John Spratt

Mr. SPRATT

Mr. SPRATT. Mr. Speaker, the gentleman from Illinois (Mr. Kirk) invoked my name, and let me assure the gentleman, I am a free agent. I am comfortable with the decision that our caucus has made and our leadership has made. Frankly, we tried to produce a budget resolution, and we found to have a competing resolution on the floor and an apples- to-apples comparison, we would have to use the gimmicks and the devices the other side used to get the results they achieve. We did not want to do that for a couple of reasons, not the least of which we did not want to go to 5 years. We think a 10-year budget is proper. We did not want to use OMB, as complacent as they can be sometimes in helping Members get the bottom line that they want. We wanted to stick with the Congressional Budget Office, the neutral and nonpartisan group. Mr. Speaker, for these and many other reasons, we decided not to do a budget resolution; but there will be a Democratic resolution. It will be presented in the other body by Senator Conrad.

Mr. SPRATT. Mr. Chairman, I yield 3\1/2\ minutes to the gentlewoman from California (Ms. Pelosi), the minority whip.

Mr. SPRATT. Mr. Chairman, I reserve the balance of my time.

Mr. SPRATT. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, let me say there is no difference between us when it comes to national defense or homeland defense. Republicans are supporting $383.3 billion for national defense. So do we as Democrats. When it comes time to vote on appropriations bills that really put that money into play, we will be there. We will support it because we support the President in the war on terrorism. Mr. Chairman, I ask unanimous consent to yield 8\1/2\ minutes to the gentlewoman from North Carolina (Mrs. Clayton) for the purposes of control.

Mr. SPRATT

Mr. SPRATT. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from Georgia (Mr. Lewis).

Mr. SPRATT. Mr. Chairman, I yield 1 minute to the gentlewoman from the District of Columbia (Ms. Norton).

Mr. SPRATT. Mr. Chairman, I yield 1 minute to the gentlewoman from California (Ms. Solis).

Mr. SPRATT. Mr. Chairman, I yield 1 minute to the gentlewoman from Texas (Ms. Jackson-Lee). (Ms. JACKSON-LEE of Texas asked and was given permission to revise and extend her remarks.)

Mr. SPRATT. Mr. Chairman, I yield 30 seconds to the gentleman from Tennessee (Mr. Tanner).

Mr. SPRATT. Mr. Chairman, I yield myself the balance of my time. Here is one reason that we have not produced a plan. It is because the plan that we are confronted with, the budget, so-called, before us, is not a real budget. As I said earlier, it is a tip of an iceberg. Here are just a few of the things that it does not include. It uses OMB scoring, and therefore it picks up $225 billion because OMB estimates the cost of Medicare by that much less than CBO. It fails to fully fund discretionary spending at the level of inflation, that is all, current policy, and picks up another couple of hundred billion dollars. We do not think that is realistic. If we had to put up a plan that would be comparable on an apples to apples basis, we would have to adopt these and many other devices in this budget which we think would be a bad precedent. That is why we declined to do it. There will be a Democratic plan. Senator Conrad is producing one as we talk. Let me just say once again with respect to the war, when the votes come on the defense appropriations bill and on the other appropriations bill with homeland security and national security, Democrats' names will be the board because we back the President and we support those appropriated items. Let me say something else about the key concern that we have in this budget and the situation we are in today. This graph here shows the extent to which previous administrations have invaded Social Security. The Clinton administration came to office in 1993 inheriting a budget deficit of $290 billion, a record deficit. On February 17, less than a month after being in office, they put on our doorstep a deficit reduction plan which passed this House by one vote. As a result, every year for the next 8 years the bottom line of the budget got better to the point where in the year 2000, we were literally in surplus without counting Social Security or Medicare, the first time in our fiscal history that that happened. It happened under the aegis of the Clinton administration. Sure you cast some of those votes and I cast some of those votes, they were costly votes in most cases; but this is where the handoff occurred to President Bush. I have seen at least five Republicans come here to the well and tout the fact that you have had $400 billion in debt reduced in the last several years. All of that happened on the Clinton administration's watch. Why did it happen? When you move your budget out of deficit into surplus, you have got money to pay off debt. That is why it happened. But look what happens. Here at the pinnacle of this summit, there is a handoff to President Bush and immediately things go south. Some of that is due to the fact that we have had fundamentally unexpected, terrible tragedies to occur in this country; and I would be the first to admit that that has had an impact, no question about it. But your tax cuts had an impact, too. Your miscalculation of what the economy was going to do has had a big impact as well. It is at least 40 percent of this. But look at this. And the reason we cannot go with your budget tonight is it has no plan, it has no strategy, it has no way for us to reverse that course which is graphically laid out there, showing you that we are backpedaling right to where we were 10 years ago. After 10 years of progress on the deficit, we are literally backsliding. Since everybody seems to be pooh-poohing the deficit, as if this is a temporary, transitory phenomenon, let me read CBO's analysis, dated March 6, of the President's budget. It says that this year we will incur a deficit under President Bush of $248 billion; $297 billion next year under his budget. Over the next 10 years it says we will incur deficits of $1.8 trillion. The consequence of that is we will be invading Social Security to the tune of $1.8 trillion. Here is this chart which we have used before. You start with a blue stub there, you start with a blue stub there which shows that we handed off the budget to the Bush administration with a budget out of Social Security and out of Medicare and look what happened. Immediately the red lines below the line begin to appear. The yellow lines up here indicate that every year over the next 10 years we will consume the Medicare surplus. Every year over the next 10 years we will consume the Social Security surplus. There is no way around it. You do not have a plan in your budget to reverse course here. So everyone voting for this budget tonight should understand this is the bottom line that you are voting for, an invasion of the Social Security surplus for the next 10 years. That is the bottom line. What it means is that we will be incurring more debt. We will not be achieving our promise of paying off the debt so that we can alleviate the burden on the Treasury and make it able to meet its Social Security obligations. This is a 180-degree reversal of where we were last year. That is why we respectfully decline to vote for this budget resolution. We think it is a badly designed element, and we think it will take us back to where we were. We hoped that we had recovered from that from a long time ago, but it does not appear that we have.

Mr. SPRATT. Mr. Chairman, I reserve the balance of my time.

Mr. SPRATT. Mr. Chairman, I yield 1 minute to the gentleman from Indiana (Mr. Hill). (Mr. HILL asked and was given permission to revise and extend his remarks.)

Mr. SPRATT. Mr. Chairman, I yield 1 minute to the gentleman from Pennsylvania (Mr. Weldon).

Mr. SPRATT. Mr. Chairman, I ask unanimous consent to yield 9 minutes to the gentlewoman from Oregon (Ms. Hooley) for purposes of control.

Mr. SPRATT

Mr. SPRATT. Mr. Speaker, will the gentleman yield?

Mr. SPRATT. Mr. Speaker, throughout this year, the gentleman from Iowa (Chairman Nussle) and I have tried to maintain an amicability and civility in the committee, which has worked between us because there is a natural relationship of friendship between us to start with. I commend him for the manner in which he has handled this on the floor. We have deep disagreements, but nevertheless, we have been able to disagree yet not be disagreeable. It is partly because of the manner with which the gentleman has tackled this whole thing, and I commend him for that. Let me also say to the House staff, they have worked, on both sides, long hours, hard hours. If Members want to see some evidence of the output, look at the walls of this place, at all of the posters they have presented, only a fraction of which ever made it in the well of the House; but nevertheless, they will be seen between now and the next several weeks. They won, but we will revisit this, I am sure, many times in the future. In any event, I thank the gentleman for the manner in which he has worked.

Mr. SPRATT

Mr. SPRATT. If the gentleman will yield, last year, as you well know, we were literally having a debate about how fast we could pay off the Treasury debt held by the public, which is a little less than $3.5 trillion. Republicans were trying to tell us we were providing too much, more than could actually be purchased and bought back. Now what we see from CBO, this is the Congressional Budget Office's analysis of the President's budget dated March 6, the debt held by the public not only has not gone down, it is actually going up. In 2001, at year's end, the total debt outstanding owed to the public was $3.3 trillion. In 2006, 5 years from then, the debt held by the public will be $3.6 trillion. It will actually go up $300 billion. Our Republican friends took to the well today and touted the fact that some $300 billion or $400 billion in national debt had been paid off. It was. It was paid off during the Clinton administration, as we got rid of the deficit and put the budget in surplus. But our objective last year was nothing less than to get that debt paid to a very, very low level, a negligible level, so when the baby-boomers retired Treasury would not be burdened with this external debt owed to the public and they could meet the obligations owed to the Social Security trust fund. Instead we see, looking at these numbers that CBO gave us just a week or two ago, in 2008, when the baby-boomers begin to retire, we will have outstanding debt owed to the public by the Treasury $3.479 trillion, which is about $150 billion more than at the end of 2001. We will not have made any progress at all on the problem. That is such a radical reversal from where we were last year.

Mr. SPRATT. If I could go back to what we were discussing a minute ago, Chairman Greenspan, about 2 or 3 years ago when we first began to see daylight, we began to see the budget pull completely out of deficit and into surplus without counting the surplus in Social Security and Medicare, we were able to discern that on the horizon, Chairman Greenspan came to our Democratic Committee on the Budget caucus over in the Library of Congress and spoke to us behind closed doors, off the record. He said, look, the Fed can get short-term interest rates down, but only you, with fiscal policy, can really bring long-term rates down, and the way you do it is exactly the way what is unfolding right now. If you can convince the financial markets that you are going to retire $3.5 trillion of Treasury debt, then that will mean the Federal Government will not be in the markets crowding out private borrowers, driving up interest rates. Instead, for every dollar you pay off, it will be a dollar added to net national saving, and over time it will drive down interest rates, boost the economy and bring that long-term rate down. That in itself, if we could have accomplished it, would have been a long step towards ensuring the solvency of Social Security. That was why it was so critically important. This is not some obtuse debate of whether or not it is better to have less or more debt. It is an absolutely essential element towards making Social Security solvent for the long run.

Mr. SPRATT. I will show the gentleman the disparity between the budget on the floor today and the President's budget, and the reason we said this budget we are voting on today is not a real budget. When the President sent up his budget, he asked for $675 billion in additional tax cuts, on top of the $1.35 trillion cut last year; another $675 billion. Some of it is for things that are going to come up, extenders, that are expiring tax provisions that are very popular and we will all vote for them. The research and experimentation tax credit is a good example. When it expires we will renew it. This budget today provided only $28.8 billion, an allowance of just under $30 billion, versus the President's request for $675 billion. What is the right number? One of the biggest issues of all is what happens to last year's tax cuts. Passed last June, by agreement with the Senators who voted for it that made up the majority, the amount of revenue reduction was limited to $1.35 trillion. To shoe horn that into the budget, it was phased in over time, and then in the year 2010 everything that was phased in would suddenly become a pumpkin, it would expire, we know that is not going to happen. Nevertheless, when we got this 5 year budget, they limited it to 5 years because that precluded them from having to deal with the decision, what happens if you make this tax cut permanent? It has a huge effect on revenues and a backwash effect at the present time. CBO says the impact on revenues from making that permanent is an additional $659 billion, that much less revenue, $659 billion. Our Republican colleagues on the committee, when asked, said no, we have not made a decision about that. This budget makes no implication. The next day the Speaker said, absolutely, the repealer, sunsetting that tax bill, will be rescinded. It will not stand. Reporters put the same question to Ari Fleischer at the White House. He said unequivocally, it will be repealed. That is a $659 billion item. You should reduce your revenues in this budget by that amount and ought to have an honest budget. Not a single penny of that tax policy is reflected anywhere in this 5 year budget. That is why we said this is not a real budget. This is the tip of an iceberg. We are not dealing with reality here.

Mr. SPRATT. None at all, even though we know from historic experience it averages about $6 billion a year. Let me give credit to our chairman, the gentleman from Iowa (Mr. Nussle). Last year he wanted to baseline that amount of money. He wanted to take the historic average and put it in the budget every year so we would not have a supplemental that would add it in later. The appropriators and some others did not like that idea, and he ultimately lost and he simply dropped it this year. But you may as well get ready, it will be there. We will have to spend that amount of money. You will have to add it to the bottom line.

Mr. SPRATT. None at all.

Mr. SPRATT. We know that 1.7 million taxpayers last year had to deal with the AMT, the Alternative Minimum Tax. We know from the Treasury Department over the next 10 years that number will grow to 39 million taxpayers, mostly middle income Americans. The gentleman was here when that bill passed. I was here. It was not intended for middle income Americans. It was intended for upper bracket taxpayers. Consequently, when they find out that deductions and credits and preferences that we promised them in the Tax Code are not fully available because of this thing called the AMT, they are not going to like it. They will be numerous, rising to 39 million taxpayers. I am sure we will eventually relent and have to modify that and should modify the AMT. But every time we bring it up and say you have to factor this in to the future planning for revenues, sooner or later we have to do something about the AMT, it gets shoved forward, gets ignored. That is another element that was simply omitted in the consideration of this budget and a reason we said this is not a real budget. This is not everything that has to be captured and taken into account.

Mr. SPRATT. It could very well be worse. There are several things to bear in mind: The surpluses come from a projected, estimated $5.6 trillion. That includes Social Security, all the way to $0.6 trillion. From $5.6 trillion to $0.5 trillion; $661 billion if we implement the President's budget as he sent it up. That is his number. That is their estimate. However, the President assumes that Medicare will grow at a rate of growth that is $225 billion less than CBO assumes. The President assumes that revenues will be $110 billion higher than CBO assumes. The President assumes that discretionary spending can be held to about $200 billion non-defense discretionary spending, held about 10 percent below the rate of inflation over the next 10 years. That is probably doable, but it has not been done before, and it is doubtful. Add all those things together, and that .6 is gone, too. If they are wrong about those three assumptions, we wipe out what is left of any kind of surplus, which means we have fully consumed the Social Security surplus, because that is what it is, the Social Security.

Mr. SPRATT. Two hundred twenty-five billion dollars less. That is the difference between CBO and OMB. CBO says it will be $225 billion higher than OMB estimates. OMB is estimating a very low percentage rate of growth, 4.5 percent in the next couple of years, which is a dramatic departure with the last several years. Let us hope it happens, but I doubt that it will.

Mr. SPRATT. If the gentleman will continue to yield, what the Republicans have done in this budget is set up a reserve account. In that reserve account, they have put $89 billion to take care of provider payment adjustments, hospitals, doctors, home health care. We have an agency called MEDPAC which advises Congress on the Medicare and Medicaid programs, and in particular, on reimbursement rates that are paid providers. They have recommended in all cases increases, and in some cases they have indicated that, for example, the physician reimbursement formula is flawed and needs to be adjusted upward because it has understated what they are entitled to. In any event, the total of their recommendations over 10 years comes to $174 billion. That is half the amount of money that the Republicans have put in this reserve fund over 10 years. That has to come out of the provision for Medicare prescription drugs, because what they have done is put in one pot the sum of money that will pay for Medicare prescription drugs and provider payment adjustments, and the provider payment adjustments could eat up half the amount of money and leave very little left over for Medicare prescription drugs. But then what happens if CBO is right and OMB is wrong? Then we have to take $225 billion from $150 billion and we only have the remainder, $125 billion to pay the providers, who are seeking $175 billion, and to pay for Medicare prescription drugs. It is obviously ludicrously inadequate. Yet, they touted the prescription drug program repeatedly here on the floor, without telling everybody who is going to be a prescription drug beneficiary, or hopes to be, they are going to be in competition for the providers for the little bit of money that is left in that account. Over 5 years, if CBO's Medicare estimate is right, there is less than $40 billion over 5 years, spread over 5 years, 40 million people, to pay for prescription drugs. We cannot do it.