Kent Conrad

Mr. CONRAD

Mr. CONRAD. We don't want to have won this right to the end and then lose it at the end. So even the hockey game has provided inspiration for the flood fight. We wish we had won the hockey game, but it is most important that we win the flood fight.

Mr. CONRAD. This would be a perfect time. I would be happy to yield the floor and give her an opportunity. While the Senator is getting ready, she has, as the Chair knows, has had a skiing accident. We are glad to see she is up and ambulatory and here at work. We are delighted she is back. I yield the floor.

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 I ask unanimous consent that the order for the quorum call be rescinded.

Mr. CONRAD. Mr. President, I wish to go back for a moment to the question of a 10-year budget versus a 5-year budget, because I have heard so many questions raised about why we did a 5-year budget rather than a 10. Again, the Congress has done 34 budgets under the Budget Act, 30 of which have been 5-year budgets. A key reason has been that the longer term forecasts are notoriously unreliable. CBO said the current forecast ``has greater than normal uncertainty.'' CBO'S current forecast, particularly for the near term, is subject to a greater than normal degree of uncertainty . . . Both the magnitude of the contractionary forces operating in the economy and the magnitude of the government's actions to stabilize the financial system and stimulate economic growth are outside the range of recent experience. The Federal Reserve Chairman, Mr. Bernanke, said the economic outlook is subject to considerable uncertainty. This outlook for economic activity is subject to considerable uncertainty . . . One risk arises from the global nature of the slowdown. He went on to say: If actions taken by the Administration, the Congress, and the Federal Reserve are successful in restoring some measure of financial stability--and only if that is the case--there is a reasonable prospect the current recession will end in 2009 and that 2010 will be a year of recovery. Again, very small differences have very big effects over time. Senator Gregg himself said in March of this year: Ten-year forecasts are very much a guess . . . That is why almost every time the Congress does a 5-year budget rather than a 10-year budget. In fact, the last five budgets done by Congress, including three under Republican chairmen, have been 5-year budgets. Now, there has been some suggestion by columnists that doing a 5-year budget suggests you are hiding something. Again, I want to emphasize, President Obama came forward with a 10-year budget that has been fully scored. Nothing is being hidden from anybody. That score is out there. It is available. It is public. So there is nothing being hidden. And Congress has almost always done 5-year budgets just because of the extraordinary uncertainty of those outyears. I also want to say, for a moment, those who argue that this budget has too much spending are up against the factual record. The factual record is that in this year, the spending will be 28 percent of gross domestic product. We bring that down very sharply in the first 3 years. We get it down to 22 percent of GDP by 2012. Again, there is a deficit in the fifth year of less than 3 percent of GDP, which the economists tell us is critical to having a sustainable debt. Let me say my own view. I believe we have to do better than that. I believe we have to do better than that. I believe the outyears under any of the budgets are unsustainable. I believe we have to have some special process such as the one Senator Gregg and I have proposed, and I am completely open to other suggestions about how we deal with the entitlement reform and the tax reform we so badly need. I see our colleague, Senator McCain, is now in the Chamber. We advised his office we would like to get him in at about this hour, so I would be happy to take a break and give Senator McCain a shot at this. I yield the floor.

Mr. CONRAD. Mr. President, I thank the Senator for his observations on the budget. I do wish to indicate the budget before us is different than the budget the President sent us. First of all, the Senator mentioned reconciliation instructions. We have no reconciliation instructions in this budget--not on health care, not on climate change, not on education. My own belief is that was never the purpose of reconciliation. Reconciliation was really designed to be for deficit-- --

Mr. CONRAD. I am happy to yield.

Mr. CONRAD. Well, I would say this to the Senator: I don't know, but I know it is not part of this resolution, and that was rather intense debate, as my colleague can imagine. I have said publicly and privately what I believe. I don't believe reconciliation was ever intended for the purpose of writing this kind of substantive reform legislation such as health care reform, such as climate change. As people get into how reconciliation actually works, I think they are going to be a lot less eager to pursue it. If I could just give two examples.

Mr. CONRAD. I am happy to yield.

Mr. CONRAD. I thank the Senator. I would just say I am going to argue strenuously against it in conference committee. The Senator asked me what will be the result. I don't know. Am I going to be able to prevail in the conference committee on this matter? I don't know. But I really do think--I hope colleagues who think reconciliation is the answer will think very carefully about how it actually works. Anything in reconciliation, first of all, is subject to the Byrd rule. The Byrd rule says any legislative proposal that does not score, that doesn't cost money or save money, is subject to automatic strike. Any provision that the score is only incidental to the policy change is subject to automatic strike. Our distinguished Parliamentarian has said, if you try to write major legislation in reconciliation, you will be left with Swiss cheese. So I hope people are thinking about that. I know there are attractive features of reconciliation, and it is true I think Republicans abused it in writing the tax reductions because I deeply believe reconciliation was only intended for deficit reduction. So I think it was wrong to have been applied solely for tax reduction during the years the Republicans were in control. I don't think two wrongs make a right. I don't think we should do it for substantive legislation that is really not deficit reduction legislation. One other thing I wish to say--and I hope people are thinking very carefully about this. The way reconciliation works is there is only one instruction for revenue, one instruction for spending, one instruction for debt in a year. So if you are going to put all of these provisions together, you are going to have education, you are going to have health care reform. You may well have to do those in one bill--in one bill. Now, are we really going to do that? Are we going to have education reform and health care reform put in one legislative vehicle? I think we better think very carefully about that. So I thank the Senator from Arizona for his observations. I do wish to stress that the budget we have before us is substantially different than the budget the President sent, and there is a simple reason for that. We have $2.3 trillion less over 10 years to write this budget. This is a 5-year budget, so we made $608 billion in changes. In spending alone on the discretionary side, we have reduced discretionary spending over 5 years by $160 billion--$160 billion. We have changed the mandatory side of the equation by $240 billion. We have changed the revenue line by almost $160 billion. So I hope as people look at this budget, they will recognize substantial changes have been made in light of the new forecast. We have attempted to be responsible, and we have gotten the deficit down by two-thirds by the fifth year and less than 3 percent of GDP, which is what all the economists say is necessary to stabilize the debt. My own strong belief is we need to do even better than that in the second 5 years in light of the retirement of the baby boomers and in light of this enormous debt that has been stacked up. Again, that did not happen--it was not the fault of President Barack Obama. He inherited a colossal debt. He inherited a colossal fiscal crisis, financial crisis, housing crisis. It wasn't his fault. He didn't create it. He is in on the cleanup crew. I thank the Chair and yield the floor.

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

Mr. CONRAD. Madam President, we have heard a lot of concern this afternoon about deficits and debt and spending from our colleagues on the other side. I wish to remind them of a little of the history of what brought us here. This is what happened with spending when they were in charge--spending about doubled in the Bush administration. Of course, we know the debt more than doubled, and we are left with an ocean of red ink. That is what this administration inherited. This wasn't President Obama's doing. This is what he walked into. Here is what happened to the debt and the deficit under the previous administration. They actually inherited substantial surpluses, which they rapidly turned into record deficits and then plunged the thing right off the cliff. If we are going to be fair about how we got here, I think the other side is going to have to accept an awful lot of responsibility. Here is what happened to the debt--it more than doubled, from $5.8 trillion in 2001 to $12.1 trillion in 2009. Senator Gregg, the ranking Republican on the committee, said: I am willing to accept this short-term deficit number, not debate it, because we are in a recession and it is necessary for the Government to step in and be aggressive, and the Government is the last source of liquidity. So you can argue that this number, although horribly large, is something we will simply have to live with. That is the ranking member of the Budget Committee. Look, I think he is entirely right. The hard reality is we have no choice but to accept, in the short-term, these large deficits as the Government seeks to provide liquidity to prevent an all-out collapse. But over time, this budget brings the spending down. I am not talking about the President's budget now. I am talking about the budget I have presented here. We take the budget--total discretionary spending--from 9.5 percent of GDP in 2010 down to 7.3 percent of GDP in the fifth year. When you distinguish between defense and nondefense discretionary, what you see is that I am bringing them both down at about an equivalent rate. So defense, in 2010, will be 4.8 percent of GDP; at the end of the 5 years of this budget, it will be down to 3.7 percent of GDP. Similarly, nondefense discretionary will be 4.7 percent of GDP in 2010, and we take that to 3.6 percent of GDP in 2014. On the discretionary accounts, which is about one-third of all Federal spending, on the discretionary accounts, both defense and nondefense, I am bringing them both down as a share of our national income and doing it in about the same proportion. We are doing that because, look, we don't have a lot of options. When the President wrote his budget, he had $2.3 trillion more in revenue than we have. Now, he did his budget some time earlier, and the forecasts were more robust. Once CBO did their more recent forecast, $2.3 trillion was gone. That requires a response, if we are also going to answer the President's charge to dramatically bring down the deficit, and we have also done that--from $1.7 trillion in 2009 to just over $500 billion in 2014. That is a reduction of more than two-thirds in the deficit of the United States. Of course, economists like to measure it in terms of a percentage of gross domestic product rather than dollar terms because that adjusts for inflation. But look what we have done in that way: We have gone from 12.2 percent of GDP in 2009 to less than 3 percent as a deficit and share of the economy in 2014--again, more than a two-thirds reduction--and we get below the magic 3 percent, which is where most economists say we stabilize the growth of the debt. I am quite proud of what this budget has accomplished in the 5 years of its term. I am the first to acknowledge that when Senator Gregg stands and says we are not doing enough about the second 5 years, sign me up. I agree with him entirely. Certainly, the President's budget has far more debt and deficit in the second 5 years than ours, if you extended our policies. But I would say that either one of them doesn't do enough for the second 5 years. We have to do much more. That is why Senator Gregg and I have proposed a special procedure to give 16 Members the responsibility to come up with a plan, and if 12 of the 16 agree, then that plan would come to Congress for a vote. Now, we changed the President's budget over the first 5 years by $608 billion. That is a lot of money. Madam President, 30 percent of it is on the revenue side, 31 percent on the discretionary spending. In other words, we reduced the President's spending by $167 billion over the next 5 years. Anybody who doesn't think that is a big deal, come to my office and listen to the phone calls. The mandatory spending we reduced by 39 percent of the total $608 billion we changed from the President's budget. So we distributed the pain about equally. We did it on a proportionate basis. Mandatory spending is the biggest part of the budget, so they took more of the reduction. Discretionary spending and revenue were done of about equal proportion. We tried to be fair. We didn't go to just one committee of jurisdiction, or two committees, and say: You take the whole burden of making these changes. We went to everybody, and we said, you know, we have to share the pain and we have to share it equally. Again, on the question of spending in the budget that is before us--I am not talking about the President's budget. The President's budget is not before us; the budget the Budget Committee has is before this body, the budget that we are going to vote on, which nobody, it seems, wants to talk about. They want to talk about some other budget. But they don't have a budget of their own. If our budget is so bad, where is their budget? They don't even have a budget. So if our budget is so bad, where is their budget? We don't see their budget. I just say this: On nondefense discretionary the average annual increase under the budget resolution is 2.5 percent. Some say we ought to just freeze it. I don't think that would be very wise to do. That wouldn't even offset inflation. But this is a pretty tough budget that is before us. I want my colleagues to know, nondefense discretionary spending is increased over the life of this budget on average 2.5 percent. Let's go to that final slide, if we could. Where are the increases in the nondefense discretionary accounts under this budget resolution? You can see, here is where they are. The biggest chunk is defense. More than one-third of the increase is in national defense. That is in part because the President, instead of hiding the costs of the war, has put the costs of the war in the budget. That is what we have done. So if you look at the nondefense discretionary increase under the budget resolution, one-third is defense. Madam President, 14 percent is international and 10 percent is for our veterans. We have given the biggest increase for veterans health care ever--and deservedly so. They have suffered the wounds of war and they deserve to have those wounds treated and they deserve to be treated with respect when they come home. So 10 percent of the increase is there. Ten percent is education, 10 percent is income security, 8 percent is the census. One-twelfth of the increase is the census that has to be done every 10 years. That is an extraordinary expense, but here it is. We have to deal with it and we do. Natural resources and environment are 6 percent, transportation is 3 percent, and ``other'' is 2 percent. The discretionary increase comes in those categories. I hope my colleagues, as they discuss the budget, deal with the budget that is before us. It is substantially different than the budget the President sent us because, again, when the President wrote his budget he had $2.3 trillion more in revenue over 10 years than we do under the new scoring that was done just before we concluded work on this budget. I think the American people would expect us to make changes when the facts change. When the revenue changes dramatically I think they would expect us to make adjustments, and that is what we have tried to do. I am quite proud of this budget document that we have produced, this outline for the country, because we have done our level best to keep faith with the priorities established by the President. He said to me, when I told him we were going to lose $2 trillion--he said: Look, do everything you can to preserve my priorities. He said, No. 1: Please do everything you can to make sure we can reduce our dependence on foreign energy. That is not just the President's priority, that is the priority of the American people. No. 2, he said: Do your level best to preserve my priority by focusing on excellence in education because if we are not the best educated, we are not going to be the strongest country on Earth very long--and we have done that in this budget. No. 3, he said: Please preserve my priority on major health care reform because that is the place that is going to take us over the cliff, in terms of our long-term economic future. That is the thing that is burdening families and businesses and taxpayers, so please do everything you can to preserve my key priorities, and do it in the context of dramatically reducing the budget deficit. We have done that in this budget. We have preserved his priorities on reducing dependence on foreign energy, on excellence in education, on major health care reform. We provided reserve funds, deficit neutral reserve funds for each one of those categories, and we have reduced the deficit by two-thirds. We have gotten it down to 3 percent of GDP, which was his charge to us. We have done it all, even though we faced a dramatic reduction in revenue available to us. Does that mean we could just copy the President's budget? Obviously not. We had to make adjustments, and we made $608 billion of adjustments over the first 5 years. I believe that was necessary and appropriate and prudent, and I hope we can hold onto those changes as we go through the markup. I am already hearing there are people who want to come here and increase the spending. I have already heard people are going to offer amendments to take away some of these adjustments. I am told Republicans and Democrats are meeting right now, this afternoon, to figure out how to come in and change this budget, to raise the spending. I am told there are a lot of Members represented at this meeting. Let me send a word to them: Change this at your peril. We have carefully crafted this package to be able to win majority support. I think you better think very carefully about changing what we have brought to the floor because you might move it in your direction--more spending--only to wind up with a defeat on final passage of this budget. I hope those who are meeting will think very carefully about coming to the floor and trying to increase the spending in this resolution. I yield the floor.

Mr. CONRAD. Madam President, from Senator Gregg's time, I yield 15 minutes to the distinguished Senator from Utah, Mr. Hatch.

Mr. CONRAD. Madam President, just one part of what the Senator has said do I wish to seek to clarify, and that is that while the United States does have the second highest stated corporate rate, we have one of the lowest effective corporate rates in the industrialized world. The reason for the difference is all the exemptions and exclusions that exist in our code for corporate rates. So while we do have the second highest published or nominal rate for corporate taxes, if you look at all of the industrialized countries in the world and what their effective corporate tax rate is, you find that ours is well below average. Now, that doesn't mean we shouldn't have tax reform because many of us believe we need thoroughgoing tax reform, but I think there is a certain amount of confusion about the difference between our statutory rates and our effective rates.

Mr. CONRAD. I am happy to.

Mr. CONRAD. I am happy to yield.

Mr. CONRAD. Madam President, the Senator is correct. I am on the Finance Committee, and I have this responsibility on the Budget Committee. It is very clear, while we do have a high nominal rate--I think we are second highest in the industrialized world--the effective rate that companies actually pay, we are near the bottom. At this point, I wish to yield 25 minutes to my colleague from North Dakota.

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

Mr. CONRAD. On a number of previous speakers, I am afraid I had to be away from the floor to deal with some of the challenges back home with flooding. Some of the previous speakers have referenced tax increases as part of the budget I have offered my colleagues in the Senate. Let me indicate very clearly, the budget resolution that is before us has net tax cuts, net tax cuts of $825 billion. The other assertions directed at the President's budget about tax increases--and there are tax increases in the President's budget and in my budget, but they are completely dwarfed by the tax cuts that are in our budget. In the President's budget, over 10 years, he has $2.4 trillion of net tax cuts. In other words, if you take the tax raises that are in the President's budget and you stack them up against the tax cuts in the President's budget, he has a net of $2.4 trillion of tax cuts over 10 years. In the budget I have offered my colleagues that has come from the Budget Committee, that is a 5-year budget instead of a 10-year budget of the President, we have net tax cuts of $825 billion. Here is why that is so. Middle-class tax relief from 2001 and 2003 is all extended in this budget. That means the 10-percent tax, the child tax credit, the marriage penalty relief, the education incentives, all those things are extended in this budget for those earning less than $250,000 a year. The net effect of that change alone is $601 billion tax relief. In addition, we provided relief from the alternative minimum tax for 3 years. That costs $216 billion. We have estate tax reform that takes the level of exemption to $3.5 million per person, $7 million per family. That means 99.8 percent of the people in this country will pay no estate tax. None. Zero. That costs $72 billion. We have business tax provisions and extenders, those provisions that periodically have to be extended. They are incentives to the business community. That costs $69 billion. That is a total of $958 billion of tax reductions over 5 years. And then if you look at the offsets, the loophole closers, going after the offshore tax havens, the abusive tax shelters, that raises $133 billion for net tax reduction over 5 years of $825 billion, most of it for the middle class. I see Senator Thune here now. If he is ready to go, we would be ready for him to go. How much time does the Senator seek?

Mr. CONRAD. I yield 15 minutes of Senator Gregg's time to Senator Thune.

Mr. CONRAD. I thank the Senator from South Dakota for his amendment and indicate clearly that this budget resolution does not prejudge in any way the climate change debate. It does not assume that there will be cap and trade or that there will not be. It leaves to the committees of jurisdiction the responsibility to come up with the best possible plan and to do it in a deficit-neutral way. That is the trigger. That is the condition. Whatever plan they devise must be deficit neutral and will have to go through the legislative process. I yield 7 minutes from Senator Gregg's time to Senator Johanns.

Mr. CONRAD. Mr. President, I thank Senator Johanns for offering his amendment early on like this. I think this is the way we ought to function on a budget resolution. Let's get these amendments up and debate them and have a chance for people to get votes early in the process. Mr. President, on our list, Senator Bond was to be next.

Mr. CONRAD. I ask the Senator, how much time does he need?

Mr. CONRAD. Mr. President, I thank Senator Bond for the time he has given to the budget discussion tonight. I ask Senator Sessions, how much time would he like?

Mr. CONRAD. All right. Mr. President, I yield from Senator Gregg's time 7 minutes to the Senator, who is a member of the Budget Committee, and a very active and valued member of the committee, Senator Sessions.

Mr. CONRAD. Mr. President, I ask unanimous consent that on Tuesday, March 31, when the Senate resumes consideration of the budget resolution, the statutory time remaining be 40 hours, each side controlling 20 hours.