. While the Republican budget dramatically slashes those provisions of the law--the Republican budget, $53 billion--our budget provides a $19 billion increase over the 10-year period. Our budget protects the Nation's veterans. At the same time that the Republican budget slashes funding for veterans by $19 billion, we provide a $15 billion increase over the 10-year period. But it doesn't stop there. We have also provided additional resources for the energy crisis that is hitting our country. We had testimony before the Budget Committee that indicated there will be an additional need for Federal resources to deal with the energy shortfall sweeping the country. We have provided an increase of nearly $10 billion while the Republican budget has cut $1.4 billion over the same period. Our budget responds to the farm crisis by providing $88 billion over the 10-year period to level the playing field between our country and our major competitors, the Europeans. The Europeans currently are spending 10 times as much to support their producers as we spend supporting ours. They are spending over $300 an acre in support for their producers while we spend $30. On the question of export support, the Europeans are providing 84 percent of all the world's agricultural export assistance while we provide one-thirtieth as much. No wonder we have a crisis in American agriculture. No wonder our producers are faced with financial ruin. Our budget addresses the crisis in agriculture. The Republican budget absolutely fails it. These are the different priorities of the two budgets. If I were to briefly recap, it would be simply this: While we support a significant tax reduction for all amounts, we have a smaller tax cut than they have provided, so that we can have more resources to pay down our publicly held debt; more resources to strengthen Social Security for the long term; so that we can reserve additional resources to improve education and strengthen national defense; and, yes, to provide a prescription drug benefit. Even within that context, our overall spending as a share of the gross domestic product has the Federal role shrinking. We have seen the Federal Government's role go from 22 percent of gross domestic product in 1993 to 18 percent today. Under our plan, the Federal role would continue to shrink to 16.4 percent of gross domestic product, the smallest role for the Federal Government--the smallest role for the Federal Government--in 50 years. That is a conservative plan. It is a balanced plan. It is one that is in line with the priorities of the American people. I hope very much that we can take the budget that has been laid down by my colleague from New Mexico and improve it; that we can add to the debt reduction; that we can set aside funds to strengthen Social Security for the long term; that we can reserve additional resources to improve education and strengthen our national defense and provide a meaningful prescription drug benefit. That is what the American people want us to do, all within the context of continuing to shrink the role of the Federal Government, all within the context of paying off this publicly held debt, all within the context of preparing for the baby boom generation, and strengthening Social Security so that when those liabilities come due, the American system of Government is prepared to respond. Mr. President, I yield the floor.

Mr. CONRAD. I just asked the Chair to notify me when I consumed another 10 minutes.

Mr. CONRAD. Mr. President, I would like to run through a number of charts and use those for a broader discussion of the budget resolution as we embark on its consideration.

Mr. CONRAD. Mr. President, I have been reading the book by David Stockman, ``The Triumph of Politics.'' It is about what happened in the 1980s, when, through a series of disastrous fiscal miscalculations, we plunged this country into deep, deep debt. I was not here at the time, but in that book he outlines very clearly what happened when the President advocated a massive tax cut, combined with a big increase in defense spending, all under a rosy economic forecast. The results were a tripling and quadrupling of deficits, a quadrupling of debt. The same voices who were advocating then to give the President a chance are advocating to give this President a chance with the same kind of fiscal scheme. It is amazing how much credence a 10-year forecast has been given in this body, this notion that there is really going to be $5.6 trillion of surpluses over the next 10 years. It is almost mystical, the confidence people have in that kind of forecast. I used to be responsible for forecasting the revenue for my State. I had to do it for 30 months--not a 10-year forecast, a 2\1/2\ year forecast. I can tell you, it is a crapshoot to forecast the revenue for 2\1/2\ years, much less the revenue for the United States for 10 years. Let me say to my colleagues, if one assumption were changed in that forecast, $2.5 trillion of the $5.6 trillion would be right out the window. If the productivity gains assumed for the next 10 years were the same productivity increases we had in the United States between 1982 and 1995, that $5.6 trillion surplus would turn into a $3.2 trillion surplus--one estimate, one part of the projection, and 40 percent of the surplus goes right out the window. It is not wise to bet the farm on a 10-year forecast, a 10-year forecast made after 5 of the strongest economic years in the history of the United States, at a time a downturn has started. Sometimes one wonders if we have all gotten caught up in the giddiness of markets. We saw the NASDAQ go from 1,500 to 5,000 and fall back to 1,800. Isn't there a warning there someplace? Do we really believe that things that just go up, up, up, just keep going up, up, up? Is there no caution here? I believe we can all hope that things keep going up, up, up. I certainly do. That would be good for the economy, good for the country, and make our jobs a lot easier. But I do not think we ought to bet the farm on it. This whole thing about it is the people's money and we ought to give it back to the people--if you examine our proposal, we are giving as much back as they are. We are just doing it in a different way. We have a tax cut that is half as big as theirs. But we have another $800 billion that we are proposing to use for strengthening Social Security for the long term, to, for example, put in investment accounts for people that they could then match or they could add to, so we would increase the pool of savings and investments for our society so we would have a stronger economy in the years ahead. That money is going right to the American people just as would a tax cut, only it is for savings and investment. The differences between us are important differences, but it is not a question of we want to take the money and just spend it on Government programs and they want a tax cut. Those are not the choices. They are just not the choices. The choices are, No. 1, that we would take $800 billion and use it to strengthen Social Security for the long term by establishing something like the thrift savings plan accounts that every Federal employee has. That is not money that is going to be spent on Government programs. That is money that is going to be available for savings and investment by the American people. On top of that, we advocate another $750 billion of tax cuts. So if you compare their tax cut to our proposal of tax cuts and money that is available for individual accounts, to strengthen Social Security, and provide a pool of savings and investment for the strengthening of the economic future of America, we both have about the same amount of money going directly back to the American people. But in addition to that, we have reserved a lot more of this projected surplus for paying down the people's debt. Yes, it is the people's money, absolutely. It is also the people's debt. It is also the people's education and the people's defense, and the people's Social Security. This is not a question of spending versus tax cuts. I know the other side always loves to use that formulation. That is not our budget plan. Our budget plan is fundamentally a question of more debt reduction, both short term and long term, versus more for tax cuts. That is a fundamental choice before us. We believe, yes, there ought to be a significant tax cut, but we also believe we ought to use more of this projected surplus for paying down both short-term and long-term debt. We devote about twice as much as their budget resolution for those purposes. We think it is a better use of the people's money to dump the people's debt while we have this opportunity because it is a fleeting opportunity. In 11 years, those baby boomers start to retire, and then the obligations of the Federal Government are going to skyrocket. Those obligations are going to be the obligations of the American taxpayer. I hope very much that as we continue this debate, the choices will become clear. I will end as I began, by saying our budget plan seeks to put aside every penny of Social Security and Medicare trust funds, reserving it for those purposes, and then to have a significant tax cut, a tax cut of $900 billion, including interest, $900 billion for high-priority domestic needs such as improving education, a prescription drug benefit, strengthening our national defense, and then that final $900 billion, or roughly that, to strengthen Social Security for the long term--resources reserved so we can strengthen the Social Security system. Every single proposal that is serious about strengthening Social Security for the long term has a cost associated with it, has a need for resources. We provide them. They don't. That is a very fundamental difference between these plans. Again, I look forward to continuing this debate tomorrow and thank my colleagues and others who have been listening. I yield the floor.

Mr. CONRAD

Mr. CONRAD. Mr. President, reserving the right to object, I would like to speak for 2\1/2\ minutes.

Mr. CONRAD

Mr. CONRAD. Let's not give up then.