Congressional Budget for the United States Government for Fiscal Year 2005

CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 2005

Mr. DORGAN. Mr. President, first let me compliment my colleague, Senator Conrad, for the work he has done. Let me also pay tribute to my colleague from Oklahoma, Senator Nickles. While we might disagree on a good many issues, Senator Nickles has been someone who has contributed substantially to this Chamber through his service in the Senate. I note he is leaving the Senate at the end of this year and I want to pay my compliments to Senator Nickles.

There is a tendency in this Chamber, I think, for us to treat the serious too lightly and the light too seriously. It is very hard to overestimate the importance of this fiscal policy that is completely off track, completely out of sync with reality. We have until recently had a fiscal policy that said: Here is what we will do. We will increase defense spending a great deal, we will increase spending on homeland security a substantial amount, we will cut taxes, cut taxes, cut taxes again, and then we will hope the economy grows enough to cover all of that.

The fact is the economy has not grown to cover all of that and we now have sunk into the largest Federal budget deficits in the history of our country. But some don't want to admit that we are there. They want to ignore it and continue to say this is not a problem, we will just grow out of this.

We have a responsibility now to address these issues. It is irresponsible for us to say, let's just do it all and let the kids worry about this, or let the grandkids worry about it.

We are technically capable of doing so many things. Today, on Tuesday, we have two little vehicles-made in this country-scrounging around the surface of Mars, controlled by some controllers in NASA, and we are picking up rocks and analyzing rocks on the surface of Mars. What a remarkable thing. By the way, I might say just from the pictures I have seen from Mars it looks like a place about 5 miles south of my hometown. But we spent a lot of money to get to Mars, I want them to do well with these experiments, and I think they are wonderful. I think it is quite remarkable, the technology we have to
put vehicles on Mars.

Why is it we are technically capable of doing these breathtaking things and then we seem so unable to come to the floor of the Senate and at least admit that there is a giant problem in fiscal policy? We are far off track. Just 3 years ago, we had very large surpluses and Alan Greenspan couldn't even sleep at night because he was worried these surpluses would be too big. He didn't know what we could do with them. Three years later, of course, we now find the largest deficits in the history of this country stretching out as far as the eye can see, stretching out every single year for the next decade.

The budget brought to the floor of the Senate by the majority party says the following: We will take the Federal debt to $10.2 trillion by the year 2009. Let's see if we can ratchet this debt up to $10.2 trillion. It says let's have a deficit this year of $512 billion. Let's have a deficit next year of $445 billion; the year after, let's have a Federal budget deficit of $431 billion; the year following that, let's have a Federal budget deficit of $441 billion; and the year following that, the fifth year, the last year for this budget resolution, let's have a budget deficit of $439 billion. This is not a budget that tackles problems. This retreats from the problems and from the challenge.

There is a circumstance that has occurred in this country that should require all of us to be more serious about this: We ran into a recession. It began in the spring of 2001. Precisely, it began in March 2001. Following that recession we were the victims of a terrorist attack on 9/11. Then we had to fight a war against terrorism. Following that attack against our country the entire aviation industry was grounded. It had a profound impact on our economy. Then we were involved in Afghanistan and a war in Iraq. We have had some pretty tough times and some big challenges.

But the administration has said and the majority party has said we can do all of this. We can and should and will increase defense spending. We can, should and will increase spending on homeland security. And we will cut your taxes again and again and, if the Republicans get their way, again this year. And it will not matter because it will all add up.

This is like the old story in the movies, what are you going to believe, me or your own eyes? Your own eyes will tell you what is in this document. It says let's take this country to $10.2 trillion in debt in 2009. The question is, when will the Congress, and especially when will the President, be serious about these policies?

It is interesting that the budget sent to us by the President this year predicted we would spend zero, no money at all, for Afghanistan and Iraq. We have been spending very close to $5 billion a month in Afghanistan and Iraq. Last year I raised the same question. If we are spending money, why don't we budget for it? The answer is, we don't know how much to budget. We do know what we are spending, we are spending $5 billion a month, $60 billion a year. Do you know what these documents from the President and the majority say? It says zero, we are not spending anything. What do they mean? They will just hide it by coming up with a supplemental bill later on, I suppose after the election, and we will act as if it doesn't matter.

It does matter. It is saying to the kids, you go ahead and pay this bill because we don't have the courage to do it. We don't want to pay for it. We don't intend to pay for it. We will ask you kids to pay for it when you are old enough to work and pay taxes and inherit this debt.

There are many issues to discuss with respect to the budget. My colleague has offered an amendment that I came to support, dealing with Social Security trust funds. This is certainly the biggest bait-and-switch operation in the history of mankind. The bait and switch that has been going on says the following: When you work, you pay a tax from your paycheck and we will tell you this, we will guarantee you we will put that money in a trust fund called the Social Security trust fund. Then, when you get to the point where you are retiring, we will have sufficient moneys in the trust fund to be able to meet those retirement needs.

The problem is the trust fund at this point is not accepting new money because all the new money being taken from paychecks in the form of Social Security taxes is being used as an offset for other spending.

We had people genuflecting on the floor of the Senate about lockboxes for the last 4 or 5 years. They would come to the floor and have an apoplectic seizure about some lockbox they wanted to create for Social Security. There is no lockbox. The box is open and all the money is gone because budgets like this say we are going to spend all that money. The only priority with this is to preserve the tax cuts that went to upper-income Americans.

I think it is wonderful if you are an upper-income American. Look, if you make $100 million or $10 million or $1 million a year, God bless you, this is a great country and you have a right to do that and I congratulate you on your success. But I would say I expect as an American you would also want to contribute to this country, and part of that contribution is to pay for that which we need-a war on terrorism and money to fund the troops when we send them overseas to protect this country. All of these issues are important issues that we have to provide for. When we also protect these upper income tax cuts, we spend the Social Security trust fund. This makes no sense at all. That is a classic bait and switch.

This reminds me of an old story about elephants. When I was a young kid, I grew up in a very small town. But even though it was a small town of 400 or 500 people, we occasionally had a circus come to town. It was a relatively small circus but they at least had one elephant. I never quite understood as a kid why a very large elephant would stand in one place if they just put a cuff around the elephant's back foot and then a chain with one little steel stake driven into the ground. How on Earth would that keep an elephant from escaping?

Then I read about how they do that. They do it in Thailand where they capture these elephants in the wild and then find a big banyan tree. They put a big steel cuff on the elephant's leg and they chain that big steel cuff to a huge banyan tree. For a week that elephant will struggle and grunt and grown and fight and try to pull away from that banyan tree. But it can't. It doesn't get away from that banyan tree. In a while, it learns it is there permanently as long as that chain is on its leg, as long as that cuff exists. Then they take the other end of the banyan tree and put a stake in the ground and the elephant will never move because the elephant is chained to his habit. The elephant knows it can't move. So it doesn't move.

A big chain to a habit is what I see in this Chamber by the majority party. They say it doesn't matter what the facts are, it doesn't matter what the deficits are, it doesn't matter that we are off the ditch with respect to fiscal policy. We are going to pretend and act as if things are just fine, that things are going along just fine.

Those who will pay the cost of this, in my judgment, will be people 5, 15, 25, and 40 years from now and who will bear the consequences of an irresponsible fiscal policy.

My colleague has offered an amendment that says: Look, let's prohibit the use of Social Security trust funds except for the purpose they were intended to be used. Radical? No. I don't think so. Obviously, there is some common sense to do that.

I don't expect that this amendment will pass the Senate when it is voted on because the majority party has to protect the fiscal policy despite the fact that all the evidence is this fiscal policy doesn't work. We have an economy that is not producing jobs. We have an economy that is not providing the opportunity we expect it to provide and that the administration said it would provide. Why? I have some theories about that.

We held a hearing last Friday on the question of why American jobs are shipped overseas in large quantities. Why do we see all of these announcements about companies that used to make American coats are now producing them overseas? Did you know that the Levis you are wearing are not American pants? If you are wearing Fruit of the Loom, you are not wearing American underwear. Did you know that if you are eating Fig Newtons, you are eating Mexican Fig Newtons? Yes. They are not produced in America-not even Fig Newton cookies.

The question is, Why are we exporting all of these jobs overseas? What kind of economy is it that says we have economic growth in this country but we are not producing new jobs? The new jobs are being created in Bangladesh, Sri Lanka, Indonesia, China, and Mexico.

This is a failed economic strategy, a set of failed economic policies, and all you have to do is go to the budget document.

Page 4 of this document, which comes from the majority party, says the following. Let us increase the Federal debt to $10.2 trillion by the year 2009. They say, let us every year between now and then have a Federal budget deficit over $400 billion. That is over $1.5 billion a day every single day for the next 4 to 5 years. This isn't a budget document; this is a failure.

It is a failure of responsibility to own up to what is happening in this country and to fix it not just on behalf of politicians but on behalf of the American people and their children who aspire to have a country that expands the most opportunity and new jobs and growth once again.

Mr. DURBIN. Mr. President, will the Senator yield for a question?

Mr. DORGAN. Yes.

Mr. DURBIN. I thank the Senator from North Dakota for taking the floor to bring this to our attention. I would like to ask him this question.

Was it not during the last 2 weeks that the Chairman of the Federal Reserve, Alan Greenspan, who has been Chairman under both Democratic and Republican Parties, testified before the House of Representatives, I believe the Budget Committee, suggesting we have now reached a point because of our deficit situation and the debt of America when we have to seriously consider structural changes in Social Security relative to the benefits paid out to senior citizens and their retirement age? Does the Chairman of the Federal Reserve, who had endorsed President Bush's tax cuts for the wealthiest people in America, now say we are in such a desperate situation that we have to turn to Social Security and to cut back in terms of potential benefits for future recipients?

Mr. DORGAN. Mr. President, the Senator from Illinois is absolutely correct. The Chairman of the Federal Reserve, Alan Greenspan, did testify and say that we have to look at cutting Social Security benefits.

I find it interesting that Mr. Greenspan, who was actually shaking the pom-poms in support of the tax cut and this administration's fiscal policy, is now saying part of the cost of the policy should be for us now to consider cutting Social Security for senior citizens.

Look, their fiscal policy has provided the largest rewards in history in the form of tax cuts for upper income Americans. We have one-half of the world's billionaires living in this country. Good for them. I wish I were one of them. I wish my colleague from Illinois was among them, and I wish my colleague from Wyoming was among them. But it seems to me those who have done so well in this country would want to help pay the bill.

Promoting tax cuts for the upper income folks, those at the very top of the ladder-for example, those who have $1 million a year in income-and saying during these tough times you get $80,000 a year in tax cuts makes no sense to me. Yet Chairman Greenspan supported that, and he now comes back and says-he doesn't say it quite this way but the cause and effect are the same-we don't have the money now. We gave money in terms of tax cuts to the folks who make $1 million a year. Now we should ask the folks at the other end of the ladder to take a cut in Social Security benefits. I don't understand that.

In my judgment, when we talk about fuzzy math, this isn't fuzzy; this is vacant math.

Mr. DURBIN. If the Senator would further yield for a question through the Chair, last week Paul Krugman, wrote an article for the New York Times entitled, "Maestro of Chutzpah" directed toward Mr. Alan Greenspan, which addressed this issue.

Mr. Greenspan came before Congress endorsing President Bush's tax cuts for the wealthiest people in America and now that we have rid the world of those tax cuts which have created record deficits that we have never seen in the history of the United States, Mr. Greenspan is now coming back to us saying the way to start resolving these budget problems is to cut Social Security benefits.

I ask the Senator from North Dakota if he would respond to whether Krugman accurately notes that during the 1980s it was the Greenspan commission that persuaded Congress to increase the payroll tax for Social Security which supports the program, a tax which is regressive, falls more heavily on middle- and lower-income families.

In fact, Mr. Krugman goes on to write that Greenspan's suggestion in the 1980s that raised the retirement age in America and raised the payroll taxes in America is generating record surpluses in the Social Security trust fund with the regressive payroll tax. Now that Social Security has generated the money it needs, it is Mr. Greenspan who says now we need to reach into the Social Security trust fund and make certain we pay off our debt, and also we need to cut benefits and raise the retirement age even further.

I ask my friend from North Dakota, the Senator who has come to the Senate to address this issue, is it disingenuous for Mr. Greenspan to, on the one hand, call for higher payroll taxes so the Social Security trust fund grows, and then when it grows to such a point, to allow tax cuts to be funded by Social Security trust fund that go to the wealthiest people in America?
The working families are paying into the Social Security trust fund, but it is the wealthy families who are taking the money out from the Bush tax cuts.

I ask the Senator his response.

Mr. DORGAN. As always, the Senator from Illinois creates the calculation exactly the right way. It is true the Chairman of the Federal Reserve Board chaired the commission in the early 1980s that decided to collect more money in the Social Security trust fund than was necessary to meet current expenses. Why? Because when the war babies or the baby boomers retire, we will have the largest crop of babies ever produced in this country who will hit the retirement rolls, and we need to save for that day. In fact, it was the Greenspan commission that recommended that. Congress embraced that.

Now Mr. Greenspan comes back to the Congress and says you are using all that money for tax cuts for upper income Americans and you are increasing defense, increasing homeland security, and telling people you do not have to pay for that. So now why don't we cut Social Security payments for the elderly.

There is an old song in that movie, "Where have you been, Joe DiMaggio?" We ought to ask the question, Where have you been, Alan Greenspan? It seems to me that as the construct of this fiscal policy has become clearer and clearer, I would have expected the Chairman of the Federal Reserve Board perhaps to send some warning signs.

I finished the book "The Price of Loyalty," written by Mr. Suskind. What he says, according to former Treasury Secretary O'Neill, is that the Chairman of the Federal Reserve Board is a critic of this fiscal policy in private while being supportive of this fiscal policy in public. A wrong approach.

Mr. DURBIN. Will the Senator yield?

The PRESIDING OFFICER. The time of the Senator from North Dakota has expired.

Mr. DORGAN. I yield myself an additional 10 minutes on the resolution.

The PRESIDING OFFICER. Without objection, it is so ordered.

Mr. DURBIN. If I might continue, in the same book, it notes Chairman Greenspan and Treasury Secretary O'Neill had several ideas. One of them was a trigger which said there will not be any tax cuts if the surplus disappears. The surplus is long gone. Later Lindsay and other economic advisers, including the President, resisted this idea of trigger.

Second, the book notes it was the plan of Chairman Greenspan to take $1 trillion out of the surplus and frankly make certain Social Security would be stronger for that much longer period of time. Yet we now have this same Chairman of the Federal Reserve who is telling us that absent both of those happening, he now has the solution, and the solution is a later retirement age and cutting the benefits out of Social Security to pay for the Bush deficit created by the Bush tax cuts for wealthy people.

How can it be fair to senior citizens who paid into Social Security their entire lives, who receive rather modest returns for that, to be told they should receive even less so people in the highest income categories can end up receiving these Bush tax cuts?

If I am not mistaken, this warped logic is continued by the Republican budget which is presented in the Senate. I ask the Senator from North Dakota if he could respond to that.

Mr. DORGAN. Mr. President, the budget that is presented in the Senate has on page 5 their estimate of what the debt should be in the year 2009. This is recommended policy. By 2009, we should have a debt of $10.2 trillion, they recommend. Every year getting there we should have budget deficits, each and every year, of over $400 billion a year.

Maybe it is something in the water. Maybe it is the food. One would expect there to be some conservative impulses here to decide that a fiscal policy ought to add up. This simply does not add up.

I mention one additional point. It was not very long ago when the Senate considered a proposal to spend a substantial amount of money, $20 billion-do you know how hard it is to get $20 billion for anything? It is a huge amount of money. The proposal was to spend $20 billion to reconstruct the country of Iraq. We must have it, they said. We won't pay for it; just have to have it.

I said, Iraq has the third largest reserves of oil in the world. The Iraqis can pump their oil and pay for their own reconstruction.

They said, We will not hear any of that. We demand the $20 billion. The majority party, the same folks who have written this budget said, we demand that money. We do not want to pay for it, just borrow it and spend it in the country of Iraq for reconstruction.

It is the kind of thing that if you did not know where the desks were placed in this Chamber you would not recognize who was saying this.

There is no common sense with respect to this kind of a budget document. This fiscal policy is radically off track and the quicker we stop, say wait, this has to somehow add up or this country will bear the consequences-this somehow has to make sense.

Let me conclude by making this point. We have a lot of people who think they know how the economy works and yet the Treasury Secretary said he is mystified. I used to teach economics and I am not sure I know how it works, but I know despite all the judgments about fiscal and monetary policies, this economy moves forward when the American people are confident about the future. If citizens are confident about the future, they do things that manifest that confidence and there is an expansion of the economy. They buy a house, buy a home, take a trip, do the things that expand the economy. If citizens are not confident, they do exactly the opposite and the economy contracts.

The biggest problem we have, in my judgment, is that it is very hard for the American people to take a look at this fiscal policy-deficits as far as the eye can see, the largest in American history, a $10.2 trillion debt-and conclude, yes, that works all right for us. Instead, this looks to them like a bunch of politicians who have their heads in the sand.

I came to the floor to support the amendment my colleague from North Dakota offered dealing with Social Security trust funds. I am happy to do that. After having debates in the Senate for about 5 years on the subject of lockbox, there is not a lockbox in sight. If there was a box, there would be no lock in site. Every single penny of money collected for Social Security is being used to give tax cuts to upper income folks and defend spending in homeland security because this majority party says you can do it all, do not worry, charge it to the kids. That is irresponsible fiscal policy and one we need to change.

I yield the floor.