Judd Gregg

Mr. GREGG

Mr. GREGG. The Senator is absolutely right. And the new program, by the way, will not be solvent either. So we are compounding the insolvency of the future, and we are passing that on to our children.

Mr. GREGG. That will be insolvent.

Mr. GREGG. Well, my view is this: First off, we know a couple of facts--that we grow the government by $2.5 trillion over a 10-year period when this bill is fully implemented. We also know the tax increases during that period will be approximately $1.2 trillion, tax increases and fees, and they are not going to fall on the wealthy, they are going to fall on the small businessperson trying to create the extra job. We also know there will be an entire sea change in the way people get their health care, that the government will be stepping in between you and your doctor and basically making a decision as to what your doctor can tell you you can have for health care, what the provider will tell you you can have for health care. There is something that hasn't been discussed much. We know the innovations in health care which have done so much to make America the best place to get health care in the world and which have put us on the cutting edge of drugs that have improved the lives of millions of people, not only in the United States but across the world, will be significantly chilled because there will not be an interest in investing capital in a market that is so controlled by the government. In the end, it is fairly obvious to anybody who has been around this place that there isn't going to be $3 trillion in reductions of Medicare spending over the next 20 years and there isn't going to be $500 billion in Medicare spending cuts in the next 10 years. So all that spending is going to fall on the backs of our children in the form of debt. We already have a nation that is on an unsustainable path under the present budget scenario without this health care bill. Our deficits are $1 trillion a year, on average, for the next 10 years. That is without this bill. Our public debt goes from 35 percent of the gross national product to 80 percent of the gross national product. We become insolvent at the end of this decade--not this decade but the decade starting today, 10 years from today. That is aggravated dramatically by exploding the size of the government under this bill rather than taking the step-by-step approach that has been proposed by our side to reform health care, to make it more effective and make it deliver more services to more people at a better cost. A number of times I have heard people on the other side of the aisle get up and say that CBO says this bill reduces the cost of health care spending to the Federal Government. It is just the opposite--just the opposite. The CBO letter specifically said that the cost to the Federal Government of health care goes up--goes up--under this bill in the 10- year period. So this bill does not turn down the cost of health care, it does explode the size of government, it does put the government into the business of managing your health care, and as a result, I think it is going to reduce the quality of life of our children.

Mr. GREGG. I do not have the floor.

Mr. GREGG. I am suggesting it is very difficult, under any scenario, to believe this Congress is going to do anything other than spend the money that is put in this bill. It is certainly not going to end up making the reductions in Medicare it proposes in this bill. If it does make those reductions, though, I think the Senator from Utah has been absolutely right in saying those reductions should go to making the Medicare system solvent. They should not go to creating a brand new entitlement.

Mr. GREGG. Absolutely.

Mr. GREGG. I think the Senator from Tennessee has once again hit the nail on the head. I respect the President's forthrightness. The President has said very simply he believes that prosperity comes from growing the government. When this bill passes, we will see the largest growth in government in the history of our country. This is going to be 16 percent of our economy basically managed by the Federal Government. You are going to see the Government explode in size. Does that lead to prosperity? I don't happen to think it does. It certainly doesn't lead to prosperity if along with that massive expansion in the size of the government you are going to see your deficit go up significantly, your debt go up significantly, or the tax burden go up significantly, which reduces productivity, or if you take a large segment of our society, our seniors, 35 million today, 70 million by the year 2019, and say to them they are not going to have the ability to have a solvent Medicare system because the way that system might have been made more solvent is now being used to create a brandnew entitlement, a massive new entitlement for a whole group of people who never paid for an insurance policy and never paid into the Medicare insurance fund. I think the Senator has touched the base. We have seen automobiles, we have seen financial institutions, we have seen the student loans, and now we are seeing health care all taken over by the government or partially taken over by the government. Clearly the goal is, as the President said, expand the size of the government, create prosperity, use the European model. I don't happen to be attracted to the European model. I think the American model works better where you have a government you can afford and give entrepreneurs a chance to go out and take risks and create jobs.

Mr. GREGG

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

Mr. GREGG. The Senator is absolutely right to point out the Bennet amendment is a shell game, charade, and a farce; that there will still be $\1/2\ trillion in the first 10 years but actually $2.5 trillion over the period 2010 to 2029 to be cut out of Medicare. Earlier the majority leader came to the floor and talked about a memo that I sent around, which is a fairly innocuous memo to our fellow Members, which outlined the rights to fellow Members relative to floor activity, and I sent in my position as Budget ranking member, because most of these issues are tied to the budget, and the covering letter said we as a minority must use the tools we have under the Senate rules to insist on a full, complete, and fully informed debate on health care legislation as well as all legislation that comes before the Senate. I ask the Republican leader, is it not reasonable that we should have a full, complete, and fair debate on this health care bill?

Mr. GREGG. If the Republican leader will yield further, it is ironic, is it not, that the majority leader would come to the floor and complain about an innocuous statement that outlines the rules which Members of the Senate have, a statement which I suspect he actually would pass out to his members for information were they in the minority--maybe even in the majority, because they would like to know how the rules work in the Senate--after the majority leader had completely subverted the rules of the Senate by not taking this 2074- page bill through committee so it could be amended, in the open, so it could be amended but, rather, writing it in the back room, some closet around here, with three or four Members of the Senate present? Isn't there an ironic inconsistency to his outrage on the fact that we suggested people should know the rules here while he has basically tried to go around the rules?

Mr. GREGG. I will ask one more question because I find the irony in the situation so unique. A memo which outlines what the rights are of all Members--but Members of the minority specifically because the rules are meant to protect the minority from the majority; that is the tradition of our Government, of course, which seems to be an affront to the majority at this point--that a memo of that nature, which essentially says the minority has certain rights in order for the institution to function correctly--I am wondering, why did we create these rules in the first place? Wasn't it so we could continue the thought of Adams, of Madison, who suggested that the Senate should be the place where, when legislation comes forward which has been rushed through the House, the Senate should be the place where that legislation receives a deliberative view, where it is explored as to its unintended consequences and as to its consequences generally, and where the body has the opportunity to amend it effectively so it can be improved? Isn't that the purpose of the Senate? And isn't that what the rules of the Senate are designed to do, to accomplish the goals of our Founding Fathers to have a Senate where the legislation is adequately aired and considered versus being rushed through in a precipitous way?

Mr. GREGG. I thank the Republican leader for his response. I suspect, were the majority leader in the minority, he would be insisting on exactly what the Republican leader is insisting on--a fair and open debate which allows the minority to make its case as to the good points in this bill and as to the bad points. The way you make that case is by following the rules of the Senate; is that not correct?

Mr. GREGG

Mr. GREGG. I appreciate the proposal of the Senator from Rhode Island, but I think it needs to be put in its proper context. This is a sense of the Senate. It has no legal implications. The CLASS Act, as proposed in the underlying bill, was described by the Senator from Rhode Island but not fully. The way the CLASS Act works, it is an insurance program theoretically where people in their thirties and forties and fifties can buy insurance to cover their retirement years when they have to go into some sort of long-term care facility and may be institutionalized. People are paying into this program for decades, maybe four decades, maybe their thirties right into their seventies or their twenties into their sixties. The cost of this program does not actually start to be incurred until these folks move into a long-term care facility or a managed care facility type of situation for their retirement years where they need skilled nursing assistance of some sort. There is a huge amount of premium that comes in under this program early which goes against virtually no expenses, because this is a brandnew program. It is a startup program. It is created by the Federal Government. It is a government insurance program much like Social Security and Medicare. The practical effect of that is that money will come in for years to the Federal coffers. In the first 10 years of this bill, it is estimated around $90 billion will come in. In the second, as we move out in the second 10 years, the total over those two periods of 10 years is about $212 billion. Then more money will come in in the third 10 years, probably somewhere in the vicinity of $300 billion to $400 billion potentially. None of this will be spent on the purposes of this insurance, because almost everybody who is paying in for these premiums is going to be too young to go into one of these institutionalized care facilities during those first three decades. So what happens is that the Federal Government gets this large windfall of money from these people who are paying their premiums and spends it, spends it on something else--education, roads, highways, arts, whatever is the decision on where to spend the money. It gets spent. That is the way the Federal Government works. It doesn't have any place to put this money and keep it safe. It comes in, and it gets spent. When these people retire, when they do go into a situation where they need assisted living of some sort, then the government gets the bill. Not us, not those of us who are here. We will be long retired by then, everybody in this Chamber, except maybe Senator Bennet from Colorado who is rather young and vibrant. The rest of us will probably not be around to take advantage of this. It will be our children and grandchildren who will end up with that bill. That bill will be staggering. We are talking hundreds of billions, if not trillions, of dollars of outyear costs as a result of this type of program; much like Social Security which basically has nothing in the coffers today, even though trillions of dollars have been paid in, but which has a lot of obligations. The same thing with Medicare. That was an insurance program which was supposed to have money in the coffers. Not there. In fact, it goes into negative cashflow and will be insolvent beginning in 2010. There is no money when these folks retire and need it. It will have been spent. This amendment, well intentioned as a statement, has absolutely no effect on that series of events. That money will still be spent under this amendment. After this amendment is passed--and I presume it will be passed; it is a nonevent amendment having no purpose other than a political statement--CBO will still score this bill as spending that money, absolutely score this bill as spending that money, the $90 billion for the next 10 years, the $212 billion for the next 20 years, the $400 billion after that. That is my guess. The third 10-year period, my guess is $500 billion. When we get out there 30, 40 years from now and these people expect to get their insurance paid, then when our children get the bill for that insurance, it becomes a tax on them, a direct tax on their earnings. It will affect their lifestyle, their earning capacity, their ability to buy a home, to send a child to college, to buy a car. This money will be spent under this bill. One of my colleagues on the other side of the aisle who is pretty respected around here on financial matters I believe referred to this CLASS Act proposal as a Ponzi scheme. That is not too far off. Basically, we are taking the money from these folks who buy into this insurance program today. We are spending it on something we want to spend it on as a Congress today, whether it is something worthwhile such as a road or education or our national defense, but we are spending it. We are leaving the people who paid that premium out to lunch unless 30 or 40 years from now, when they go into that situation where they need that insurance, the country is strong enough and our kids are making enough money to pay for the cost of that program. That is a real gamble for them, and that is called a Ponzi scheme, which is exactly what this is. This bill, this sense of the Senate, although a good political document because it allows Members to wander around their districts and say: I voted to protect the CLASS Act dollars, I voted that it not be accounted for under this bill, that was a sense of the Senate. In actuality, it has no effect at all in that area. All the money that comes into this, insurance money, is going to be spent somewhere else. And the CBO will still score this bill as taking credit for that insurance under this program. It is Bernie Madoff accounting one more time under this bill. You would think after a while people would get embarrassed--really, it would become embarrassing after a while. When you match up 10 years of tax increases, 10 years of Medicare cuts, to 5 years of programmatic spending and claim you have a program that is fully paid for and is only an $840 billion program, when you know that if the program, the entire bill is fully phased in, it is $2.5 trillion in cost. It isn't $500 billion in Medicare cuts when this thing is fully phased in, it is $1 trillion in Medicare cuts. It isn't $500 billion of tax increases in this bill and fee increases on small businesses mostly or on provider groups, it is over $1 trillion of increases. You would think after a while people would be embarrassed about the manipulation of numbers in that way. But that doesn't seem to occur. Yet we get this proposal that says, OK, let's do it again. Let's claim we are doing something we are not doing. Let's claim we are protecting the dollars that come in under this new CLASS Act proposal, assuming this program goes into place. Let's claim we are segregating them somehow so the people who pay their hard-earned dollars and buy into this CLASS Act think they are getting something for it, when in fact that will not happen at all, is not going to happen at all. That money is going to be spent the day it comes in. In fact, it is already spent. We are already borrowing so much and spending so much in this government right now. We already have an obligation of debt that will spend this money. I guess everybody can walk away feeling good about this amendment, but substantively, it has no impact at all.

Mr. GREGG. I am happy to yield.

Mr. GREGG. The Senator has asked a very pointed and appropriate question, because the answer is pretty startling. The point I think most people don't understand is that this money gets spent as it comes in. In other words, let's say over the next 30 years, younger people pay into this new alleged insurance program, accurately described as a Ponzi scheme. All that money that comes in will be spent on other activities of the government and, therefore, the other activities of government will be allowed to grow fairly dramatically. There will be a lot of money here. You are talking potentially $1 trillion over the next 30 years. Those expenditures, which will have occurred as a result of this money coming in, which will have nothing at all to do with paying for the cost of the health care which these people who buy into this CLASS Act think they are getting--in other words, long-term care insurance, it has nothing to do with that--it will be on, as I said, education, roads, national defense, whatever we spend it on around here. Those expenditures will be built into the baseline forever. They will presume that there is going to be revenue to pay for them. What happens when that generation that has bought into the CLASS Act starts to actually need the money it is alleged it is going to get? Two things happen. The younger generation is going to have to pay taxes to cover that cost because the money will not be there. There will be no money in the kitty, none, zero. There will be zero money in the kitty, the alleged kitty to pay for this insurance program. Second, ironically, the government will have been grown by all the money that came in and was spent on new programs. So you are basically going to double down on the cost here. Our children and our grandchildren are going to have to pay twice, not only to pay for the long-term care which allegedly has been promised to these people under these insurance programs but also to pay for all the new spending that will occur as a result of spending the premiums which were supposed to be saved for these programs. So they are going to get hit twice. The implications are, quite honestly, staggering. We already know we have a $38 trillion unfunded liability in Medicare. We know, when you combine Medicare, Medicaid, and Social Security, we have a $60 trillion unfunded liability. If you calculate in the cost of the CLASS Act on top of that, you are adding potentially trillions more of unfunded liability, which will all have to be paid by our children and our grandchildren. At the essence of this bill, there are a number of problems, but the problem I find most inappropriate in the way we are doing this is we are creating a government which our kids cannot afford under any circumstance. We are absolutely guaranteeing that our children are going to have a lower standard of living than we had because of the burden we are going to put on them as a result of these expansive new programs, which we know cannot be afforded in the outyears. We already know we cannot afford the government we have in the outyears. We already know the public debt is headed above 80 percent of GDP by 2019. So the Senator from South Dakota has touched on a core issue. What is the real cost of this? Well, it is extraordinary. As I said, it hits the next generation twice. First, they will have to pay the taxes to pay for the program that was put on the books, which is allegedly there, plus they will have to pay to support all the programs which the money that came in was supposed to be preserved for.

Mr. GREGG. I think the Senator from South Dakota touched on another point. The sense of the Senate, basically, confirms the fundamental flaw of the CLASS Act. The fact that you would think a sense of the Senate is necessary pretty much proves that everybody around here understands there is a big game going on with the CLASS Act. The problem is, of course, the sense of the Senate has no effect of law and, therefore, the problems the CLASS Act creates in the area of spending, the revenues that come in for the purpose of something other than what the CLASS Act alleges people are buying when they pay for that insurance, will still exist, and the CBO will still score the CLASS Act as benefiting the budget situation, when it should not be scored that way at all. As I said, this is a nice resolution from a political standpoint, but substantively it has no effect on correcting the problems which the CLASS Act generate in the area of fiscal policy. I understand there is a unanimous consent request that somebody wishes to offer. I was asked if I would listen to it.

Mr. GREGG. I ask the assistant leader, is he offering a unanimous consent request? I will yield the floor for the purposes of a unanimous consent request.

Mr. GREGG. Reserving the right to object, my only concern would be that will take us past 7 o'clock, so you may want to adjust the time.

Mr. GREGG. Is it my understanding, then, the order of recognition will be Senator Whitehouse, the assistant leader, and then Senator Hatch?

Mr. GREGG. I was just wondering if the Senator would yield for a question.

Mr. GREGG. Is the Ponzi family from Chicago?

Mr. GREGG. I appreciate the assistant leader asking me that question. Regrettably, I am not immediately familiar with it. I have probably seen it, although I apologize for not being immediately familiar with it. Therefore, I presume the assistant leader is going to remind me or at least reacquaint me with its terms. I would note the term ``Ponzi Act'' did not come from me. It came from the chairman of the Budget Committee.

Mr. GREGG. If the Senator would allow me to comment on that one point?

Mr. GREGG. I fully agree with that analysis. The first 30 years of the CLASS Act will generate revenues. It will add to the Federal Treasury and will--and that was the purpose of my discussion; that is the point I made--during the first 30 years of this proposal, younger people will be paying in and very few people will be taking out because they will not have yet qualified for the insurance because they will not be old enough to go into assisted living.

Mr. GREGG

Mr. GREGG. Madam President, it is the tradition in this body that a person seeking recognition gets recognized, is it not?