Paul Sarbanes

Mr. SARBANES

Mr. SARBANES. Mr. President, I know we want to proceed with our business, but if I could just be recognized for 1 minute.

Mr. SARBANES. Mr. President, I thank my colleagues for their very gracious remarks and all of my colleagues for their expressions of respect and affection. My colleague, Senator Mikulski, said I was the longest serving Senator in Maryland's history. I want you to know, it is a little bit like being like Cal Ripken; every day you go to work, you set a new record--one more day than the day before. It has been, obviously, one of the great focuses and joys of my life to be able to work here in the Senate with all my colleagues. I am extremely grateful to all of you. I will just close with this story, because I am still here until the 3rd of January 2007. So there is still time to go. But I once got an award. My mother was there at this dinner. This was a few years ago. And they asked her to speak as well. So she got up to speak, and she said how honored she was they had given this recognition to her son, and so forth, and how much she appreciated it. And then she closed her remarks by saying: He has been a good boy--so far. I carry that comment with me. Thank you all very much. (Applause, Senators rising.)

Mr. SARBANES

Mr. SARBANES. Mr. President, this amendment raises the function 300 back to baseline. I have a letter here. I ask unanimous consent to have it printed in the Record. It is from a number of the leading environmental organizations.

Mr. SARBANES. I will quote one paragraph: The cuts proposed in the Senate budget resolution would undermine the progress that has been made on protecting our natural resources. Funding for drinking water and clean water infrastructure has been cut to dangerous levels; clean up of toxic sites around the country will continue to slow down; species and land preservation for future generations will struggle forward; the condition of our national parks would continue to deteriorate; our ocean resources would linger on the brink of collapse; and farmers and ranchers seeking assistance to improve environmental quality will be turned away. Don't let these things happen. Support this amendment.

Mr. SARBANES

Mr. SARBANES. Mr. President, I urge my colleagues to vote against this amendment. The United States did not get all the changes it wanted made with respect to the Human Rights Council, but very significant changes were made. And under Secretary Burns, they have indicated that the administration intends to work with those changes to try to improve that situation. We have a real problem with respect to that Human Rights Council. But changes are being made. They are being made in the right direction. I very much oppose this amendment. I hope my colleagues will vote against it.

Mr. SARBANES. I move to reconsider the vote.

Mr. SARBANES

Mr. SARBANES. Will the Senator yield?

Mr. SARBANES. This borrow-and-spend policy which the other side of the aisle is pursuing is the direct cause of the runup in the national debt, is it not? This chart which shows the incredible expansion of the national debt is the consequence of pursuing this policy. We are running record budget deficits, is that correct, I ask the Senator?

Mr. SARBANES. I inquire of the Senator, when the Bush administration came in in 2001, wasn't the Federal budget in surplus?

Mr. SARBANES. Will the Senator yield?

Mr. SARBANES. This also reflects or demonstrates a sense of priorities. To take the amendment we were just considering, the Murray amendment, and then the Santorum amendment, the Murray amendment sought to avoid increasing the deficit by adding money for the community development block grant. All of the State and local governments are petitioning Congress for this. It is desperation time for them. She was prepared to pay for it by closing some corporate tax loopholes, all of which have previously been approved by the Senate, as I understand it. So in terms of priorities, in effect, we are saying: Support the Community Development Block Grant Program, but pay for it by closing these corporate tax loopholes; that is a higher priority. You do not raise the deficit, and you do not increase the debt by that amount. Is that correct, I ask the Senator?

Mr. SARBANES. Will the Senator yield for a question? Isn't more and more of this debt we are running into being held overseas rather than here at home? Hasn't there been a shift in who holds the debt, so we are becoming increasingly dependent upon strangers to finance this deficit and this debt? Is that correct?

Mr. SARBANES. Absolutely stunning.

Mr. SARBANES. Yes.

Mr. SARBANES. Furthermore, doesn't this budget make it clear their prime priority on the other side is to provide these tax cuts, which overwhelmingly benefit the wealthy? The consequence of that is either we run up the deficit and debt or we cut programs that are badly needed across the country, particularly for working people. So the priority that is being established is tax cuts first and foremost, which upon analysis are seen to benefit--I understand the tax breaks for millionaires that have passed under the Bush administration, the people with more than $1 million of income each year, amount to $41 billion in the coming year--$41 billion. The community development block grant proposal was for $984 million, one-fortieth of the amount going out in the tax cuts. So those are the priorities that are being established here--the tax cut first and foremost--and the consequence is, you run up the deficit and cut programs which are badly needed by ordinary citizens all across America.

Mr. SARBANES

Mr. SARBANES. Mr. President, will the Senator yield?

Mr. SARBANES. Mr. President, would the Senator agree with me that it is very fitting that the debt limit discussion should be inserted right in the middle of discussion of the budget resolution since this budget resolution will add very substantially to the deficit and drive the debt up even further, requiring this vote that is going to come to raise the debt ceiling? What is the amount by which the debt ceiling will be raised?

Mr. SARBANES. It underscores the deeper hole that these budgets are driving us to over the last 5 years, does it not?

Mr. SARBANES. Mr. President, I am deeply troubled by the pending legislation, which would raise the Federal debt limit by $781 billion. The fact that we are considering this legislation illustrates how deeply the policies of this administration have plunged us into deficits and debt. This President has supported, and continues to support, tax cuts for the wealthiest Americans, which are not paid for and which will continue to run up deficits and debt as far as the eye can see. I am very concerned that if the President continues to pursue this reckless fiscal policy, our Nation's long-term economic strength will be seriously compromised. Despite the fact that the President signed into law legislation increasing the debt limit less than a year and a half ago, the Treasury Department has now informed us that it will need to borrow even more to keep the Government functioning. The legislation we are considering today would allow Federal debt to grow to $8.965 trillion, truly a staggering sum. When President Bush took office, he promised that his fiscal policies would include ``maximum possible debt retirement.'' At that time, the Congressional Budget Office was projecting that our net debt to the public would decline to $36 billion by 2008, when this President leaves office. Now, instead of achieving ``maximum possible debt retirement,'' the President is asking for historically high debt increases. In fact, the CBO is now projecting that publicly held debt will rise to nearly $5.5 trillion in 2008--almost 40 percent of our GDP. Gross Federal debt, which includes our commitments to Social Security and Medicare, will be $9.6 trillion by the time this President leaves office. You do not need a very long memory to recall that a few short years ago, under President Clinton, we made some very hard choices on taxes and spending--restraining spending and raising some taxes, primarily on upper-income people--and we were able to turn around the Nation's fiscal status and begin to pay down our debt. When President Bush took office in 2001, the statutory debt limit stood at $5.95 trillion and had not been raised since 1997. The administration is now asking for the fourth increase in the debt limit since this President took office. The limit was raised by $450 billion in 2002, by $984 billion in 2003, and by $800 billion in 2004. Now the President is asking for an increase of $781 billion--for a total increase of more than $3 trillion since 2001. These figures demonstrate how seriously our economic situation has deteriorated under this administration. Let me just emphasize that point with one further example. When the President took office, he inherited a 10-year surplus estimated at $5.6 trillion. Now, when you factor in some of the costs we know are coming, such as the continuing costs of the war in Iraq and the cost of reforming the alternative minimum tax, plus the cost of some of the President's proposals, such as making his tax cuts permanent and continuing his defense buildup, the projections are for a $3.5 trillion deficit over the next 10 years, a reversal of $9.1 trillion. That is a seismic shift in our position. Much of this shift is a direct result of the reckless fiscal policies pursued by the President during his first term and his singular focus on providing tax cuts for the wealthiest Americans, even at a time of war. And the President is seeking to increase our debt burden by permanently extending many of these tax cuts, utterly ignoring the fact that these massive tax cuts for the rich have led to budget deficits so large that they could jeopardize our future economic strength. In part, my concern for our economic future stems from a change in international economic position of the United States. Two decades ago, the United States was a creditor nation internationally, by about 10 percent of our GDP. Now, because of the deterioration of our position over those intervening two decades, we are a debtor nation, to the tune of almost 25 percent of our GDP. At the end of fiscal year 2001, 31 percent of the outstanding Federal Government debt was held by foreign lenders. Over the succeeding 4 years, borrowing from abroad accounted for more than 80 percent of the increase in our Government debt. The international financial position of the United States reminds me of Tennessee Williams's Blanche DuBois in ``A Streetcar Named Desire,'' who said: ``I have always depended on the kindness of strangers.'' That is what has happened to the United States in the international economic scene. We have deteriorated into a debtor status so that we are now dependent upon the kindness of strangers. That is not where the world's leading power should find itself. This dramatic change in our economic situation comes at a time when the United States is facing a demographic tidal wave as the baby boom generation approaches retirement. When President Bush first took office, that retirement was almost a decade away. But time has run out. The first of the baby boomers will begin to retire in 2008, on this President's watch. Unfortunately, rather than prepare for the obligations we know are coming, this President has squandered every opportunity to save for the future. Moreover, his policy of deficit-financed tax cuts makes us less able to make needed investments today. Every increase in the Government's debt means we are siphoning off resources that could be used for other purposes simply to pay the interest on that debt. Net interest payments on our debt are expected to consume more than $1 trillion over the next 5 years. Instead of making investments in education, in health care, in transportation, we are paying billions of dollars in interest costs that would not have existed in the absence of the reckless fiscal policy of this administration. Not only do these policies jeopardize our current and future economic strength, they place a tremendous burden on our children and grandchildren who will have to pay off this debt. By cutting taxes for the wealthiest, the President is really raising taxes on everyone, including our children and grandchildren, by leaving them with the responsibility for paying off this enormous debt. It is unfortunate that this administration has demonstrated such a single-minded focus on cutting taxes, regardless of the very serious change in our economic situation and our country's current and future needs. The fact that the President is calling for permanent tax cuts at the same time the Congress is being asked to add almost $800 billion to the Federal debt ceiling is beyond reckless--it places in jeopardy our future economic strength and the economic security of all Americans.

Mr. SARBANES

Mr. SARBANES. I understand, Mr. President, this is off the resolution; is that right?

Mr. SARBANES. I think an agreement was reached that it would be off the resolution and count toward the time on the resolution.

Mr. SARBANES. Only that the 25 minutes that Senator Feingold is going to use will come off the resolution.

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

Mr. SARBANES. Mr. President, I take it the parliamentary situation is such that it is in order for me to now be recognized?

Mr. SARBANES. I thank the Chair. Mr. President, at the very outset, let me say I have closely followed Senator Conrad's remarks on the budget. It is something I have done each year he has served as the ranking member on the Budget Committee. As always, I found his presentation to be both clear and insightful. For anyone who cares deeply about fiscal responsibility, as he does, the picture he has painted of America's fiscal condition is deeply troubling. I express my own deep appreciation to Senator Conrad, as I think people all across the country should do, for seeking to focus attention on this important problem. Day by day, we have different issues which grab the headlines and the public's attention, but, meanwhile, this deteriorating situation of America moving further and further down into a fiscal box goes on. The implications of that are very far reaching. Senator Conrad has sought to call our attention to that, to focus our attention upon it, and to make us come to grips with this challenge. I commend him for what I think has been a very important public service. As we set out to consider the budget for fiscal year 2007, I think it is necessary for all of us to recognize the budget resolution is, in a very basic sense, the most important document we will deal with in this Congress. The budget contains within it literally hundreds and hundreds of decisions that are critical to our national life. Each time it comes before us, it puts to us the questions: What are our values? What are our priorities? What are we trying to accomplish as a society? It is within the budget that we set our priorities. We make these judgments: how much of our resources to commit, how much to raise through the taxing system, how large a deficit to run. All of these are very basic questions, and the priorities set among these programs determine the direction of our national life. Now, I think in order to judge the current budget and to develop some informed and responsible answers, we need to place that budget in the fiscal and economic context in which the Nation now finds itself. You do not need a very long memory to recall that a few short years ago, under President Clinton, as he was moving through his second term, after we, the President and the majority in Congress, had made some very hard choices on taxes and spending, restraining spending and raising some taxes, primarily on upper-income people--we were able to turn around the Nation's fiscal status. In 1998, the Federal Government reported its first surplus in the budget since the 1960s. When President Bush took office, we were in our third straight year of a surplus in the Federal budget, and we were projecting surpluses over the next 10 years of $5.6 trillion--five and a half trillion dollars in surpluses projected over a 10-year period. Obviously, this was a pretty healthy position to be in. It would have, of course, allowed the Nation to pay down the large national debt that had been accumulated as we moved through the 1980s and into the 1990s. But in what I predict history will write as a gross irresponsibility, President Bush, in effect, squandered the projected surpluses by instituting irresponsible and reckless tax cuts--tax cuts whose overwhelming beneficiaries were those at the very top of the income and wealth scale. These were not broad-based tax cuts. These were tax cuts whose benefits, upon analysis, were seen to be focused very much on the top few percent of the income scale. When the President submitted his first budget proposal, he asserted: We can proceed with tax relief without fear of budget deficits, even if the economy softens. ``We can proceed with tax relief without fear of budget deficits, even if the economy softens.'' The following year, with a budget already in deficit, the President advocated for yet another tax cut--yet another--promising that ``our budget will run a deficit that will be small and short term.'' In fact, the President's budget that year, 2002, stated the deficits would be so short term that today--as he was looking ahead--the Government would be back in surplus. Now, let's look at what has happened. Exactly the opposite of what the President predicted has happened. Under the irresponsible fiscal policy that this President has pursued, we have run deficits each and every year since 2001. In 2002, the deficit was $158 billion. President Bush inherited a surplus in 2001 of $128 billion. The three previous years had had surpluses as well, and then there was a $158 billion deficit in 2002. The deficit rose to $378 billion in 2003, rose again in 2004 to $413 billion, fell slightly in 2005 to $319 billion, and is now projected to go back up again in 2006 to $371 billion. Far from being small and short term, these deficits are at record levels. This chart shows the deterioration in the Nation's fiscal position over the last 35 years. As we see, the budget went into the red more and more and more. In fact, in 1992, we had the previous record deficit of $289 billion. Then there were the years I referred to when we came out of deficit and ran a surplus. Now we have dived back into deficit, thanks primarily to the excessive tax cut and other factors, including the slowing of the economy and the involvement in Iraq. We ran a record deficit in 2004 of $413 billion. What an extraordinary deterioration in fiscal position to go from here to there. The deficits would be even larger if we were not using the Social Security trust fund each year to mask the cost of the President's policies. When we do a unified budget, we include in it any surplus or deficit in the Social Security trust fund, and the Social Security trust fund has been running a positive balance. That offsets the picture of the deficits, but it is not a totally accurate picture. The President has submitted a budget this year that would cause our Nation's fiscal health to continue to deteriorate. Regrettably, the President's budget does not even tell the whole story. It fails to account for very significant and substantial obligations overseas and for significant and substantial obligations at home. I want to give two examples of that. There are others. We could develop a longer list. But for purposes of illustration in terms of dealing with a budget that is not fully transparent and fully accountable, I will give two examples. From the very start of the war in Iraq, the administration has not reflected its true cost in the budget and in the budget submissions. In retrospect, one is given pause by the fact that the very day the bombing started on Baghdad in March of 2003, we were debating the budget resolution on the floor of the Senate--3 years ago. Of course, since the war had just started at that time, the budget resolution before us did not contain funding for that war. Instead, the President came along and submitted a request for an emergency supplemental appropriation to cover the initial war cost. That is not out of the ordinary. The budget had been submitted. The war had not been started. The money was not included for the war. I noted at the time that the money requested in the emergency supplemental appropriations was clearly only a downpayment and that much more would be needed to cover the full cost of the war and of the reconstruction. I am frank to say to my colleagues, I fully expected that the President would include those costs in his next budget submission. In other words, I expected that, having now become involved, the costs of that involvement would be reflected in subsequent budget submissions, and yet the President's budgets in fiscal year 2005 and fiscal year 2006 did not include a single cent for the ongoing cost of operations in Iraq and Afghanistan. Instead, the President continued to ask for funding for Iraq and Afghanistan outside of the regular budget process. This year the President has included a placeholder of $50 billion in his budget. Even for the administration, after 2 years of not recognizing these costs, it finally hit home that they had to do something. So they put, as it were, a placeholder of $50 billion in the budget that was submitted, when everyone knows that significantly more than that figure will be needed. This is not responsible budgeting. The President is refusing to own up to the true cost of his policies. Let me turn to a domestic issue which is not fully reflected in the budget but, again, as we know, is going to happen. That is the cost of fixing the alternative minimum tax. This tax was put in place as part of our Tax Code in order to require that very wealthy people, who are using various exemptions and deductions in the Tax Code to avoid paying any taxes at all, would pay at least a certain amount of tax. It was an effort to assure some equity and fairness in the workings of the tax system. What has happened is that the threshold levels of the alternative minimum tax have not been adjusted for inflation. As a consequence, this tax is beginning to affect middle-class Americans to whom it was never intended to apply. We have adjusted it in previous years. It is clear it will need to be adjusted again at a significant cost. But those costs are not reflected in the budget the President has submitted to us. When these two items are taken into account, plus the deficits the President is projecting on the basis of his revenue and spending programs, we are now projecting a 10-year deficit of $3.5 trillion. Think about that. When the President came into office we were projecting a surplus over 10 years of $5.6 trillion. Now we are projecting a $3.5 trillion deficit. This is a deterioration in fiscal position of over $9 trillion. Because of these annual budget deficits, which we are running and are projected to continue to run, the debt of the country is projected to explode. It is now projected to rise to $11.8 trillion, almost $12 trillion, in gross Federal debt by the year 2011. Look at this incredible runup in debt that has happened since 2001. We have moved up in an escalating way. We are at $8.6 trillion in 2006. We are projected to go to almost $12 trillion by 2011. Net interest payments on this debt are expected to consume more than $1 trillion over the next 5 years. These are just the interest payments on the debt. Each dollar that we pay in interest is one less dollar that we can invest in key areas that will help to keep our economy competitive in the future. We face a global competition. Other nations are investing in workforce training, physical infrastructure, transportation networks, research and development. If we fail to rise to that competitive challenge, we are going to fall behind, not move ahead. These debt figures, some say, are just numbers. It is hard to get your imagination around $12 trillion in debt. But these numbers all reflect real obligations. These will have to be paid off by the next generation and the generation after them through higher taxes and a reduced standard of living. As the New York Times put it in an editorial entitled ``The Pain That is Yet to Come'': America cannot escape the consequences of its debt indefinitely. The effects may be sudden or gradual, but either way they mean a weaker economy than would otherwise be the case. This debt has another troubling aspect to it as well. We are financing this deficit by mortgaging our financial future to foreign lenders. The United States, in roughly a quarter of a century, has gone from being the world's largest creditor nation to being the world's largest debtor nation. In my view, there is a basic contradiction between being the world's largest debtor nation and asserting a role as the world's leading nation. Our international deficit, called our current account deficit, was nearly $800 billion last year, over 7 percent of our Nation's gross domestic product. In effect, we rely on over $2 billion of foreign inflow into the country each and every day. Warren Buffett was recently quoted as saying: Right now the rest of the world owns 3 trillion more of us than we own of them. In my view it will create political turmoil at some point. Pretty soon I think there will be a big adjustment. This large adjustment could come in the form of higher interest rates here at home, a sudden crash in the value of the dollar or a sharp drop in our stock and bond markets. We don't know exactly what will happen because we are not in control of our own economy. Much of that control is in the hands of others overseas. As Blanche DuBois said in Tennessee Williams' play, ``A Streetcar Named Desire'': We have become utterly dependent on the kindness of strangers. ``Utterly dependent on the kindness of strangers.'' Obviously, this situation should raise serious concerns about our ability to conduct our foreign policy in the future if we are constrained and limited by the need to keep our creditors willing to lend us money. Regrettably, in the budget plan submitted this year, the President offers no solution to bringing this national debt under control. In fact, the President is calling for the permanent extension of his tax cuts for the wealthy at a cost of trillions of dollars. I didn't agree with the President's tax plan in the days in which we had a budget surplus. I felt then it was too large, too heavily weighted toward the wealthy. Some argued--and I thought it had some logic to it--for a short-term targeted tax cut aimed primarily to middle- and working-class Americans and, at the same time, using the surplus to pay down our debt. In other words, to do a combination of those things. What I opposed and did not understand was the very excessive tax cuts the President put forward then and his continued support today for tax cuts in times of war and enormous budget deficits. We keep moving along year to year in this way, and we make these budget decisions, and then we go on to other business, but all the time these policies are working to drive us deeper into debt. As I said, much of this debt is held by foreign lenders, and that amount is growing all the time. At the end of fiscal year 2001, 31 percent of the outstanding Federal Government debt was held by foreign lenders. Over the succeeding 4 years, borrowing from abroad accounted for more than 80 percent of the increase in our Government debt. So we have seen the debt rise and the portion of the debt held by foreign lenders, in percentage terms, rise at a much more rapid rate. If foreign lenders continue to buy 80 percent of new Federal debt, the Federal Government will owe more than half of the debt to foreign lenders by 2011. That is equivalent to almost 25 percent of our expected gross domestic product. Think of the leverage we are placing in the hands of foreign lenders. And a shift has also occurred from private to Government lenders with respect to where those funds are coming from. Regrettably, the President's budget also cuts substantially a number of programs designed to help working and middle-income people in this country. For example, Federal education funding has been cut by the largest amount in the 26-year history of the Department of Education. These cuts come at a time when tuition and fee increases have placed college education out of reach for many students. Since 2000, tuition and fees have increased almost 60 percent for public 4-year colleges and 32 percent for private 4-year colleges. The budget for the Department of Housing and Urban Development is, once again, marked by cuts in programs that provide housing services and a healthy home environment for millions of American households. The President has proposed a 20-percent cut in community development block grants, a 25-percent cut in elderly housing, a 50-percent cut in housing for the disabled, and despite everyone's recognition of the essential services provided by our police and firefighters--everyone waxes eloquently about our first responders--the budget proposes to cut funding for community police by close to $400 million and to cut the fire programs by more than half. Let me try to put this in a little bit of context in terms of the choices being made with respect to priorities. In fiscal year 2007, the benefit of the President's tax cuts for millionaires, those with incomes over $1 million, will total $41.3 billion. That is the benefit for millionaires resulting from those tax cuts. I mentioned cuts in education, housing, police, and fire. We could fund all of those programs that I listed--in other words, bring them back up to the current levels--for less than 10 percent of the benefits flowing from that tax cut for millionaires--less than 10 percent. I am not supportive of the bulk of that tax cut. I think it was giving much to those who already had more when we had other pressing needs facing us. But just 10 percent of it would bring education, housing, fire, and police back up to current base levels. What does it say about our priorities as a nation that we are placing these tax cuts for people at the very top ahead of investments in these programs? What is said, of course, is: We can't do the programs because we have a deficit. The public needs to ask: Why do we have this deficit? And the reason we have it is because of the tax cuts. So in terms of setting priorities, the tax cuts were given a higher priority than investments in education or in housing or in stronger police and fire, and I could go through the rest of the budget reflecting the same decisions and the same choice in terms of priorities. I could develop that list at some length, but let me conclude with one last point. I think the American people have a strong sense of fairness and equity. There have been a number of events during the course of this administration which have underscored the necessity to come together as a nation with this sense of fairness and equity--the attacks of 9/11, the war in Afghanistan and then in Iraq, the devastation of Hurricane Katrina, most prominent among them. But to move ahead, we must share the burden, and, unfortunately, the President's budget continues to favor the very wealthy. They are not carrying the burden. In fact, they are being relieved of some of the burden through the tax cuts while leaving the majority of Americans to carry the burden. So as we move forward with this budget process, we need to ask ourselves: What are our priorities as a nation? In my judgment, the President's budget does not reflect the values of the American people. It is neither fair nor responsible. While some changes were made in the Budget Committee, I still think it basically reflects the policies submitted to us by the President which I think are not fair, not responsible, and I urge my colleagues to reject the budget resolution. Mr. President, I know Senator Feingold is here on the floor and would like to be recognized for up to 25 minutes.