John Spratt

Mr. SPRATT

Mr. SPRATT. I yield to the gentlewoman from Texas.

Mr. SPRATT. They are becoming so abundantly evidenced that they cannot be overlooked or denied any longer. That is the point I am trying to make.

Mr. SPRATT. Let me make two points before I yield again. First of all, we all believe that disaster relief should be a program of shared sacrifice. We should all want to pitch in and help the people of New Orleans and Bay St. Louis and the gulf coast. No question about it. But when you spread that burden across our whole country, and that is the way we should do it, it should be spread equitably and evenly and fairly. The second problem we have with what is being proposed and pushed right now, is that the costs would not come down evenly and equitably, but they would come down heavily on, in many cases, those least able to bear the burden. We do not think that is the way it should be done. We are not saying it should not be paid for in some respect or stretched out over time. We are simply saying, when and if it is paid for it ought to be equitably distributed. Let me make one other final point by saying that if you look at our charts here you will see that in the year 2015, way down here in the corner of this particular chart, the deficit will be $640 billion. That does not assume anything for Hurricane Katrina because it had not happened when these numbers were run. If you factor Hurricane Katrina in at today's level expenditure in that year the deficit will be about $645 billion. So the problem in the outyears here is not Hurricane Katrina. It is budget and fiscal decisions that were made in 2001, 2002, 2003, 2004 and are still being made today through 2010 with the insistence that all the tax cuts passed then have to be renewed. That is what is yielding you these outyear deficits. This budget that gets worse and worse by the year.

Mr. SPRATT. That is essentially on a linear graph, what we have here in a simple table. It shows a blip for Katrina but basically it adds very little to the outyear deficit.

Mr. SPRATT. Madam Speaker, I thank the gentleman for his comments, and I yield now to the gentleman from North Carolina (Mr. Price).

Mr. SPRATT. We had some resilience.

Mr. SPRATT. Madam Speaker, I think the gentlewoman will agree that the essence of America's opportunity and the essence of opportunity is a good education, and what we are seeing in this budget is diminishing money every year for education. For example, the signature program of the Bush administration was No Child Left Behind and many voted for it on the assumption that there would be, yes, more accountability, higher standards but there would also be more money. And now, 2006, the difference between what was authorized and expected to be committed to this program and what is actually being made available in this budget is about 8, $9 billion. The number the gentlewoman gave was a cumulative number since the adoption of the bill. In addition, in order to make what is provided for the additional Title I funding available, the Bush administration has proposed to cut or kill about 48 educational programs. A lot of them are small programs, but they are the Eisenhower Science and Math Program. We just had a blue ribbon commission say we need to be investing more in science and math education if we are going to make it to the future and sustain our style of living. So we see a faint hearted commitment in name, in slogan, No Child Left Behind, but the dollars do not follow the children to the extent that we all expected when we voted for the bill in the first place, no question about it.

Mr. SPRATT. Madam Speaker, I thank the gentleman for his insight, and I now yield to the gentleman from Arkansas (Mr. Ross).

Mr. SPRATT. Madam speaker, I yield to the gentleman from North Carolina.

Mr. SPRATT. Mr. Speaker, I yield to the gentleman from North Dakota (Mr. Pomeroy).

Mr. SPRATT. Madam Speaker, the gentleman is absolutely right. First of all, foreigners are picking up the lion's share of our debt for now. It cannot go on forever. We know that. No borrower can go back to his creditors continually and endlessly and ask to borrow more and more. But it has had an effect. It has kept interest rates low, because foreigners are borrowing our debt. When they quit buying it in large shares, we are going to see a rise in interest rates, it is going to have a significant effect on our economy. Let me just show you the path we are on right now, to illustrate why the word not on a ``sustainable'' path has become commonplace in Washington today. Our trade deficit, our budget deficit are simply not sustainable paths. This September, just a month or so ago, CBO, by law, presented a budget update, economic update which they are required to present. We asked them to take this projection of the economy and the budget over the next 10 years and adjust it for assumptions that would capture the essence of the Bush budget. For example, we said assume that the tax cuts passed in 2001, 2002 and 2003 will be extended when they expire in 2009, 2009 and 2010. We asked them to assume that we fix somehow the alternative minimum tax so it only affects the same number of taxpayers as it affects presently. We asked them to assume that there will be a drawdown beginning next year, this year, in the troop levels in Afghanistan and Iraq to the point where there are about 20,000 in each theater, and there will be a steady state like that. And we asked them to assume that the President's proposal for Social Security privatization is enacted. Factor all of these into the budget. Extend the budget out 10 years. And CBO, we said, tell us what the results are. And here are the results on this chart, and they are very stark. The budget deficit for last year, 2005, was $319 billion. Under the assumptions I have just outlined, that deficit will go to $640 billion. It will double over the next 10 years. The debt of the United States held by the public and held by foreigners will increase from $4.6 trillion to $9.2 trillion. It too will double. And debt service, the interest we pay on the national debt, net interest that we pay on the national debt held by the public will increase almost threefold, going from $182 billion to $458 billion. That is why we say there is a debt tax implicit in this budget. There may be tax cuts today, but tomorrow if there is one thing obligatory in the budget, it is interest on the national debt. It has to be paid or the credit of the United States will collapse. And look at what we are leaving our children, the burden we are leaving them to bear and the increase in debt service which buys nothing for the government, breeds cynicism of our government because when the citizens are paying $458 billion in interest on the national debt and seeing nothing in return for it except for the fact that the bond holders of America are getting interest payments, they get cynical for what government can do for them for charging such high taxes and doing so little in return. The debt of the United States will increase from 37 percent to 46 percent of the GDP. That is the path we are on now, and that is the path everyone knows is not sustainable.

Mr. SPRATT. Madam Speaker, as we gather here tonight to talk over the problems of the budget, our colleagues on this side of the aisle, the Republicans, are locked in a dispute over how to pay for Hurricane Katrina, the cost of which could fall between $100 and $200 billion, maybe even more, for the Federal Government alone. Some, for the most part their most conservative Members, have proposed big cuts in programs that range from student loans, to Medicaid, to food stamps, about $50 billion in spending cuts spread over 5 years. They present these spending cuts as a way to offset, partially at least, offset the spending increases that the response to Katrina and Rita are going to require. But in actuality these spending cuts will not go to offset Katrina, because the Republican budget, the budget resolution operative for the year 2006, the resolution to be brought to the floor to be amended, already calls for $106 billion in additional tax cuts, $106 billion in new tax cuts. And when these new tax cuts are passed, the spending cuts proposed, ostensibly to offset the cost of Katrina, will instead go to make up for the loss of revenues due to the $106 billion in tax cuts. Since the spending cuts are $50 billion and the tax cuts are $106 billion, none of the spending cuts will ever make it to the bottom line where they might otherwise be available to offset the cost of Katrina. So the first problem that we as Democrats have with what our Republican colleagues are pushing is that it is not what it purports to be. It is not a plan to pay for Katrina. It is a plan to facilitate $106 billion in additional tax cuts. The second problem that we as Democrats have with their plan is that we believe the cost of helping one State sustain the catastrophic loss and cost of a natural disaster, a disaster like Katrina, Hurricane Rita, should be borne by all of us, by all of the States, should be a matter of shared sacrifice, has been in the past should be in future, it works and it is right. But we do not believe that those least able to bear the costs should be saddled with the lion's share of the load. And yet that is exactly what their plan will do, because they are pushing a plan that will pay for the cost of Katrina by coming down hard and heavy on the backs of students borrowing to pay for their college education, on the sick whose only access to care is through Medicaid, and on the very poor who depend upon food stamps to feed their families. This is just some of those on whom the cuts they are proposing will fall, and the reason we are proposing alternatives and opposing the plan that they are bringing to the House floor. What we have coming before the House is a plan for spending cuts that basically and simply does not achieve its stated purpose, because it does not go to cover the cost of Hurricane Katrina, and the spending cuts it does select, whether they are used to offset tax cuts or offset the costs of Katrina, as I have said, come down on some of these who are the least able to sustain and bear them. It is fair to ask, I think, as we begin to consider such a program, why is it we are insisting upon offsets for rebuilding Biloxi or Bay St. Louis or New Orleans, but not insisting on offsets to pay for rebuilding Baghdad or Mosul or Basra. Well, one of the reasons I believe that we are experiencing this newfound interest in offsets that might diminish the deficit is that the evidence of a swelling deficit that is not going away, it is a structural deficit, built into the budget, not a cyclical deficit deficit based on the ups and downs of the economy, one that is going to be with us for a long time to come because of fiscal decisions that were made in 2001, 2002, 2003 and 2004, is becoming so obvious, so widespread, so obvious, so significant that it simply cannot be denied. I mean, after all the basics are apparent and they are well known. As Yogi Berra used to love to say, you can look it up, it is a matter of record. Back in the year 2000, we had a surplus of $236 billion. Matter of record. The budget was in the black by $236 billion, unprecedented. That was a budget that was inherited by Mr. Bush. Today, just a few weeks ago as a matter of fact, the administration closed the books on fiscal year 2005, and when they closed the books they finally declared the balance at $320 billion. And they took some credit because that deficit is actually smaller than the deficit in 2004, which was $412 billion. But a $320 billion deficit is nothing to crow about. Look at what has happened over the last four fiscal years. The simplest way to show it to you on the back of an envelope is to look at how many times our Republican colleagues have had to vote to increase the debt ceiling of the United States, and what those total increases come to since 2002. This chart shows it to you very, very clearly. It shows that in June of 2002, despite the administration's assurance that we would not have to increase the debt ceiling, the legal limit to which the United States can borrow for another 8 years, they were back a year later saying we need an increase this year of $450 billion. Then in May of 2003 they came back and asked for an incredible amount, $984 billion. You would think that big an increase would take you at least several years. This request was approved on May 26, 2003. By the summer of 2004 the Bush administration was back, Secretary Snow came back hat in hand saying we have just about run through the $984 billion increase you allowed us last year, we need another $800 billion increase, and before we could leave for the winter break, last November, that had to be passed. Finally this year, we had a budget resolution on the House floor, passed the Senate, has now been passed as a concurrent budget resolution. It calls for an increase of $781 billion in the year 2006. If you add all of these debt ceiling increases together, you will see that to accommodate, to make room for the budgets of the Bush administration over the last four fiscal years, we have had to raise the debt ceiling of the United States by $3 trillion, 15 billion. So why do we have this newfound interest in offsets? It is because the budget is becoming undeniably unsustainable. I yield to the gentleman from Wisconsin.

Mr. SPRATT

Mr. SPRATT. Madam Speaker, I thank the gentleman for yielding me time. Madam Speaker, I want to commend the gentleman from South Carolina (Mr. Barrett) for taking this initiative, and I want to join my other colleague from South Carolina in recognizing the South Carolina Farm Bureau Mutual Insurance Company on its 50th anniversary. Its motto is ``Helping you is what we do best,'' and as that motto suggests, the South Carolina Farm Bureau Insurance Company has provided a wide range of financial services, insurance services to the people of our State for nearly a half century now. The South Carolina Farm Bureau Insurance Company came along at a time when farmers in our State were looking for better options in the way of obtaining good insurance coverage that was also affordable. Recognizing that need, the organizers of the South Carolina Farm Bureau Federation went to work and secured a charter from the South Carolina Secretary of State on December 1, 1955. The result, five decades later, is a company that supplies a whole diversity of insurance products to South Carolinians from all walks of life, not just farmers. Among some of the services they provide are auto insurance, homeowners insurance, life insurance, as well as financial services such as banking, individual retirement accounts and credit cards. I was here in 1989, and I recall well the bedlam in our State after Hurricane Hugo struck in Charleston and then moved inward, coming all the way to Charlotte, North Carolina. The South Carolina Farm Bureau Insurance faced probably the biggest natural disaster in the history of our State except for the Charleston earthquake, and it faced the test of its ability to handle such a massive amount of claims, but it rose to the occasion. It settled some 16,000 claims and paid out more than $71 million. Then, in 1999, the South Carolina Farm Bureau Insurance Company was tested again. Hurricane Floyd struck our coast, and 90 percent of the reported claims were settled within 1 week, which would set a model, if not a record, for fast and expeditious claims management. It is no surprise then that this company has prospered and succeeded over the years. Today, the South Carolina Farm Bureau Insurance Company has a presence in every county in our State, and that is one reason they are able to provide such timely and quality service. Theirs has become a name that folks trust and know and feel comfortable with. I am proud of their service to our State. I rise to salute them, and I wish them the best as they celebrate their 50th anniversary and look to the future.

Mr. SPRATT

Mr. SPRATT. Mr. Speaker, I would like to join my colleagues in recognizing the South Carolina Farm Bureau Mutual Insurance Company, SCFBMIC, on its 50th Anniversary. As its motto--``Helping you is what we do best''--suggests, the South Carolina Farm Bureau Insurance Company has provided a wide range of financial services to the people of our state for half a century. South Carolina Farm Bureau Insurance came along at a time when South Carolina farmers were looking for better options in the way of obtaining good insurance coverage that was also affordable. Recognizing that need, the board members of the South Carolina Farm Bureau Federation went to work and secured a charter from the South Carolina Secretary of State on December 1, 1955. The result, 5 decades later, is a company that supplies a diversity of insurance products to South Carolinians from all walks of life. Among some of the services they now provide are, auto, home, and life insurance, as well as financial services such as banking, loans, IRA, and credit cards. I recall the year 1989 when the South Carolina Farm Bureau Insurance Company faced one of the biggest natural disasters in the history of our state: Hurricane Hugo. The South Carolina Farm Bureau rose to the occasion. It settled some 16,000 claims and paid out more than $71 million. Then, in 1999, when Hurricane Floyd struck the coast, 90 percent of reported claims were settled within one week, setting a model, if not a record, for expeditious claims management. Today, the South Carolina Farm Bureau Insurance Company has a presence in every county in the State, which is one reason they are able to provide such timely and quality service. Theirs is a name that folks know and trust. I am proud of their service to our State, and wish them the best as they celebrate their 50th Anniversary and look to the future.

Mr. SPRATT

Mr. SPRATT. Mr. Speaker, I rise to recognize Bowater's Catawba Operations, the largest coated paper manufacturing facility in North America. The plant makes paper used in magazines, flyers, inserts, and coupons, and I am proud to say that it is located in my congressional district. Fifty years ago, when Bowater chose the site for a paper-making plant on the Catawba River in York County, South Carolina, a special session of our General Assembly was called to amend the state constitution so that Bowater, then a British firm, could purchase unlimited timberland acreage. That plant site has proven its worth many times in the years since then. Now, Bowater's Catawba Operation has been recognized for meeting and surpassing world-class standards in manufacturing, employee programs, community outreach, and environmental stewardship. The Catawba plant employs 1,000 associates. Most live in York, Chester, and Lancaster counties. And they are the reason that the Catawba plant won Industry Week's 2005 Best Plant competition, one of just 10 plants out of 220 nominated. They are also the reason that Catawba plant was named South Carolina's Manufacturer of the Year for 2004 by the South Carolina Chamber of Commerce and the National Association of Manufacturers. Industry Week calls the plant a ``pacesetter'' that will ``continue to lead the way in the future.'' Bowater's Catawba Operations recently undertook major capital improvements, including the construction of a $175 million state-of- the-art kraft-pulping mill, along with a $106 million paper machine conversion. Both were completed while the mill maintained a full 24- hour production schedule. The plant's associates and managers not only work hard and smart, they work safely--recently reaching a significant safety milestone by working four million hours without a disabling or lost time injury. It comes as no surprise to us in South Carolina why the Catawba plant is second to none in its class. As the editors of Industry Week put it in honoring the Catawba plant and the nine other ``Best Plants'': ``These plants produce different products from one another, operate different machinery, rely on a host of different improvement methods, and face different competitive challenges in their quests to excel at the jobs they do. What they share, however, is a vision of excellence by design, not by accident. They hire the right people and train them well, and they focus continually on improvement. They have leadership that encourages input from all employees and employees who take up the challenge; and they look outside their four walls to their upstream and downstream partners in their efforts to be the best.'' Mr. Speaker, I am proud to represent Bowater's Catawba Plant and its outstanding associates, and honored to call them today to the attention of the House.

Mr. SPRATT

Mr. SPRATT. Mr. Speaker, I thank the gentleman for yielding me this time. Mr. Speaker, I rise in full support of the $1.5 billion in veterans health care funding for 2005, which was added on to this conference report. I am pleased that my colleagues on the other side have finally come around to our position on veterans funding and now acknowledge that their budgets have not funded this priority accurately or adequately. This shortfall has not occurred for lack of notice or foresight. Over warnings from veterans groups and our own strenuous objections, the budgets passed by this House have consistently, consistently, understated the cost of veterans health care. This is the Veterans Administration borrowing from Peter to pay Paul, denying or delaying service until a supplement finally comes through. And then when the supplement comes through, it busts the spending caps imposed in the budget and adds to the deficit. This is no way to budget for veterans health care, and it is no way to budget generally. The White House just 2 weeks ago issued a midsession review of the budget, which we received with some skepticism. We observed that their projections of the deficit seemed better, partly because they omit the full cost of various policies like veterans health care, the ongoing cost of operations in Afghanistan and Iraq, and fixing the alternative minimum tax, extending other tax credits. In the short run, these omissions make the deficit look better, sure, but in the long run the true costs emerge, and the actual deficits turn out to be worse than projected. Here, for example, is what happened to veterans health care in the fiscal 2005 budget cycle. When we brought forth our budget resolutions on the Democratic side for 2005, we argued that the discretionary spending levels in the Republican resolution were too tight, not realistic, and would shortchange essential priorities like veterans health care. We were not alone. The chairman of the Veterans' Affairs Committee argued that more funding for veterans health care was badly needed, but our concerns went unheeded. Now we have to face the truth. The funding provided for veterans health care in the 2005 budget was, in fact, not sufficient. And since an accurate funding level was not built into the budget, today's bill will move discretionary spending for 2005 over the allocation included in the Republican budget. This misestimate, like others, was left out of the deficit projections that OMB announced just a couple of weeks ago. For the record, let me point out that the Democrats put forth a responsible budget for 2005. Our budget brought us to balance by the year 2012, yet we funded veterans health care priorities and other priorities adequately. Our budget provided $1.3 billion more for veterans health care in 2005, and $1.5 billion more over a 5-year period of time. Unfortunately the same story is playing out, unfolding again in 2006. Once again, once again, this year we warned that the budget provided too little for veterans health care, and once again it was to no avail. Our resolution provided $1.5 billion more for veterans health care in 2006, $16.4 billion more over 5 years, and a budget, mind you, that balanced by 2012. Just 3 months later, 3 months later, we are told that the VA appropriations bill for 2006 will have to exceed its budget allocation to accommodate the administration's amended request for veterans health care. And, of course, the deficit estimates for 2006 will have to be revised upward accordingly. Mr. Speaker, I would gladly vote to raise veterans health care to the level it should have been to start with, but I urge that we learn a lesson from this experience and be forthright in the future about the cost of veterans health care. And in that connection, I would note that in the outyears, 2007, 2008 and onward, the official estimates of the Republican budget still grossly underfund veterans health care, they understate the deficit, and they definitely will have to do this all over again until the numbers are finally done right.

Mr. SPRATT

Mr. SPRATT. Mr. Speaker, there are various good reasons to vote against CAFTA, but the first is enough and it's basic: this is not a good deal. The U.S. is running unprecedented trade deficits--$618 billion last year, $195 billion this year in the first quarter alone. And the deficit worsens every year, weakening our economy and our independence. Virtually every trade deal the U.S. has made has resulted in far more imports than exports. Yet we keep creating free trade zones in the blind faith that the market will optimize the outcome. Central American countries are part of the Carribean Basin and already enjoy wide-open access to our markets by virtue of tariff Item 807, the Generalized System of Preferences, the Carribean Basin Trade Partnership Agreement, and the Uruguay Round of GATT, which has removed all quotas on textile/apparel imports. Far from being disadvantaged, these countries enjoy preferential access now. In fact, the Caribbean Basin countries as a group already export more to the U.S. than Mexico and import less. The CBI countries shipped $2.6 billion in apparel exports to the U.S. versus $1.6 billion in apparel shipments from Mexico. During the most recent quarter, CBI countries imported $655 million in fabric from the U.S. Mexico imported $809 million. Overall, in 2004 our textile/apparel trade deficit with Mexico was $3.765 versus $5.669 with CBI countries. CAFTA purports to be based on a rule of origin adopted from NAFTA. NAFTA provides that for textile and apparel goods to move freely among Mexico, Canada, and the U.S., they must be made from the yarn stage forward in these three countries. CAFTA follows the same rule, but carves out so many exceptions that the exceptions swallow the rule. Here are some of the exceptions to the rule of origin that CAFTA allows for textiles and apparel: Only the component that gives the garment its essential character is subject to the rule of origin. Non-essential components are excepted. Textile or apparel goods that contain fabric or yarn deemed ``in short supply'' in the U.S. are treated as originating in CAFTA, regardless of origin. This opens the door to more Chinese components entering the U.S. duty-free. Denim, wool, cotton, and man-made fiber woven products from Mexico and Canada, are permitted under the rule of ``cumulation.'' Cumulation allows countries that have free trade agreements with us to supply component parts to CAFTA countries without affecting duty-free treatment. This opens the sale of U.S. yarn and fabric to competition and increases the likelihood that transshipped textiles from China will enter the U.S. duty free. For the first 10 years, CAFTA grants Tariff Preference Levels (TPL) to Nicaragua, for up to 100 million square meter equivalents of out-of- region cotton or man-made fiber garments. These goods come into the U.S. at nominal duties. This exception represents \2/3\ of Nicaragua's current capacity and opens another back door to Chinese imports. The origin of collars, cuffs, and linings is not considered when determining the origin of the apparel goods. This allows the use of Chinese collars, cuffs and linings. CAFTA allows Central American countries to use components from anywhere--including China--to make pajamas, bras, and boxers and import them duty-free. The import of these goods from China has been found disruptive to our markets. So, they are subject to ``restraints'' under a special ``safeguard'' agreement with China. By allowing duty-free access to the U.S. for these goods, CAFTA allows China a route around the ``safeguard'' restraints. Here's another oddity about CAFTA. CAFTA benefits are retroactive to January 1, 2004. Manufacturers will receive duty rebates if CAFTA is ratified. Under the Caribbean Basin Trade Partnership Act, garments made in the region from U.S. yarns and fabrics already receive duty- free treatment. The only manufacturers who will benefit from retroactivity are the ones who want to use non-U.S. fabric as part of the single transformation, TPL, or cumulation loopholes. Retroactivity is essentially an invitation from the U.S. government to manufacturers to start using non-U.S. fabrics immediately. The U.S. has been unable to make labor and environmental standards a condition of free trade for GATT/WTO members, though they should be. Otherwise, free trade becomes a race to the bottom. Our goal should not be just to expand markets, but to raise living standards. All CAFTA says is that a country must enforce its own laws. CAFTA sanctions the status quo, doing nothing for labor or environmental laws. All in all, CAFTA strikes a poor bargain. China is now making trade deals world-wide, using as leverage the largest emerging market in the world. The U.S. still has the largest existing market in the world. Surely in exchange for access to our markets, we can cut a better deal than CAFTA--better for our workers and theirs.

Mr. SPRATT

Mr. SPRATT. Madam Speaker, when China joined the WTO, the U.S. and China entered into an ``accession protocol.'' Among other things, that protocol anticipates that the United States may find that China is subsidizing exports, and in that case, the United States may seek to impose countervailing duties, to level the playing field. The Department of Commerce is required to use Chinese data to measure the size of the subsidy, ``where practicable,'' but use of Chinese cost and pricing data is not always practicable, so similar data must be drawn from a comparable country. As originally drawn, this bill dropped the key phrase, ``where practicable.'' It restricted the ability of the Commerce Department to measure subsidies in China and other non-market economies. Due to a barrage of complaints from U.S. industry, that phrase was added back at the last moment, before this bill was brought to the floor. But two other problems, to which U.S. industry objects, were not corrected. First of all, this bill requires the Department of Commerce to ensure that there is no ``double-counting'' of countervailing duties and anti- dumping duties. Current law only requires that there be no double- counting of export subsidies, but makes no provision with respect to antidumping duties. Commerce has called this change ``wholly inappropriate.'' These are the words of the Commerce Department: ``The proposed change would put China into a special category distinct from all other countries when subject to concurrent anti-dumping and countervailing duty investigations.'' According to the Department of Commerce, this restriction ``would raise complex methodological questions, the costs of which may far outweigh any purported equity gains of any such adjustment.'' Secondly, this bill gives the WTO Dispute Settlement Body special influence over U.S. law. WTO decisions are not self-executing. The Congress decides how, when, and whether to implement a WTO decision. This bill would require the Commerce Department to ensure that our application of countervailing duty law to non-market economies is consistent with our international obligations. There is no guarantee how the WTO would rule if this aspect of this law were brought before it. This provision could place WTO dispute settlement tribunals on a special footing when dealing with U.S. laws. If this bill were brought up as a regular bill, it would be amendable, and these troubling provisions could be changed or deleted.

Mr. SPRATT

Mr. SPRATT. Mr. Speaker, six senior members of the Fort Mill Rotary Club in Fort Mill, South Carolina are being honored for life-long contributions to their community. All six have demonstrated the ideals of Rotary in their lives and made significant contributions to their communities, Fort Mill and Tega Cay. All are Paul Harris Fellows and all are World War II veterans. They are not only dedicated Rotarians but dedicated civic leaders, and most importantly, they are men who love their families, their country, and their church. I want to share with my colleagues in the House of Representatives sketches that indicate the contributions of these six outstanding citizens: O.T. (Buddy) Culp, Robert C. (Bob) Hill, William H. (Howard) Jones, William C. (Bill) Kimbrell, Roderick W. (Rod) Snider, and Phillip D. (Phil) Ray. Buddy Culp--U.S. Army Artillery, Fort Mill native, 1999 Fort Mill Business Person of the Year, Charter Member of Fort Mill Rotary Club, Sustaining Member and Paul Harris Fellow Award, Life-long member of Unity Presbyterian Church, served on the session and board of deacons several terms. Fort Mill Area Chamber Board of Directors, Life-long membership in York County Regional Chamber of Commerce, United Way and Boys & Girls Club of York County Board of Directors. Owned and operated Culp Brothers, oil jobber and convenience stores. Married to Bette Jo, two children. Bob Hill--U.S. Marine Corps, Fort Mill native, 2005 Lifetime Achievement Award--York County Regional Chamber, Charter Member of Fort Mill Rotary Club, Sustaining Member and Paul Harris Fellow Award, Fort Mill Chamber--First President and First ``Man of the Year,'' Rock Hill Advisory Board of NationsBank, Retired Officers Association (Retired Major, SC ARNG), Veterans of Foreign Wars, American Legion, Former Member of York County Economic Development Board, United Way, Fort Mill Community Playhouse Past President, Member of the first York County Library Board, Masonic Lodge--Past Master, Optimist Club--Past President, Member for 60+ years of Unity Presbyterian Church. Owned and operated State Farm Insurance Agency in Fort Mill. Married to Dot, two children. Howard Jones--U.S. Army Air Corps--saved three of his crew of four in a plane crash in combat over Italy, Member of Fort Mill Rotary Club since 1992, Sustaining Member and Paul Harris Fellow Award, Tega Cay Chamber--Past President, Carolina Historic Aviation Commission, Civic Air Patrol since 1948, Tega Cay Lions Club. Owned and operated American Management Appraisal. Married to Nancy, three children. Bill Kimbrell--U.S. Navy, Fort Mill native, 2001 Lifetime Achievement Award, York County Regional Chamber, Charter Member of Fort Mill Rotary Club, Sustaining Member and Paul Harris Fellow Award, Fort Mill Chamber--Past President and ``Man of the Year,'' Member of Unity Presbyterian Church Choir for 55+ years and served on the session and board of deacons for several terms, American Heart Association, Boy Scouts of America, Boys & Girls Club of York County, Winthrop University Foundation, York Technical College Foundation Board of Directors. Married to Joanne, three children. Phil Ray--U.S. Army Air Corps, Member of Unity Presbyterian Church and served on the session and board of deacons for several terms, Charter Member of Fort Mill Rotary Club, Sustaining Member and Paul Harris Fellow Award. Started Ray Textiles of Fort Mill from scratch and has been running it for 25 years. Married to Fannie, two children. Rod Snider--U.S. Navy, Member of Fort Mill Rotary Club since 1995, Sustaining Member and Paul Harris Fellow Award, Member of Unity Presbyterian Church, Good Folks of York County, United Way, Vintage Club of Tega Cay, York County Foundation Board. Owned and operated Snider Plumbing. Married to Peg, three children.

Mr. SPRATT

Mr. SPRATT. Mr. Speaker, let me quickly point out that this should come as no surprise. The President's budget for 2005 cut veterans appropriated funding $248 million below the Congressional Budget Office estimate of what was needed to keep pace for inflation in 2005 and $13.4 billion below current services over 5 years. For 2006, the President's budget called the even deeper cuts. Excluding the proposal to impose new and unrealistic fees, it cut funding for veterans appropriated programs $759 million below current services necessary to keep pace with inflation, $18 billion below inflation over 5 years. Democrats have offered alternatives every year on this floor that would have covered the shortfalls the V.A. has identified. In 2005, we offered a budget resolution with $2.5 billion more than the President requested. In 2006, we offered a budget resolution with $2.3 billion over the President's request. And every year the outyear funding that we proposed was also substantially more than they proposed, and that is a problem we are not even discussing tonight because consistently what has happened here is there has been a little plus-up in the near term and a flattening out in the long term, and we inherit the consequences and episodes like this. If we had passed the resolutions that Democrats supported and brought to this floor, we would not be here tonight discussing this bill.

Mr. SPRATT

Mr. SPRATT. Mr. Speaker, this is not the first nor will it be the last time that we take the floor of the House here in the well of the House to address a problem that is of great concern to all of us, and that is the budget deficit. This year past, it was $412 billion and while it appears to be improving, thankfully, a bit for the current fiscal year, it still will come in likely in the range of $350 billion, and that will make it the third-largest deficit in our Nation's history, the third in a row where we have approached the pinnacle, the largest deficits we have run in our country's history. We are not here to score political points. We are here to call attention to a problem that we think has grave consequences. It may be that we do not feel or see the consequences right now, but we feel that a day of reckoning lies on or just over the horizon. I believe that, because sooner or later the fundamentals in any market begin to take hold. It happened to the dot coms; it could happen again to us with the budget deficit that we are running today and the trade deficit we are running also today. It could hammer the dollar. After all, the fundamental is, simply stated, like this. When you raise the demand for credit, which is what you do when the government runs a deficit of $312 billion, $412 billion, when you raise the demand for credit, eventually you raise the price of credit. In other words, you raise interest rates. What do interest rates do when they go up? They stifle growth in the economy, long-term growth and short-term growth. They could have devastating consequences, for example, on the housing market, on the automobile market. That is a likely consequence of the policies we are running today. For the time being, we have not felt or seen the results, the consequences, and largely that is due to the fact that this country is running large current account deficits, which means we are pumping dollars into the world economy which come back here, are recycled here by the purchase of our Treasury bonds and Treasury notes. So for now, foreigners are lending us the money to bridge our budget, which is sparing us the effect of high interest rates. But at the same time, debt means dependence, and over the course of years if we continue this practice, we will find ourselves having undercut our independence in foreign policy which is something none of us wants. Even when foreigners buy our debt and spare us the outlay for now, we still have to pay the interest. We still have debt service. The debt service in the total budget this past year was $165 billion, $170 billion, and it is going up inexorably because we have got more debt, and interest rates are rising again. As those two factors converge, you are going to see the debt service, the interest we pay on the national debt, go up to $200 billion, $225 billion, $250 billion within the foreseeable future. This is an obligation that has to be paid. Indeed, there is no other item in the budget that is more obligatory. The United States of America has to pay its interest on its national debt or otherwise our currency and our credit would collapse. But once we pay the debt, once we pay the debt service, the effects are that priorities in the budget we could otherwise afford and fund and increase, such as medical research and scientific research and education for our children and Social Security and Medicare for the elderly become all the harder to fund because the interest has to be paid first. This deficit problem is all the more distressing because it did not have to be. Just a few short years ago in the year 2000, the last full fiscal year of the Clinton administration, this country was running a surplus of $236 billion. It is a fact. You can look it up. Every year the Clinton administration was in office due to two budget plans we adopted, one in 1993, another in 1997, the bottom line of the budget got better and better and better. The President came to office and inherited a deficit of $290 billion. He sent us on February 17 a deficit reduction plan that barely passed the House, a one-vote margin, barely passed the Senate, the Vice President's tie-breaking vote. But look what happened, as this chart here shows. The deficit every year came down and down and down to the point where in the year 2000, we had a surplus, without including Social Security, a unified surplus of $236 billion. Unprecedented. This was the surplus that President Bush inherited when he came to office in the year 2001. And that is why I say this did not have to be. We did not just fall out of the sky with these enormous deficits. We did it because of policies that were adopted and passed in this House. Not by all of us. Most of us on our side of the aisle voted against them. Foreseeing this problem and knowing how difficult it had been to move the budget finally back into the black again for the first time in 30, 40 years, we did not want to see us backslide into deficit, but that is exactly what happened. What we have seen now is that we have gone from a surplus, projected, of $5.6 trillion between 2002 and 2011. That was the 10-year projection that Mr. Bush's own economists made at the Office of Management and Budget when he took office, $5.6 trillion. We have gone from a projected surplus of $5.6 trillion to a projected deficit of $3.8 trillion over that same 10-year period of time. That is a swing of $9.4 trillion in the wrong direction. We have never seen a fiscal reversal like this, at least since the Great Depression, $9.4 trillion in the wrong direction, and much of that was policy driven. The President says we have got to get our hands around spending, but a large part of this problem was driven by his insistence that we have unprecedentedly large tax cuts, and when the surpluses that we thought were going to obtain over that 10-year period of time appeared to be overstated substantially, by some estimates as much as 50 percent, the President charged ahead with his tax cuts. In 2002, 2003, in addition to 2001, there were substantial tax cuts, and the loss of revenues has had a big impact on the bottom line and has helped put the deficit almost intractably in the red again. But most of the spending increases have come on the discretionary side of the budget in the appropriation bills that we adopt every year in four different accounts, four different programmatic areas, which is important to know, because all of these areas are areas where the President has sought and we have provided what he has sought in the way of additional increases in spending. If you look at the increases in spending over and above current services, and that is the amount of money necessary to maintain the government services at their existing level, if you look at those spikes in the budget that rise above funding for current services alone, you will find the landscape for 4 years dotted by the same increases, namely, defense, homeland security, the response to 9/11, they account for 90 to 95 percent of the increases in spending. So, while the President is saying that Congress needs to tighten spending, in truth much of the spending that has driven the budget into deficit is spending that has been called for for defense and homeland security and for the response to 9/11, called for by the President, passed by the Congress, and the fact of the matter is we are simply not paying the tab for these necessary expenses. I am not disputing the need for this money. What I am disputing and calling attention to is the fact that we are taking the tab for defense in our time against terrorists in the Middle East and elsewhere and shoving this tab off onto our children. That is why I often say that the deficit is a problem for the economy because eventually it will raise interest rates and stifle long-term growth, eventually it will affect the priorities in the budget because debt service is obligatory and has to be paid; and as debt service increases, other things get eclipsed and shoved aside. But the biggest problem with the deficit in my book is moral, because what we are doing is instead of paying for defense in our time, we are telling our children they have got to pay for defense in their time and our time, too, or at least the incremental cost of it. This is the concern that we would like to address tonight, the fact that we are not facing up to the situation that confronts us and the fact that we have a budget deficit of enormous proportions and by any honest, fair, and accurate calculation or projection of what it is likely to be, it shows little signs of abating over the next 10 years, as this particular chart right here will show. This chart shows where we believe, using Congressional Budget Office numbers, the President's budget, if implemented over the next 10 years, will take us. The budget deficit will get a bit better, as indeed it is scheduled to improve this year, probably $350 billion. Good news. The bad news is that the President in projecting the future course of the deficit, number one, is only giving us a 5-year projection; and, number two, he has left out some significant costs, such as the cost of maintaining troops in Afghanistan and Iraq after the year 2005, such as the cost of fixing Social Security, such as the cost of repairing something we call the alternative minimum tax, which actually raises tax revenues above the level that would otherwise exist if people were not required to pay this alternative minimum tax. It will soon, by 2010, affect 30 million tax filers as opposed to 4 million this year. I do not think politically that is likely to happen, and if you fix it to avert that problem, the problem of having the alternative minimum tax apply to middle-income families, for whom it was never intended, then you get a result here of a deficit, 10 years from now, equal to $621 billion. No improvement; and indeed after a few years of slight moderation, a worsening deficit every year to the point where at the end of our 10-year time frame, it is up to $621 billion. Let me just wrap up this introductory presentation of what concerns us about the budget by showing you sort of the back-of-an-envelope, the easiest way I know to explain what I think is an out-of-control situation. Back in 2001 when the Bush administration was pushing its tax cuts, they came to us and they said, The future looks so rosy that you can pass these tax cuts, you can pass these defense increases, you can pass our budget, and we won't be back to ask you to increase the debt ceiling of the United States, a legal limit beyond which we cannot borrow. We won't be back until 2008, 2010. Well, the Republicans in the House and the Republicans in the Senate passed the President's budget pretty much as he requested, with a few moderations. The next year they were back, hat in hand. 2002, notwithstanding what they told us the previous year, they needed an increase in the debt ceiling of the United States of $450 billion. The following year, 2003, they were back again. This time they wanted a phenomenal increase in the debt ceiling of the United States, $984 billion, an increase in 1 year of $984 billion. How much is that? That amount is equal to the entire debt of the United States the year that Ronald Reagan took office. It is a bit more than that, as a matter of fact. The following year, having obtained a $984 billion increase on May 26, 2003, the following September, 2004, Secretary Snow was back saying, I need $800 billion more. They ran through $984 billion of debt ceiling in 1 fiscal year and came back hat in hand and asked for $800 billion more, which the Congress passed in late November of last year. And then when the budget resolution was brought to the floor this year, the Republican budget resolution, when it passed the House and passed the Senate, buried in it was a provision that called for another increase in the debt ceiling of $781 billion. This is a budget which they claim will eventually move us to halving the deficit over 5 years. At the same time they make that claim, they bury in that budget a request provision that Congress increase the debt ceiling by $781 billion. Add those together, 4 fiscal years, we get an increase in the deficit, an increase in the national debt of $3.015 trillion. That is just phenomenal. There it is on the back of an envelope. It sums up the fiscal course and policy of this administration as succinctly as anything we can present: $3 trillion of additional debt-borrowing capacity, which will basically all be used up by the end of this fiscal year, and they will be back again asking for more. So this is what concerns us. We frankly do not think the country can continue on this course. And that is why we are here tonight to talk about a problem that we think should be a front-burner problem for both parties, both Houses, both executive branch and the Congress. It needs more attention than it is now receiving. Mr. Speaker, I yield to the gentleman from Maine.

Mr. SPRATT. What we have seen in the 1980s and 1990s in coming to grips with the budget deficit, a compelling problem that nevertheless eluded a solution for years, is that unless the administration, the President and the leadership of the Congress, is focused upon this problem and there is a driving priority, it simply will not be resolved. And that is the problem we have today. When we finally put the budget to bed, the deficit to bed, got rid of the remaining deficit in 1997, it was because President Clinton had not only made that his number one priority for his second term, but he put his first team on the field. Every time we met for negotiations, Frank Raines was there, Bob Ruben was there, Erskine Bowles was there, everyone in the room had the President's proxy and could speak for him; and the participants, the budget principals, knew that the administration was pushing hard. Unless everybody pulls hard in that same direction, there are too many otherwise outside forces that stray you off course. So you have got to have leadership to get this done. And we do not have that leadership.

Mr. SPRATT. This would clearly make the problem worse, probably 100 percent worse over this 20-year period of time

Mr. SPRATT. Well, the administration avows its aversion to debt. And yet it keeps tacking debt on top of debt. The deficit in the year 2003 of $378 billion, a record. A deficit the next year of $412 billion, another record. A deficit this year of $350 billion. And they claim to be cutting it in half, but it does not appear that way if you accurately project it. And then the Bush administration begins it second term with this policy initiative, the first that the President brought forth, namely, to privatize Social Security. In order to privatize Social Security, the Bush administration would allow workers today to take up to a third of their payroll taxes, take them out of the Social Security trust fund account where they accumulate to a surplus, and put them instead into private accounts. That means a diversion of well over $3 trillion over the next 10 years, or the first 10 years during which that program would be implemented. And here is a depiction in bar graphs of how much additional debt would be stacked on top of the enormous mountain of debt already accumulated if privatization took place as the President proposed it. As you can see by the year 2025, 2028, we would have racked up $4.9 trillion in additional debt on top of even more debt incurred in the ordinary budget of the United States. So the Bush administration claims that it does not like debt any more than anyone else, but its policies contradict that claim; and the Social Security proposal coming on top of an already out-of-control deficit-ridden budget just leaves one incredulous as to what they say about their fiscal policy.

Mr. SPRATT. I thank the gentleman for his insights into this very critical problem. And I yield again to the gentleman from Virginia (Mr. Scott.)