College Cost Reduction Act of 2007

Floor Speech

COLLEGE COST REDUCTION ACT OF 2007 -- (Senate - July 17, 2007)

Mr. GREGG. I will speak, and if the Senator from Alaska wishes to offer her amendment and that has been worked out, I will yield the floor to the Senator from Alaska. I am not offering an amendment at this time. Whenever she wishes to proceed, tap me on the shoulder.

Mr. President, I wish to address an issue which may be perceived as a bit arcane and is outside the policy within the debate that is occurring here, which is actually quite critical to the fiscal discipline of our Government and especially the Congress.

This bill comes forward as a reconciliation bill. This is an arcane term which arises out of the Budget Act. The Budget Act creates the ability for the Budget Committee, when it is creating a budget, to give instructions to various committees within the Congress to meet goals set forth by the Budget Committee. These instructions are called reconciliation instructions.

The purpose of reconciliation is to control entitlement spending primarily and to control the rate of growth of the Government, in fact, as a purpose.

It was structured because although part of the budget can discipline discretionary spending through what is known as caps, it is virtually impossible to discipline the rate of growth of Government on the entitlement account side through spending caps because entitlements are programs which people have a right to and a spending cap has no impact on it.

So if we are going to affect the rate of growth of spending on the entitlement side, programs which people by law have a right to receive and is a Federal benefit--that is programs such as veterans' benefits, education benefits under the Pell grant, in some instances, Medicare, Medicaid. Those are all entitlement programs. If you are going to control those entitlements, you actually have to change the law.

So the Budget Committee--and it is probably the primary power vested in the Budget Committee--passes a budget to direct various committees in the Congress that have jurisdiction over various entitlement programs to control the rate of those programs and, thus, the rate of growth of the Federal Government.

That was always the concept of the Budget Act--control the rate of growth of the Federal Government, especially in the entitlement accounts through reconciliation.

But what has happened is a total adulteration of that purpose. In a rather effective sleight of hand, the Budget Committee, with the full knowledge of the Budget Committee on the majority side and with the full knowledge of the majority side, gave a savings instruction to the HELP Committee to save $750 million over 5 years, which is a lot of money, but under the Federal budgeting process actually is still an asterisk.

Why would the Budget Committee ask the Health, Education, Labor, and Pensions Committee to save $750 million over 5 years, when it asked no other committee in the Congress to save money in the entitlement accounts? None. No other committee was asked to discipline fiscal spending around here on entitlement accounts.

Well, because it was a ruse, a pure unadulterated ruse. The HELP Committee, under the able and wily leadership of the Senator from Massachusetts, whom I greatly admire as one of the finer legislators in this body, had identified a pool of money which they knew they could grab, specifically subsidies which are paid by the Federal Government to lenders and which are unquestionably excessive--there is no debate about that.

That pool of money had been identified by the wily chairman of the Health, Education, Labor, and Pensions Committee. He knew that if he could get his hands on that money, he could then spend it. But he also knew he couldn't get his hands on that money without a reconciliation instruction from the Budget Committee.

So what happened was we had this small, in the context of Federal spending around here, budget savings instruction of $750 million given to the HELP Committee by the Budget Committee, with reconciliation appended to it as a protection. What reconciliation protection means is the bill comes to the floor, it has to be completed in 20 hours, and it only takes 51 votes to pass it. That is a huge protection in the Senate--protection from the filibuster rule, protection from the standard operating practice of the Senate with a lot of amendments occurring which could take up to weeks. It is an immense power to give to a bill to identify it as a reconciliation bill for the purposes of passage. So that bill, that power of reconciliation was attached to a $750 million instruction for savings.

Then the HELP Committee passed out that bill, the reconciliation bill. I believe it is a $19.7 billion bill--$19.75 billion, something like that. What happened to the other $19 billion in savings? It is being spent.

This chart reflects it fairly well. The new spending, under expansion of programs under reconciliation, under this bill, will be $19 billion. The actual savings under the bill will be making a farce of the concept of controlling the size of the Federal Government and Federal spending through the reconciliation process, inverting the process, to be quite honest, at a rate of 1 to 20.

Ironically, when the budget left the Senate, it had an amendment in it which said--because I offered the amendment, so I am familiar with it and it was passed, which was even more surprising--which said that no reconciliation bill could spend more than 20 percent, which I thought was still too much, of the amount saved.

Had that amendment survived the conference process, this bill could not have come to the floor because this bill spends $20 for every $1 it saves. Under that amendment, not the reverse but a significantly different approach would have had to have been taken. It would have had to save $5 for every $1 it spent.

This is a totally new practice. This is a historical use of reconciliation. We can see that deficit reduction over the years through reconciliation has occurred rather dramatically. But in this bill, in this budget, there was no deficit reduction through reconciliation.

More importantly--and this is the real essence of the problem--the spending under the Federal budget, the alleged reductions had no impact on spending. Spending continues to go up dramatically because actually the mechanisms that are supposed to be used to reduce the size of spending or the rate of growth of spending--we never actually reduce spending around here--reduce the rate of growth of spending and the rate of growth of a Federal program is a mechanism that is now being used to dramatically expand the rate of growth of spending of the Federal Government.

So the Budget Act, which has been under significant pressure to begin with, and basically in 3 of the last 5 years we haven't even been able to pass a budget, has now essentially been emasculated as a concept of disciplining spending and is now being used as a mechanism to expand the size of the Federal Government and destroy the fundamental purpose of reconciliation.

Why is this a problem? Whether we like to admit to it, we have some huge issues coming at us in the area of entitlement spending in this country. We have on the books $65 trillion--that is trillion with a T--of unfunded liability in the three major mandatory or entitlement accounts--Medicare, Medicaid, and Social Security.

The only way, I suspect, that we are going to be able to manage some sort of disciplining of those programs so they are affordable for our children, so we don't pass on to our children a Government that basically overwhelms their capacity to pay for it, is through using the reconciliation process. But that process has been, for all intents and purposes, run over. A new concept has been developed.

Reconciliation will no longer be used to control the rate of growth of the Federal Government. It will be used as a stalking horse for expanding the rate of growth of the Federal Government. The great irony, of course, is it did not have to happen this way. The equities are on the side of the Senator from Massachusetts relative to the need to reduce the subsidy to lenders and, in fact, I proposed an idea which would have probably seen a much bigger reduction in lender subsidies, which would be an outright auction so we could actually find what is the market value of what should be paid for these accounts.

Even the administration wanted to take a fair percentage of those funds that would be saved from lenders and move them into Pell grants. My druthers, of course, but I am not in the majority and I suspect I wouldn't win this fight, would be to take a big chunk of the money and put it into Pell grants and a big chunk of money and put it into deficit reduction so we start to pay down some of the problems we are presenting our children. But under any scenario, the protection of reconciliation was not necessary to accomplish this funding. In fact, it would have been good had reconciliation not been used because then we would have tied to this bill the underlying policy of the Higher Education Act, which should be passing the Senate at the same time this funding mechanism is passing this Senate.

But, no, the choice was to go this cut-by-half proposal, which in the process has fundamentally harmed our capacity as Congress to discipline ourselves and is using a vehicle meant to control the rate of growth of Government to expand the rate of growth of the Government.

I probably am the only person in this body frustrated by this situation because I may be the last person in this body who believes we should use reconciliation for fiscal discipline. But I thought the point should be made as former chairman of the Budget Committee that we have now, for all intents and purposes, as a body, abandoned any attempt--not any attempt but the one vehicle that gave us credibility on the one issue of doing something about the most significant issue we confront as a nation after the question of how we fight Islamic fundamentalists who wish to do us harm with weapons of mass destruction. After that issue, which pervades all other issues, the most significant issue is the fact that we are about to pass on to our children a government that under no circumstances can they afford because the cost of entitlement accounts is going to exceed their capacity to pay for those accounts by huge numbers.

In fact, we had a study last week from CBO that said in order to pay for the pending entitlement responsibilities of the baby boom generation--Medicaid, Medicare, Social Security--tax rates in this country will have to go to 92 percent--92 percent--of income. Obviously, that is not a doable event. The one mechanism we had around here to force action effectively has now been emasculated by the process which we are participating in on the floor.

Mr. President, I yield the floor.

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