John Spratt

Mr. SPRATT

Mr. SPRATT. This is past history. What I was giving you is a projection. You can look at the last three increases over the last 4 years, and the bottom line is $2.234 trillion. As Yogi Berra liked to say, you can look it up. It is a matter of record.

Mr. SPRATT. Mr. Speaker, we have a chart to prove that point. I need to get it up here. We have a chart that shows how over the last 4 fiscal years, the increases in discretionary spending and, once again, that is the money we appropriate in 13 different bills each year. We call it discretionary because each year we decide how to spend it, it is defense, it is national parks; if we look at those accounts in discretionary spending, we will find that 90 to 95 percent of the increases in discretionary spending over and above current services, just running in place, are attributable to 3 different factors. Here we go. Here is the chart. Defense, Homeland Security, and the response to 9/11. Those three factors account for 90 to 95 percent of the growth in discretionary spending. Now, the President says we are spending out of control but, in truth, the House is controlled by Republicans, the Senate is controlled by Republicans, the White House is controlled by Republicans. It is a self indictment, if anything. But here is the actual truth: discretionary spending is going up, but it is going up in accounts and for reasons the President has requested and sought money for, and we have given it to him. Having put an Army in the field in Iraq, we are going to support them and see them through, we hope to a successful conclusion. But this is policy that he has originated and we have supported in one way or another and now support, and this accounts for the main increase in spending. So number one, it is spending he has initiated; number two, it is not likely to fall off substantially to abate by any significant amount in the near future. That is a fact we have to live up to, a fiscal fact we have to live up to. But the administration is in a state of fiscal denial. They will not acknowledge that this is a fact, and that the remaining wedge out of the budget for discretionary spending, domestic, nondefense discretionary spending constitutes maybe $380, $390 billion. You cannot squeeze enough out of that sector to begin to wipe out a $427 billion deficit.

Mr. SPRATT. The gentleman mentioned what they told us about repayment of the debt. If the gentleman recalls, they said if you pass our budget, including these tax cuts, $1.5 trillion, $1.6 trillion in tax cuts, with interest even more, we will not be back until 2008, if you implement our budget, to ask you for an increase in the debt ceiling. We will not need to come back because we will have ample room beneath that ceiling. In the Clinton administration the last 3 years we paid off over $300 billion of national debt. That is the first time that has happened for a long time. So they said that trend is going to extend and we will not need to come back and ask for an increase in the debt ceiling in 2008. History shows in 2002 they were back, hat in hand, saying we need $450 billion. The next year, 2003, they needed 984. As the gentleman from Tennessee (Mr. Cooper) pointed out, that was equal to the entire debt of the United States in 1980. And then only 16 months later, they were back asking for another $800 billion which was provided in November of last year; and as a consequence, the total increase in the debt ceiling of the United States to accommodate the Bush budget from 2001 through 2005 is $2 trillion 234 billion. That is simple arithmetic, back-of-the-envelope analysis, but it is truly astounding to me, given the fact that they told us we would not need to raise the debt ceiling until 2008.

Mr. SPRATT. Every 18 months we are adding $1 trillion to the national debt, to the statutory debt to the United States. Nobody in his right mind thinks this is something that can be sustained.

Mr. SPRATT. Roughly that. Even the CBO tells us that another substantial increase in the debt ceiling will be necessary by at least January or February of next year.

Mr. SPRATT. $2.6 trillion budget, which no one has seen.

Mr. SPRATT. I yield to the gentleman from Virginia (Mr. Scott).

Mr. SPRATT. I yield to the gentleman from Tennessee (Mr. Cooper), who I believe has a question he wants to put forth.

Mr. SPRATT. Mr. Speaker, that is the point I was trying to make at the opening. While these cuts may seem to be necessary to deal with the deficit, in truth, the deficits and their budget resolution are bigger than they would be under current surpluses. What they really do, to some extent, is use these entitlement cuts and discretionary spending cuts to offset the tax cuts so they will not grossly enlarge the bottom line. But they still have a huge deficit that is bigger than would otherwise be the case, because they are, notwithstanding these deficits, are making more and more tax cuts.

Mr. SPRATT. Mr. Speaker, I thank the gentlewoman for a very effective presentation. I yield to the gentleman from Portland, Maine (Mr. Allen), a former mayor who understands what Federal grants and aids and other projects mean to cities and small towns all over this country.

Mr. SPRATT. Mr. Speaker, I yield to the gentlewoman from Nevada (Ms. Berkley). I traveled to Las Vegas to spend the day with the gentlewoman from Nevada (Ms. Berkley) a couple of weeks ago, and we went all over the City of Las Vegas, from three different editorial boards, to television, to a town meeting, and we found people there very much concerned about Social Security and about the shape of the budget.

Mr. SPRATT. Reclaiming my time, in the meantime, they are accumulating claims against the United States that could some day be called.

Mr. SPRATT. This chart shows the percentages of our debt that are held by foreigners. As you can see, they have steadily increased to the point where in 2004 the share of foreign-owned debt rose to 44 percent. One of the reasons that it is difficult to get this message across to the American people is that they are not really feeling the effects of it, since foreigners are buying for now a lot of our debt. But when and if they cease buying it in huge quantities as they have been, we have got a problem.

Mr. SPRATT. Ironically, there is about $20 billion there for roads, bridges, oil wells and other infrastructure in Iraq.

Mr. SPRATT. Mr. Speaker, I yield to the gentleman from North Carolina (Mr. Price).

Mr. SPRATT. That is correct. We had a deficit last year of $412 billion. But that was after deducting $150, $160 billion surplus in Social Security. If that Social Security surplus had not been offset, there was a deficit in the general account of the Federal budget equal to nearly 600.

Mr. SPRATT. Yes. It is a serious problem. It is a result of policies. It did not just fall off out of the sky. It is not terrorism necessarily. It is not war, even. It is the fiscal policies of this administration. Now, one thing we did, as the gentleman will recall, in 2001 we did not do it, I did not vote for that budget; but in the Senate in particular, they said these tax cuts will have to sunset at the end of 2010 because, one reason, there may not be the surplus that we think there will be. This is a blue-sky estimate. It may not obtain it. If it does not, we do not want to be committed to these tax cuts only to find out that the surplus that they are predicated upon does not actually happen. And so they were all made to expire or terminate by December 31, 2010. Now, we know that the surplus projection was wrong, grossly off, vastly overstated. And we have huge deficits in the place of huge surpluses now. But the administration is still pushing the same fiscal policy, asking, insisting, scheduling these tax cuts to be extended, all of them, almost all of them, after the year 2010, even though they can only do one thing at that point in time and that is go directly to the bottom line and vastly, hugely, expand the deficit of the United States.

Mr. SPRATT. That is correct.

Mr. SPRATT. It is more like $3.3 trillion deficit. We have had a swing in the wrong direction of nearly $9 trillion.

Mr. SPRATT. Here is one good chart that does just that. The gentleman can see it better than I can from his vantage point. We can see what they projected. In the year 2002 they projected a surplus of $313 billion. That was with the implementation of their policies. It turned out to be a deficit of $158 billion. In the year 2003 they projected $359 billion. At least that was the January 2001 projection. I beg your pardon. That was without policy. That was the projection before Bush policy. A $359 billion surplus turned into a $377 billion deficit with Bush policies.

Mr. SPRATT. Well, as I acknowledged, terrorists and war and recession have all taken a toll on the budget. But the President has basically taken the attitude that we can have guns, butter, and tax cuts too, and never mind the deficits. The tax cuts keep coming every year. The President has an unfinished tax agenda of at least 1 trillion 400 billion, and that does not include everything, because he does not put on his agenda anything, anything to fix the alternative minimum tax. I paid it this year, I paid it last year, more and more Americans are going to be paying the AMT until it rises, Treasury tells us, to 30 million tax filers in the year 2010, not far away. The political truth of the matter is, we will have to do something about that. That means that the President's tax agenda, tax cut agenda calls for another $2 trillion beginning in 2011. They conveniently stop their budget projections in 2010, so we miss the outyears, but here is what happens in the outyears when you add AMT to the President's other requests, principally to make permanent the tax cuts adopted in 01, 02 and 03. This is what happens to the baseline projections of the deficit; it gets worse and worse and worse. There is no end in sight, and it is aggravated by this fact, the tax cut agenda.

Mr. SPRATT. Mr. Speaker, more than a month ago, the House and Senate passed budget resolutions both on a fast track. Our hearings were minimal, ostensibly to finish up for the Easter break. But this year's budget has become the classic case of hurry up and wait. Only yesterday, a month after finishing the budget resolution, did the House finally appoint conferees, and today we held the first and only meeting of the conference committee. We held that meeting amidst reports that agreement on the conference report was almost already a done deal. So the meeting was a formality, a gesture to lend some sort of collaboration to the budget process. But there has been no collaboration, and the budget resolution said to be emerging from conference does not reflect the resolution that we would pass if we were full partners in this process. This year the Federal Government faces a deficit estimated at $427 billion, the third record deficit in a row. With deficits of this size, $427 billion, rising and never ending, the budget should be used to make the bottom line better, not worse. But the budget coming out of this conference does just the opposite. The President's budget, the House Republican budget, the Senate budget all make the deficit larger, not smaller. The House budget makes the deficit $127 billion worse than current services. The Senate budget, Republican budget, makes the deficit $217 billion worse than current services. I acknowledge, I will give the Republicans their due, both houses. They have searched the budget for programs to cut, and they have come up with some significant cuts. Medicaid, $20 billion; student loans; pension benefit guarantee premiums; probably the earned income tax credit, food stamps, maybe veterans benefits. But these cuts do not go to the bottom line. That is the dirty little secret. They do not go to the bottom line and diminish the deficit. What they do, partially at least, is offset their tax cuts because even though the budget is $427 billion in deficit, Republicans are still pushing for more tax cuts, knowing full well that it can only make the bottom line worse, the deficit larger. I think it is fair to ask can we fund the government if we have massive deficits and yet keep on cutting taxes? Obviously one way is to use the payroll taxes in the Social Security surplus to make up for the income taxes that are lost to tax reduction. And, in fact, that is just what the Republicans do. They use the payroll taxes that are accumulated in the Social Security surplus to make up for the income taxes lost to tax reduction. As the next chart shows, the chart I have right here shows, they spend 100 percent of the Social Security Trust Fund surplus not on benefits but on everything in the Federal budget, 100 percent of it not just this year, 2005, 2006, but every year in their 5-year budget. I know that a government bond is placed in the trust fund for every dollar that is taken out of it, but I also know that President Bush went to West Virginia a couple of weeks ago and disparaged these bonds as mere IOUs, just scraps of paper. Mr. Speaker, I do not believe that Social Security is in what one would call a crisis, but I do believe the actuaries at Social Security when they tell us that it may be faced with insolvency as early as 2041, and I believe we should do all that we can, as soon as we can, to remove that risk. But until we have a solution in place, a grand solution that returns the program to assured solvency for 75 years, surely we should do no further harm. Yet in raiding the Social Security Trust Fund of $160 billion this year and more in subsequent years, the Republicans' budget does just that, considerable harm. This is not a step towards making Social Security solvent. It is a long step backwards. This budget is also a long step backwards for programs that Americans depend upon: education, veterans health care, environmental protection, medical and scientific research, and on and on down the list. On the discretionary side, the money we are appropriating, 13 bills every year, the House resolution cuts nondefense discretionary spending, domestic discretionary spending, by $12 billion in 2006 and by $150 billion over the next 5 years below inflation. The Senate's resolution is a bit lighter. It cuts spending next year by $6.3 billion and by $128 billion over the next 5 years. On the mandatory spending side, which some call the entitlement side, the House budget resolution directs nine committees to come up with mandatory spending cuts and reconciliation procedures that will total $69 billion over 5 years. The Senate, more moderate, calls for $17 billion in reconciled cuts. These reconciled cuts that our committee issues to different committees of jurisdiction in the House and Senate do not designate or specify how they shall be achieved, but the jurisdiction of each committee suggests exactly what is likely to be cut. The House resolution, since it is directed to the Committee on Energy and Commerce, for example, will likely fall on Medicaid; and since it is directed to the Committee on Agriculture, it will likely fall on food stamps; and since it is directed to the Committee on Education and the Workforce, it will likely fall on student loans or other income security; and since it is directed to the Committee on Veterans' Affairs, on veterans benefits. It is also directed to the Committee on Ways and Means. That means it is likely to fall on something we call the earned income tax credit, which is tax relief for the working poor, the people who need it the most. Or it could fall on welfare for the most disabled, those who have nowhere else to turn and rely upon a program called SSI, Supplemental Security Income. These cuts are likely as a result of the reconciliation instructions in the budget resolution, even though the President did not call for them in his budget resolution and they are not included in the Senate budget resolution. The Senate also, enough Senators got their backs up and said the Medicaid program is too important to people for whom it is health care of last resort and we simply cannot blindly whack $20 billion or even $10 billion out of the program. If we want to reform it and restructure it and try to achieve some savings, fine, but let us not have an arbitrary budget savings number that drives reform and restructuring. So enough Republicans in the Senate voted that the Medicaid provision calling for cuts in Medicaid was deleted from their resolution. And yesterday on the House floor we did exactly the same thing. A large majority of this institution, Democrats and Republicans, voted not to have the Medicaid cuts included in the bill. Mark my words, however, notwithstanding a majority in this House and a majority in the Senate, those cuts in Medicaid are likely to emerge in the budget resolution that is likely to come forth tomorrow. These budget policies continue the course that was set when President Bush came to office. At that time the budget was in surplus by $5.6 trillion dollars over 10 years. Democrats warned then and there on the House floor and in committee that these were paper projections, they could disappear in the blink of an economist's eye, and we said let us seize this opportunity. Having years and years of deficits, now that we have a surplus or what appeared to be a huge surplus, we said let us pay down some of our long-term liabilities like Social Security and build up the Social Security program. President Bush decided to take a different tact. It is true, terrorists, recession, and war have all taken a toll on the budget. But the Bush administration has adopted the attitude that we can have guns, butter, and tax cuts too, and never mind the deficits. As a result, the budget has moved from record surpluses to record deficits, as this next chart shows. The President's 2006 budget, the budget for next year, like the House budget, like the Senate budget, claims to cut these deficits in half over 5 years. That is the claim we hear repeated frequently. They imply that in another 5 years, the budget would be brought back to balance. Give us 10 years, we will get the job done. But their budgets give us no figures at all, nothing after the first 5 years, and by running their numbers out only 5 years instead of 10, they avoid recognizing the impact that 90 percent of the President's remaining tax cut agenda is going to have on deficits. They will add $2 trillion if passed, if implemented, $2 trillion to the deficits in those outyears from 2011 to 2015 if we include a fix to the alternative minimum tax. CBO, our Congressional Budget Office, our budget shop, which is neutral and nonpartisan, has given us a 10-year estimate, something the Republicans have not supplied us in the House nor Senate, a 10-year estimate, at least with the President's budget, and they estimate that there is no progress whatsoever on the deficit. In fact, CBO estimates deficits totaling $2.6 trillion over the next 10 years if we implement, if we follow the recommendations and the requests in the President's budget. $2.6 trillion in additional debt. As bad as this may appear, the realistic numbers are even worse, because CBO is simply taking what the President has requested and extended it forward over 10 years. If we add what the President has omitted, the numbers are far, far worse. The President has omitted the cost of Social Security privatization, even though he is pushing hard for it and acknowledges that the cost will be $754 billion between 200 and 2015. He omits the cost of fixing the Alternative Minimum Tax, which CBO says is $642 billion over 10 years, even though everybody knows it is a political inevitability. And he omits any costs for our deployments in Iraq and Afghanistan after 2005. Nothing for 2006. Everybody knows we will still have troops in substantial numbers there. CBO suggests that the cost over the next 10 years could easily amount up to $384 billion. Not a dime of that is in the President's budget. When these costs are included, the budget outlook, as the next chart shows, is much, much bleaker. Annual deficits never fall below $362 billion. The heck with this talk of cutting them in half. They never fall below $362 billion, and they eventually rise at the end of this time period to $621 billion in 2015. That is a CBO number, which we have adjusted. We do not have a 10-year projection of the House or Senate budget, but both are broadly similar to the President's budget, and that means that these estimates are roughly the same, basically in the same ballpark. They say that the past is prologue, and we should not forget in that sense the impact of Bush budget in the first term between 2002 and 2005. To accommodate the Bush budgets between 2002 and 2005, we in the Congress, Republicans in Congress, on three different occasions have had to raise the debt ceiling, the legal ceiling to which we can borrow in the United States, first by $450 billion, then by $984 billion, then by $800 billion, by a total of 2.234 trillion in a period of 4 years. In the House when we considered the budget, Democrats offered a better plan. We offered a better plan to reduce the deficit and eventually, believe it or not, to balance the budget again in the year 2012. The numbers added up. The Republican budget never achieved balance. A real bipartisan conference, not like the one we had today, a real bipartisan conference, with everyone at the table and everything on the table, would give us a chance to consider a conference report like the budget resolution that we offered the floor which put the budget back in balance and actually achieved balance in the year 2012. Unfortunately, such a conference and such an outcome will not occur. Unlike last year, there probably will be a Republican budget this year, but there be no plan, no prospect, for reducing the deficit. I yield to the gentleman from Tennessee.

Mr. SPRATT. Well, we have to probably inflate our currency. But let us not get into that. We are still not in that bad of shape, and I do not want to get into dire predictions. But we are forewarned. We all know there are limits to which anyone can go, governments, individuals, households, companies, corporations, there are limits to which you can go in borrowing money. It is a function of what your income is, and we are beginning to approach those limits.

Mr. SPRATT. Most of the numbers that we have quoted, as the gentleman well knows, are net of the Social Security surpluses.

Mr. SPRATT

Mr. SPRATT. Madam Speaker, let me say in response to the last speaker that this party proudly presented a budget resolution that brought the budget to balance in the year 2012 and did not do it on the backs of the most deserving in our country, the sick and the elderly who depend upon Medicaid. And lest there be some misunderstanding, this budget makes the deficit worse, not better, because it calls for $106 billion in additional tax cuts. And the primary purpose and function and reason for these Medicaid cuts is to diminish the $106 billion so it does not swell the deficit any more grossly out of proportion than it already is. This does not go to the bottom line and reduce the bottom line at all. It leaves us with a bigger deficit because it only partially offsets the $106 billion in tax reduction that the resolution also calls for. So it is not necessary. And that is recognized by the 44 Republican House Members who signed the letter urging that this resolution not contain any cuts in Medicaid.