CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 2007
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Mr. VOINOVICH. Mr. President, I rise today to speak not only on the fiscal year 2007 budget resolution that has been placed before this body but also on the environment in which Chairman Gregg has had to write the resolution.
First of all, I thank our chairman for his yeoman effort to bring this budget to the floor. Chairman Gregg has produced a very strong effort under difficult circumstances.
For once, I am excited to see the chairman's limitation on the use of ``emergency'' designations for the fiscal year 2007 budget. While utilizing ``emergency'' spending may be necessary, Senator Gregg has put in place a process to force us to reflect on what should be deemed as an ``emergency'' and consequently sidestep the regular budgetary process versus what should be moved as part of the regular appropriations process. In other words, all of us feel that in terms of our emergency spending, much of it should be actually in the regular budget resolution rather than considered as emergency spending.
I also applaud the chairman's inclusion of a new point of order against direct spending that would apply once it was determined that the general fund would contribute more than 45 percent of total Medicare outlays. This new point of order serves to highlight what all of us know is decimating future budgets--the impending costs of Medicare and other entitlements.
While I respect the efforts required in producing this budget, and the effort to try to comply with the cap that the President issued, it is the view of this Senator that the budget falls short of meeting the current pressing needs of our country, and those sentiments are reflected in some of the amendments that have and will later be offered to the budget.
Each of us must be able to justify our actions on behalf of our constituents. During my first biennial budget, as Governor of Ohio, I had to go back to the budget four separate times to find additional areas to cut. But after cutting program after program, I could not justifiably say I provided for the public good by slashing more. Indeed, I made the difficult choice to ask the legislature to increase taxes at the margins. After keeping spending to its lowest growth in 30 years, we were able to reduce taxes my last 3 years in office. But we did take care of the needs of the people of the State of Ohio.
I am not calling for raising revenues at this time. However, I am calling attention to what I view as a lackadaisical attitude toward what I believe is a freight train bearing down on our fiscal house. I voted for tax cuts in 2001, 2002, and 2003. In 2001, we were projecting surpluses beyond the horizon, I think a $5.4 trillion surplus in 10 years. We believed those surplus funds were better utilized in what I called the three-legged stool of fiscal responsibility--pay down the debt, spending restraint, and returning excess funds to households so as not to be unwisely spent.
In 2002, I supported additional tax cuts to stimulate our economy in the aftermath of September 11. And in 2003, our country was still reeling from September 11, the war against terror, and corporate accounting scandals. We needed additional stimulative medicine. I fought to ensure that the amount we passed was the right amount. I said that $350 billion in tax cuts would be enough to get the economy moving, and I believe that it worked.
However, the world does not stand still, and we now face different challenges. Since that time, the economy has grown. The Nation's GDP grew by 4 percent in both 2003 and 2004 and 3.5 percent in 2005. Unemployment has dropped since we enacted the tax cuts from 6.6 percent to the current 4.8 percent. I wish it were as good in the State of Ohio as that, but overall that is what it is. While the tax cut stimulation worked, making these tax cuts permanent should be subject to pay-go. I am sorry today that we didn't have the votes to do that.
While the economy has been renewed, our Nation has had to pay for the extraordinary expenses of Iraq and Afghanistan, as well as responding to our concern for homeland security for which, since 2001, we have tripled governmentwide spending related to nondefense homeland security, and on top of that add in the expenses of Hurricane Katrina. What I am saying is that with the 22 agencies we brought together after 2001, 180,000 people, we have tripled the budget of those agencies since 2001. While we are dealing with all these expenses, we are ignoring the 800-pound gorilla in the room: the impending tidal wave of entitlements coming due. In his State of the Union Address, President Bush acknowledged that:
The retirement of the baby boom generation will put unprecedented strains on the federal government. By 2030, spending for Social Security, Medicare, and Medicaid will be almost 60 percent of the entire federal budget. And that will present future Congresses with impossible choices--staggering tax increases, immense deficits, or deep cuts in every category of spending.
I am pleased that the President decided to focus on what some have called the demographic tsunami coming our way and the necessity to reform entitlement programs before it hits. The 77 million baby boomers coming into Social Security and Medicare Programs will put the Federal budget under unprecedented pressure. Chairman Gregg took the courageous step to take on entitlement spending through the Deficit Reduction Act of 2005, and I supported those efforts. However, this was just the tip of the iceberg. I would support greater efforts to continue to debate on entitlement reform so that we may make wise decisions and not decisions stemming from unneeded dawdling and delay.
No matter which way you look at it, if we leave reform of entitlement programs to future Congresses to handle as well as a mountain of national debt to pay off, it will have devastating consequences on the economy and our children.
We owe it to the American people to let them know the true condition of our Federal budget. Currently, governmental expenditures absorb about 20 percent of the GDP, while our tax receipts are only 17.5 percent of GDP. The debt has grown from about $5.5 trillion when I first came into office in 1999 to a staggering $8.1 trillion today. That is a 47-percent increase. The debt service alone threatens to gobble up revenues in the near future.
According to the CBO, in fiscal year 2005, interest on the public debt grew more rapidly than any other major spending category, rising 14 percent above the fiscal year 2004 level. Without major spending cuts, tax increases, or both, the national debt will grow more than $3 trillion through 2010 to $11.2 trillion according to GAO--nearly $38,000 for every man, woman, and child in the United States. The interest alone will cost $561 billion in 2010, the same as today's budget for the Pentagon. Think of that.
However, we all know that the real problem is our long-term debt. I might mention in terms of our interest costs, if the central banks of foreign countries that are investing in our debt decide to redo their portfolios, we are really going to be in trouble because we will see our interest costs spike dramatically.
By the General Accounting Office's own estimates, about 35 years from now, when my grandchildren have their own children to care for, balancing the budget will require actions as large as cutting total Federal spending by 60 percent or raising taxes to 2 1/2 times today's levels. Think about that. And if we are going to be honest with the American people about the shape of our fiscal house, we should be honest on budgeting. Accrual accounting is what we require private businesses to use in presenting their finances to give an honest snapshot. On an accrual basis, our Federal deficit for fiscal year 2005 was $760 billion, representing an increase of $144 billion or 23 percent over the previous year's deficit of $616 billion. That is a stark difference from the $319 billion deficit that was reported. That is what we told the American people: It is $319 billion. Under this convenient Government accounting, it made it look as if we had a decrease in the deficit of $93 billion from the previous year's deficit of $412 billion.
Frankly, if the Treasury Department already has the numbers, why don't we use the accrual method of accounting for our budget? I want to remind the American people again, as well as my colleagues in the Senate, that the true deficit in 2005 was $760 billion--an increase of $144 billion or 23 percent over the previous year's deficit.
I have also introduced a bill called the Truth in Budgeting Act, cosponsored by Senator Conrad, which stops the Federal Government from using surplus trust fund revenues to hide the true size of the Government's deficit and highlighting the true size of the Federal debt by forcing the Government to increase borrowing from the public to cover general fund expenses. It is important to have an honest accounting of where we are and where we are headed from a fiscal perspective. We need to change the current Federal accounting and reporting model and budgeting systems to better reflect the Government's true financial condition. This will bring about greater transparency and accountability in Government operations and really let the American people know what is happening here in Congress.
Additionally, if we are to be honest about the budget, we should make reasonable assumptions. The administration's budget assumes enactment of more than a dozen user fees totaling $3.2 billion in 2007 to offset discretionary spending increases. The user fee proposals in the budget include an increase in airline passenger security fees, changing some veterans' enrollment fees for medical care--which, by the way, was rejected by the Senate today 100 to 0--increased TRICARE enrollment fees and deductibles for military retirees under 65, regulatory fees for explosives, and Food Safety and Inspection Service user fees. These proposals have been rejected by Congress in the past and are unlikely to materialize. What they will do is, because that money is not going to come in, it is just going to squeeze other priorities.
Additionally, we are not being honest about the Medicare physician fee schedules. Physicians are reimbursed for treatment of Medicare patients through that fee schedule. Right now, physicians are facing another 5 percent decrease in their Medicare payment on January 1, 2007. Reducing physician payments will have a direct negative impact on seniors' access to quality health care. Last year, we responsibly offset funding to avoid a scheduled 4-percent reduction. We included a freeze in their payment rates in the deficit reduction bill. It has become evident that we must face this annually, but never truly budget for it. In other words, we know that we can't cut the reimbursement for doctors in this country for Medicare patients, but we just assume that we are going to do it, at least the administration does, knowing full well that Congress is going to have to come in with that additional money--in this case, $1.5 billion--and that means that there is just going to be less money for other priorities that we have on our domestic side of the budget.
The administration's budget also accounts for an extension of AMT relief in 2006 but not for 2007 or the rest of the 5-year budget window. The administration says that a permanent solution to the AMT issue should be enacted as part of tax reform. However, the likelihood of Congress passing tax reform this year, as much as I would like to see it since I offered the legislation calling for the blue ribbon panel on tax reform, is slim to none. I feel bad that the administration has backed away from tax reform as a priority since simplifying the Code to make it more simple, fair, and honest could, by some estimates, save taxpayers $260 billion in costs associated with preparing their taxes. That is across the country. Saving that cost would be a real tax reduction and not cause the Treasury to lose one dime of lost revenue.
The question we must ask ourselves is, If we don't have enough revenue to pay our current bills, how in the world are we going to prepare to cover much larger future promises? The simple fact is that we can't have it all. We need to set priorities. We need to make choices; otherwise, our children will end up paying for it.
Our forefathers recognized the inequity of passing on debt to future generations. George Washington in his farewell address stated:
[likewise avoid] the accumulation of debt, not only by shunning occasions of expense, but by vigorous exertion in time of peace to discharge the debts which unavoidable wars may have occasioned, not ungenerously throwing upon posterity the burden which we ourselves ought to bear.
In other words, throwing the cost of a war on to the next generation. Frankly, if we are willing to be honest with ourselves and make the hard decisions, the last thing we should be doing is talking about making tax cuts permanent. If we are to be honest and forthright with the American people, we should be asking them to pay for the extraordinary cost of the war and improving our homeland security. Because if we are not willing to do so, it will not be Members of this body who are going to be paying the tab. We will be gone. Instead, repayment of the debt will land squarely in the lap of our children and grandchildren. I don't know any parents or grandparents who would think it was a good idea to run up huge personal debts that their children and grandchildren would have to pay at the time of their death, but that is exactly what we are doing with our Federal budget--passing it on to our children and grandchildren. The major reason I sought reelection to this venerable body was to make sure that was not going to be our legacy or the legacy I left my three children and seven grandchildren and my fellow Americans.
According to the administration's fiscal year 2000 budget, mandatory spending will take up 54 percent of the $2.8 trillion budget; net interest we will have to pay on the debt will eat up 9 percent; 18 percent would be allocated for the defense discretionary budget, leaving 19 percent for all the discretionary programs or about one-fifth of the budget. And what we have been doing the last couple of years is flat-funding discretionary spending, the real increases in this budget. People say: You are spending money. The money is being spent on the war and on homeland security. And in terms of discretionary nondefense spending, we basically have flat-funded that.
As I quoted, by the administration's conservative estimate, the programs on auto-pilot, such as Social Security, Medicare, and Medicaid, will account for over 60 percent of the budget by 2030. That does not leave much for all other governmental obligations we have. We are putting the squeeze on just one-fifth of the budget while the rest sees large increases.
We must make entitlement reform a priority, but in the meantime, we should not pretend that by flat funding or cutting nondefense, nonhomeland security needs or programs that work and serve a critical governmental purpose will get the job done. Some of these programs actually save the Government money by benefiting the economy or avoiding further costs down the road.
The point is that in this global economy, we are confronted with the most competitive environment our Nation has ever faced, at least in my lifetime. Anyone who has read Tom Friedman's book ``The World is Flat'' or read the National Academy of Sciences report ``Rising Above the Gathering Storm'' gets it. They get it.
In the big picture of where the United States stands, it is clear to me that the economic framework of our Nation needs to be refurbished. There are certain investments and responsibilities that this Senator believes we can no longer ignore and must address. We should be rebuilding an infrastructure of competitiveness so that future generations can compete in that global marketplace and have at least the same opportunity to enjoy our standard of living and quality of life.
We cannot remain competitive without a workforce full of educated and motivated young Americans. As a nation, we have to invest in our children and enable them to fully develop their God-given talents in order to compete in a knowledge-based global economy. This means we have to place more emphasis on careers in science, engineering, and math. And right now we are not getting the job done.
Globally, the United States ranks 17th in proportion to college aid population earning science and engineering degrees, down from third place several decades ago. In fact, the percentage of 24-year-olds with science or engineering degrees is now higher in many industrialized nations, including England, South Korea, Germany, Australia, Singapore, Japan, and Canada. All produce a higher percentage of science and engineering graduates than the United States.
The National Academy of Sciences released a report this fall that recommends action that the Federal Government should take to enhance our ability to compete in our global economy. The recommendations range from those that will improve our Nation's math and science coursework and establish a workforce of qualified teachers who will prepare our students for futures in highly innovative careers, to the crucial need for energy independence, and an investment in research.
I am encouraged the President recognized that America needs to wake up and build a new infrastructure for competitiveness, and I applaud his American competitiveness agenda.
Also, I have joined a number of my colleagues as an original cosponsor of the Protecting America's Competitive Edge Act of 2006, PACE. This legislation is aimed at improving our Nation's competitiveness through advancements in and emphasis on math and science education. Like the President's initiative, this legislation is comprehensive in its aim to increase our Nation's research capacity, emphasize strong science and math education, but it will require a national commitment to reengage our Nation's youth in science and math, similar to our response in the late 1950s to Russia's launch of Sputnik and the ensuing space race.
In order to implement PACE, it is going to take $10 billion a year for the next 10 years, including making the research and development tax credit permanent. That money is not in this budget. That money is not in this budget.
Funding for nuclear engineering programs truly showcases the disconnect between our stated priorities and the budget. The administration and numerous Members in this body are supportive of the recommendations in the National Academy's report, which also highlighted the importance of moving toward greater energy independence. However, the administration's budget zeroes out funding for the Department of Energy's University Nuclear Reactor Infrastructure and Education Assistance Program from $27 million in fiscal year 2006--it is a relatively innocuous amount within the context of a $2.6 trillion budget. But with our renewed focus on our Nation's competitiveness and the need to address our education and energy policies, it doesn't make sense to eliminate this program. That is what we see all the way through this budget.
Additionally, beyond our human capital infrastructure needs, our physical infrastructure needs are facing a real dilemma as well. In other words, we have to build that infrastructure of competitiveness. We are not getting it done. We desperately need to provide increased funding for the Army Corps of Engineers, including funding for levees and additional civil engineers. This Nation has an aging national water resources infrastructure. If we continue to ignore the upkeep, the deterioration of locks, dams, flood control projects, and navigation channels, we risk disruptions in waterborne commerce, decreased protection against floods, as we saw in Katrina, and other environmental damage.
I have been concerned about the backlog of unfunded Corps projects since I was chairman of the Subcommittee on Transportation and Infrastructure in 1999 and 2000 on the Environment and Public Works Committee. When I arrived in the Senate in 1999, the operation and maintenance deficit was about $250 million. Today it is $1.2 billion. In 2001, there was $38 billion in active resources projects waiting to be funded. Today there is $41 billion in active construction general projects that need to be funded. This budget is only going to increase this backlog.
This budget proposes a 33-percent cut in the Corps construction budget and a 42-percent cut in the Corps investigations budget. Currently, the Corps is able to function only at 50-percent capacity at the rate of funding proposed by this budget. Listen to this: Currently the Corps is able to function only at 50-percent capacity at the rate of funding proposed by this budget.
Can you believe this, after the lesson we learned from Hurricane Katrina? We had people testify before the Environment and Public Works Committee who were a part of the American Civil Engineers Society saying that if we had properly funded the levees in New Orleans, they would have survived Katrina.
Let's talk about our highways. According to the Federal Highway Administration 2002 Conditions and Performance Report, $106.9 billion through 2020 is needed to maintain and improve our highways and bridges. We are just not getting the job done.
Community development block grants, which was spoken to by Senator Murray earlier, is another example. These grants support State and local government-directed neighborhood revitalization, housing rehabilitation, and economic development activities. I know in my time being mayor of the city of Cleveland how important CDBG is in terms of providing funds to local government officials so they can do housing rehabilitation, neighborhood revitalization, and economic development. I refer to it as the yeast that raises the dough. It is probably the best leveraged Federal program we have for our cities in the United States of America.
By the way, it is a program that was put in place by Richard Nixon when he was President of the United States.
When we fail to recognize our country's needs, it is at the expense of our seed corn programs that are essential to the future of our country. We must not be pennywise and pound foolish while we consider this budget. While cuts and reforms need to be made, it should not be made at the expense of programs that our country relies on, such as these.
It is too bad that we don't have to balance our budget. That would be beautiful. The thing that drives me crazy about this place, after being mayor for 10 years and doing 10 budgets, and being Governor and having to do four budgets when we had to balance our budget, is that we are irresponsible when it comes to budgeting.
I recall as Governor, as I mentioned earlier, we had to raise taxes at the margin to balance the budget and respond to critical needs of Ohio. It was through cuts in spending and making very difficult choices that we balanced the budget and accumulated over $1 billion in our rainy day fund. It was through these efforts--in other words, we tried to do everything, and at the end, through what I call the strong-management, good-economy bonus, we reduced our State income tax 3 years in a row, including almost 10 percent in 1998.
It is difficult for this Senator to believe that we have the ability to fund the war on terror, respond to homeland security needs, pay for emergencies such as Hurricane Katrina, deal with explosions in entitlement costs, guarantee our country will have the infrastructure of competitiveness to battle the global marketplace, balance budgets, pay down the debt by focusing our attention solely on the discretionary, nondefense, nonhomeland security part of the budget--it doesn't make sense, and it is not fair. It is not fair, and I think the American people understand what I am talking about.
The problem is that Congress has not told the truth about what we can and cannot afford. We want to have it all but don't want to pay for it. America's families don't live like that, nor should we. I learned this difficult lesson while serving as mayor of Cleveland for 10 years and Governor of Ohio for 8 years. It is time that we in Congress learned that lesson as well.
Yesterday, I sat in the Presiding Officer's chair listening to Chairman Gregg and Senator Conrad debate. I was heartened to hear these two budgeteers agree that we have to take on the debt on a bipartisan basis, and sooner rather than later. I wish to be associated with those sentiments, and I hope both sides of the aisle will promptly realize the dilemma and heed the words of Senators Gregg and Conrad. We can get the job done. We can be responsible, but we have to do it on a bipartisan basis.
When I had my problems when I was Governor of Ohio, I had the strongest leader we ever had, a Democrat, in the House of Representatives. He had been there for 24 years. We named a building after him while he was alive. In fact, I had to genuflect to his statue every day when I went to my office at the State House. He was a very powerful guy. We had problems. I went to him and said: Vern, we have to do something about this. He said: Partner, OK, but you have to give a little, we will have to give a little. We spent 3 weeks and came up with a program to get the job done.
The President recognized this. One of the things I felt very bad about last year is we spent all this time on dealing with Social Security when I knew right from the beginning if it wasn't going to be on a bipartisan basis, it would go nowhere, and it went nowhere. The President wasted a lot of time--I give him credit for pointing out the fact that we had a problem with Social Security, but it had to start out on a bipartisan basis.
I was so delighted, I got up and clapped when the President said: We have to put together a commission of the best and brightest to tackle the problem of entitlements so we can move toward fiscal sanity.
We have to do that. The American people are looking at what we are doing here and they are saying: Put aside your partisan differences; come together for the benefit of our country, for our children, for our grandchildren.
I am concerned about this budget, but I am more concerned about the direction we are going. Our problem is that we are unwilling to pay for things or do without them. Unless we wake up to that fact, we are in very deep trouble.
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