Kent Conrad

Mr. CONRAD

Mr. CONRAD. Well, the answer is, you did. And the second question would be, Did you then execute on extending those tax cuts in 2006?

Mr. CONRAD. Yes.

Mr. CONRAD. And it would count against the resolution. That would be correct.

Mr. CONRAD. Madam President, let me say there have been a number of examples last year and this year of what I think distinguishes the Senate. The actions by the Senator from Iowa last year were an example of courtesy and graciousness that I will never forget. I want to say publicly, as I have said before, how very much I appreciate what the Senator did last year to withhold an amendment that would have otherwise taken down the budget. It was an act of great courtesy, and I thank the Senator for it.

Mr. CONRAD. Madam President, I thank the Senator from Iowa. You do not have to agree with all the Senator has observed. I do not agree with everything he said here, but I do have great respect for him. He has conducted himself as a gentleman, especially with respect to these budget matters. I very much appreciate that. I want to make certain I say it publicly. I ask unanimous consent that Senator Stabenow, who has now waited well over an hour, be recognized for 15 minutes, to be followed by Senator Graham on the other side for 15 minutes, before we go to the joint economic presentation which has already been locked in at 5:15.

Mr. CONRAD. Madam President, why don't we go to Senator Stabenow for 15 minutes, and then we will hopefully work out this matter with our other colleagues.

Mr. CONRAD. I thank the Senator from Kentucky for his courtesy.

Mr. CONRAD. Well, the only problem with that is I might need to respond. Why don't we do this: Why don't we proceed with the understanding of Senator Stabenow for 15 minutes--and then the desire is to go to Senator Graham; is that correct?

Mr. CONRAD. I would like to reserve the right to be able to respond to Senator Graham, if I might. Will Senator Bunning be speaking on the same subject? Senator Bunning has been gracious. Why don't we do that. We will have 15 minutes for Senator Stabenow, 10 minutes for Senator Graham, and then we will go to Senator Bunning for 10 minutes, and then I will reserve time in case it is needed to respond. We thank the Senator from Kentucky for his courtesy.

Mr. CONRAD. At roughly 5:20. We pose that unanimous consent request.

Mr. CONRAD. Madam President, would the Senator withhold for just one moment for the purpose of a unanimous consent request that the ranking member and I previously worked out?

Mr. CONRAD. Madam President, I ask unanimous consent that the Baucus amendment be temporarily laid aside for the purpose of the Republicans offering the Graham amendment, and that the Baucus amendment remains as the regular order, regardless of the pendency of other amendments.

Mr. CONRAD. I thank the Chair, and I thank the distinguished Senator from South Carolina for his courtesy.

Mr. CONRAD. Mr. President, we wish to amend the previous unanimous consent agreement to provide that Senator Brownback finish his presentation on JEC by 6:05, from 6:05 to 6:30, that it be the JEC Democratic time; from 6:30 to 6:45, Senator Hatch be recognized; from 6:45 to 7:15, Senator Coburn be recognized; from 7:15 to 7:30, Senator Brown be recognized; and that there also be an opportunity for Senator Coburn to continue after Senator Brown, if he should desire; and that at the end of that time, both sides would yield back an additional 5 hours each off the resolution.

Mr. CONRAD. Mr. President, first, I recognize the ranking Republican on the Budget Committee, Senator Gregg, to thank him for his cooperation in bringing this budget resolution to the floor. While we have serious substantive differences, and we will be discussing those, I do have a high regard for the Senator from New Hampshire for the way he conducts himself. He, in the Budget Committee, did something I want to recognize publicly. One of our members was ill. We have a rule in the Senate Budget Committee that Senators are not allowed to vote by proxy. We are the only committee in the Senate that has that rule. We have that rule because we are the only committee with the power to bring a fast track vehicle to the floor for immediate vote. That rule has been a long- standing rule in the Senate Budget Committee. Senator Gregg and Senator McConnell, when we told them of the problem we were confronted with, one of our members was ill--with only a 12-to-11 margin on the committee, that would have meant we could not report a bill to the floor. In a gracious way, in a way that I think reflects well on the Senate, in fact, makes me proud to be a Member of this body, Senator Gregg and Senator McConnell allowed a unanimous consent motion to come to the floor of the Senate so all Senators could pass judgment on whether we should exempt one member from the requirement to be present because he could not be. I want to start by thanking Senator Gregg for that professionalism, for that graciousness, and I do. I give my appreciation to Senator McConnell as well. Now, on the substance of what the Senator has said: I do not think anybody would be surprised that we have a strong disagreement with respect to the way he characterizes this amendment. This amendment is to a 5-year budget resolution. This amendment specifically extends the middle-class tax cuts and provides for estate tax reform and for provisions that are of assistance to our men and women in uniform, and will provide for certain property tax relief as well. With respect to the middle-class tax cuts, it is true we offered a similar amendment last year. It is true we offered it containing estate tax reform as well. It is true that final action was not taken because there was no need to take final action in 2007. There is no need to take final action in 2008. There is no need to take final action in 2009, because all of these tax cuts under current law do not expire until 2010. It is not a game; it is reality. The reality simply is, this is a 5- year budget resolution that is recognizing that we will extend those tax cuts, we will do it in a way that still allows the budget to be balanced in the fourth year, and remain in balance in the fifth year, and there is no need to take the final action, because all of those tax cuts exist until the end of 2010. That is a fact. The second point the Senator makes and makes repeatedly is all of these tax increases in this budget. No, there are not. He made the exact same speech last year. Second year, second verse. He said we were going to increase taxes last year $1 trillion. Now we can go back and look at the Record. We do not have to resort to rhetoric, we do not have to resort to projections, we do not have to resort to forecasts; we can look at the Record of the Congress last year and the beginning of the year. What has happened? Taxes did not increase by the trillion dollars the Senator warned about last year. In fact, taxes have been cut by $194 billion. This is with offsets of $8 billion. So on a net basis, taxes have been reduced by $186 billion by this Democratic Congress that my colleague claimed last year would increase taxes by $1 trillion. Those words ring pretty hollow when you compare them to the actual record. Now, how did Democrats cut taxes by a net of $186 billion since last year? In two ways: No. 1, the stimulus package. The stimulus package, supported by the President of the United States, passed by the House of Representatives, passed by the Senate, and the alternative minimum tax relief provided last year. That combination has provided a net reduction in taxes to the American people of $186 billion. Not a tax increase, a tax cut. When the Senator says this budget is going to increase individual taxes $2,400, no. With the adoption of the Baucus amendment, which virtually every Democrat will support, we will extend the middle-class tax cuts. When he says: You are going to increase taxes on this category and that category, the fact is, you could accomplish the revenue numbers in our budget, which is 2.6 percent more revenue than is in the President's budget--that is how much more revenue we have, 2.6 percent--we believe that amount of revenue can be achieved not by tax increases--in fact, I think it would be unwise to ask the American people for a tax increase before going after three other categories of revenue: No. 1, offshore tax havens. Offshore tax havens, according to the Permanent Subcommittee on Investigations, are now causing us to lose $100 billion a year. Offshore tax havens. That abuse is proliferating. No. 2, abusive tax shelters. Let me give you an example. Right now we have the spectacle in the United States of U.S. companies buying foreign sewer systems, not because they are in the sewer business but because they want to depreciate those systems on their books for U.S. tax purposes. They then lease the sewer systems back to the European cities that built them in the first place. They are not just doing it with sewer systems, they are doing it with European city halls. Companies and wealthy investors in this country are buying European city halls, writing them off on the books in the United States to reduce their tax obligation here, and then turning around and leasing them back to the European cities that built them in the first place. That is a scam. It ought to be closed down. The estimates are that is costing us $40 billion a year. On top of that, the tax gap, which in 2001 was identified at over $300 billion a year, the difference between what is owed and what is paid--while the vast majority of us pay what we owe, we have a number of people, unfortunately an increasing number, who do not pay what they owe, companies and individuals. Before we ask for a tax increase from anybody, we ought to go after those folks. Now we will have a debate on these issues, but to suggest there is a massive tax increase here, no, there is not a massive tax increase here. The exact same speech was given last year, $1 trillion of tax increases. What happened? On net, this Congress reduced taxes by $186 billion. That is a fact.

Mr. CONRAD. Mr. President, I ask the chairman of the Finance Committee, Senator Baucus, if I might be listed as an original cosponsor as well.

Mr. CONRAD. Mr. President, I thank the chairman of the Finance Committee, Senator Baucus, for this excellent amendment. This will extend the middle-class tax cuts, the 10-percent bracket, the childcare credit, and the marriage penalty relief provisions. All those tax cuts will be extended. In addition, as I understand it, the chairman of the Finance Committee has crafted an amendment that will include significant estate tax reform because we are now in this unusual situation of where, under current law, the estate tax will go from a $3.5-million exemption per person in 2009 to no estate tax in 2010, and then in 2011, the estate tax comes back with only $1 million exemption per person. The amendment of the Senator from Montana would make certain it stays at $3.5 million and is allowed to rise with inflation. The Senator from Montana has also added provisions for those who are serving in the military and also has provisions that will provide for property tax relief because we know that across the country, at the very time house prices are falling, property taxes in many jurisdictions are rising, and people don't get the benefit of the deduction because of the formalities of the current Tax Code. All these items are addressed in the amendment of the chairman of the Finance Committee. I wish to express my appreciation. This will still permit the budget to be in balance by the fourth year and to stay in balance in the fifth year. The President's budget, by contrast, balances in the fourth year, but then it quickly slips right back out of balance again. Ours does not. I take this moment to again thank the chairman of the Finance Committee for his work on this amendment and to thank his staff as well. I know they put a great deal of time and effort into this amendment, meeting with many interested parties, as one can imagine with an amendment of this magnitude. It makes a very, I think, important contribution to the consideration of this resolution.

Mr. CONRAD. Mr. President, I thank the chairman of the Finance Committee. I also ask him, as I understand it, the Defenders of Freedom Tax Relief Act is also part of this package.

Mr. CONRAD. And that package would provide, as I understand it, significant tax relief for our fighting men and women overseas, and it will continue to help them save for retirement and expand their opportunities for home ownership. It will also help the employers of reservists and National Guard who are called to Active Duty. This is a package that passed the Senate last year by unanimous consent. It did not get to the President's desk but is included in this package, which I think will make it even more attractive to our colleagues. Mr. President, I know Senator Murray was here seeking recognition. Then I think Senator Cornyn would like to be recognized. I will conclude, if I may, on this matter. This amendment is an important amendment, and I hope my colleagues will support it.

Mr. CONRAD. Will the Senator yield for a question?

Mr. CONRAD. I thank the Senator.

Mr. CONRAD. I would just ask the Senator----

Mr. CONRAD. I have not yet had a chance to study the amendment. I would be happy to do so and give you an answer after I have had a chance to review it. Let me ask the Senator, did your budget resolution in 2006 extend the middle-class tax cuts?

Mr. CONRAD. You mean the same argument I have just made with respect to ours?

Mr. CONRAD

Mr. CONRAD. Mr. President, I wish to welcome back the ranking member of the Budget Committee. I have listened with great interest to his presentation this morning, a highly imaginative presentation. It is highly imaginative. The presentation he has made that purportedly is about the budget we have offered has virtually nothing to do with the budget that is before us. It is largely a concoction, although I must say when he talks about creativity, I give him high marks for creativity because this is complete make-believe, what we have heard from the other side, in terms of a description of what is on this floor. Maybe a good place to start is to look at what the Senator said last year about our budget because it is almost identical to what he has said about this year's budget. He said last year we were going to have $1 trillion of tax increases if our budget passed. Well, our budget passed, and now we can go check the record. We don't have to have a bunch of projections or suggestions about what might happen; we can now look back and see what actually did happen. Last year, the Senator from New Hampshire, the ranking member of the Budget Committee--by the way, for whom I have high regard. We work together very closely. We have substantive differences, as will become more clear as these days wear on, but I have high regard for the Senator from New Hampshire. But let's check the record. Did we increase taxes, as he asserted would happen last year, by $1 trillion? No. Did we increase taxes at all? No. Did we cut taxes? Yes. How much did the Democratic Congress cut taxes? Well, here it is. It is not a projection. This is not make- believe. This is a fact. The Democratic Congress has cut taxes $194 billion, with $7 billion of revenue raisers. So that is the factual record with respect to tax cuts. The Democratic Congress cut taxes by $194 billion, most of this in the stimulus package passed to give lift to the economy. Now, the Senator talks about where we are headed under this budget, but perhaps the best way to anticipate where we are headed is to look back and see where we have come from. When they controlled everything-- they controlled the House, they controlled the White House, they controlled the Senate--here is their record. Here is what they did. They started with budget surpluses, and they ran up record deficits. You can see this is the record of the Bush administration: $413 billion was the biggest deficit in the history of the United States. In fact, they have five of the biggest deficits in the history of the United States. That is their record. Revenue was flat. They increased spending about 50 percent, and the result was they have exploded the debt of the United States. Again, this is not a projection. This is not a forecast. This is their record. Our friends controlled it all. They controlled the White House, they controlled the Senate of the United States, they controlled the House. Here is what happened to the debt. They have built a wall of debt that is unprecedented. They took us from a debt at the end of the President's first year of $5.8 trillion. They have run it up to over $9 billion last year, and by the end of 2009, which will be the 8 years this President is responsible for, they will almost have doubled the debt of the country in 8 years. It is a stunning record, and I don't mean stunning in a good way. Now, the Senator from New Hampshire says we have this massive increase in spending. Well, not in this budget. That is not the case. Here is a chart that shows the President's spending, which is the red line. The green line is the spending under this resolution. This is over the 5 years of this budget. You will see that they are very close to each other. In fact, the difference in spending over the 5 years between our budget and the President's budget is 2.1 percent. We have 2.1 percent more spending than the President's budget. Why? Because we have restored cuts he made in things such as the COPS Program that has put 100,000 police officers on the street. The President's budget eliminates the COPS Program. The President's budget eliminates the weatherization program in this country, a program to go back and weatherize homes so they are more energy efficient. He says: No, we don't want to do that anymore. The President's budget cuts the grants to first responders, our emergency medical personnel, our ambulance crews, and other first responders, including our firefighters, and cuts those by 78 percent. We didn't think that was a good idea. So, yes, we do spend some more. We also spend more to reduce our dependence on foreign energy because we think that is a smart investment. We do spend some more on education because we think that is critical for the future strength of the country. And we do spend some more money on infrastructure because we don't want any more bridges collapsing, as we saw happen in Minnesota, where the bridge over 35W collapsed with people on it. So, yes, we spend 2 percent more over the 5 years. For this year, the total spending in the President's budget is $3.04 trillion, and in our budget it is $3.08 trillion. That is a difference of 1 percent. All this great spending the Senator just described--the problem is the facts. The thing that gets in the way of his recitation is the facts. The facts are that we spend 1 percent more than the President in 2009. The Senator also said we have not been responsible with the troops. Let me just indicate that if we have not been responsible, then the President hasn't been responsible either because we have the identical amount in our budget for defense and the war as the President had in his budget--identical, not a dime of difference. So if we have been irresponsible, then the Senator is saying the President has been irresponsible because we match him dollar for dollar. The Senator said something that is quite jarring. Do you remember what he said about the President's role in the budget? He said the President doesn't have anything to do with the budget. Really? The President of the United States has nothing to do with the budget of the United States? I don't think so. The President sends us a budget. If you look at the historic record, what you find is that Congress gives the President, in the budget, very close to what he asks for. That is the record going back 40 or 50 years. Now, he added to that by saying the President cannot veto or sign a budget. That is true. The way the process works is the President sends us his budget, and then a budget is developed by Congress that does not go to the President for his signature or his veto; that is true. But to suggest that the President really doesn't have anything to do with the budget, that is not true. The President sends us his budget blueprint, and then he has the power of the veto to enforce all of the provisions that flow from a budget. He can veto any appropriations bill; those are the bills that spend money. He can veto any revenue bill; those are the bills that raise money. So to suggest the President doesn't have anything to do with the budget is really misleading to people. I think if you just think of it in a commonsense way, of course the President of the United States would have a lot to do with the budget policy of the country. He should have, and he does have. It is true he does not sign the budget resolution. He cannot veto it. But he does have the capability to enforce its spending and its revenue because he has the power of the veto. Let's look at the question of revenues. Again, our colleague said we are going to raise taxes a trillion dollars. That is exactly what he said last year: Democrats are here to raise your taxes a trillion dollars. I think he just likes that number. It doesn't matter what budget we present; he says a trillion dollars. I have already shown that what Democrats have done once we have controlled the House and Senate was actually reduce taxes by $194 billion. That is our record so far. That is a fact. There is additional revenue in our proposal over the 5 years. You can see the difference. On this chart, our revenue line is the green one, and the President's is the red line. You can see they are very close. If you look at the numbers, over the 5 years of this budget, the President has $15.2 trillion in revenue; that is the proposal he sent to us. We have $15.6 trillion in revenue. That is a difference of 2.6 percent. I don't know where the Senator comes up with this trillion dollars because that is not our proposal. Our proposal--when the Baucus amendment is adopted--is to raise $15.6 trillion, in comparison to the President's $15.2 trillion, which is a difference of 2.6 percent. Now, the other day the Senator put up a sign that said--he quoted me in a ``60 Minutes'' interview saying that the first thing we need is more revenue. That is true, I did say that. They didn't include the whole quote. Here is the whole quote from the transcript. Steve Kroft is talking to me, and he is asking me about the head of the General Accounting Office, who is warning the country that we are on an unsustainable course because of the long-term commitments that have been made. He says: What do you think about David Walker and what he's doing? I said: I think David Walker is providing an enormous public service. Mr. Kroft asked: Do you agree with his figures and his projections? I said: I do. You know, I mean, we could always question the precise nature of this projection or that projection, but that misses the point . . . The larger story that he is telling is exactly correct. Mr. Kroft: Are most people in Washington aware of how bad it is? I said: Yes, they know in large measure here, Republicans and Democrats, that we are on a course that doesn't add up. This is one place Senator Gregg and I are in complete agreement--that we are on an unsustainable course. Mr. Kroft asked: Why doesn't somebody do something about it? My answer: Because it's always easier not to, because it's always easier to defer, to kick the can down the road. . . . Mr. Kroft asked: Do you think taxes ought to be raised? My response: I believe, first of all, we need more revenue. But then the Senator didn't include the next sentence: We need to be tough on spending. And we need to reform the entitlement programs. We need to do all of it. That was my answer. I believe it is the truth. Not only have I said that, but Senator Gregg has said we need more revenue. Senator Gregg himself said: We also know revenues are going to have to go up, if you are going to maintain a stable economy and a productive economy, because of the simple fact that you are going to have this huge generation that has to be paid for. He is talking about the baby boom generation. So if we are going to be honest with the American people, we do need to be tough on spending, we do need to have more revenue. I have said repeatedly that before we ask for a tax increase from anyone, we ought to go after the tax gap, the difference between what is owed and what is paid. The Internal Revenue Service says that back in 2001 that gap was over $300 billion in a year. I think it is unfair to the vast majority of us who pay what we owe to allow others to escape. But it doesn't end there. We also have offshore tax havens. Our Permanent Subcommittee on Investigations has indicated that we are losing $100 billion a year to those offshore tax havens. We have had an additional report in the last 2 weeks of more of these tax havens proliferating. If you go on the Internet and put in ``offshore tax havens,'' you will get a million hits because there are a lot of con jobs going on. We ought to shut them down before we ask for a tax increase from anyone. In addition, there are these abusive tax shelters, where some companies are actually buying European sewer systems and writing them off on their books in the United States to lower their taxes and then leasing the sewer systems back to the European cities that built them. Mr. President, the Senator also went after the pay-go rule. He calls it ``Swiss cheese-go,'' which is humorous, and I always appreciate the humor. But let's give both sides of the story. The pay-go rule says that if you are going to have new mandatory spending or tax cuts, they must be offset or must get a supermajority vote. This is a means of disciplining the budget process that has worked well in the past. We have instituted it. When Senator Gregg was in charge of the Budget Committee, he said this about pay-go when he supported it: The second budget discipline, which is paygo, essentially says if you are going to add a new entitlement program, or you are going to cut taxes during a period, especially a period of deficits, you must offset that event so it becomes a budget-neutral event that also lapses. If we do not do this, if we do not put back in place caps and paygo mechanisms, we will have no budget discipline in this Congress and, as a result, we will dramatically aggravate the deficit, which will impact a lot of important issues, but especially Social Security. He had it right when he was an advocate for pay-go. We had a strong pay-go rule from 1991 to 2000. We climbed out of the deficit ditch. We produced surpluses. And then our friends came into power, and in 2000 they dramatically weakened pay-go, and look what happened. We went right back to an ocean of red ink. We have now put pay-go back into effect, since the 2004 elections. Let's look at the record. The number of times pay-go was raised was 13. The number of times pay-go was waived was zero. Pay-go was raised 13 times and waived zero. Pay-go is working. Excluding the AMT legislation that passed last year, the Senate pay-go scorecard has a positive balance of $1.3 billion over 11 years. Every bill sent to the President--other than AMT and the stimulus package just passed--has been paid for or more than paid for. Pay-go also has significantly produced a deterrent effect. Anybody who doubts that should sit in my seat for 1 week and see the number of times colleagues decide not to offer spending proposals because of the pay-go rule. On the other side, they have said that there is $143 billion that they claim pay-go has been violated. Let's look at each one of their claims. And I only have 2 minutes left before Senator Stabenow will be taking over. Immigration reform. They claim there is a $30 billion loophole. In fact, zero. The immigration reform bill never passed the Senate. Remember, the test is what goes to the President of the United States. The bill never went to the President of the United States. The energy bill--the final bill that was sent to the President--was more than paid for. They claim a $4.2 billion shortfall. In fact, it was more than paid for and had a surplus of $52 million. Mental health parity. That bill hasn't yet gone to the President. They are claiming a $2.8 billion shortfall. That bill hasn't gone to the President; it is still in conference. The promise has been made by the conferees that it will comply with pay-go. The prescription drug user fee amendments. The final bill sent to the President was more than paid for. They are claiming a $200 million shortfall. In fact, it was $4 million to the good. The minimum wage increase was fully paid for on a unified basis. They claim a $50 million shortfall. In fact, it was zero. The Water Resources Development Act. The final bill sent to the President was more than paid for. It passed the Senate on a vote of 81 to 12. Other items they have mentioned. The children's health insurance reauthorization was more than paid for over 6 and 11 years. They claim a $45 billion shortfall. In fact, it is a savings of $207 million. The farm bill--more than paid for over 6 and 11 years. By the way, that has not yet gone to the President. They are claiming a $27 million shortfall. In fact, there are savings. Higher education reconciliation--more than paid for over 6 and 11 years. They show a $26 billion shortfall. In fact, the savings will continue to grow in decades beyond the budget window, and over 6 and 11 years that bill is completely paid for. The 2007 supplemental, county payments, payment in lieu of taxes, and MILC. They claim a $6.5 billion shortfall. The pay-go rule applies to mandatory spending and revenues, not to appropriated accounts. Discretionary is controlled by separate caps. The 2008 budget resolution established a new 60-vote point of order to limit changes in mandatory spending on appropriations bills and to strengthen pay-go even further. They call pay-go ``Swiss cheese-go.'' Their pay-go was ``easy cheese''--``easy cheese'' because what they allowed under their pay-go was for the debt to explode. No forecast, no projection, just the facts, just the record. They have increased the debt from $5.8 trillion to over $9 trillion today, and under the President's proposal, it is going to go to over $10 trillion. That is the record. We have now reached the 11 o'clock hour. Senator Stabenow is going to take the chair, and there are other Senators awaiting recognition. We have a meeting to try to determine where we go with the rest of the day. But I hope we have a good, substantive debate. I look forward to it. I thank the Chair and yield the floor.