Congressional Budget for the United States Government for the Fiscal Year 2006-Continued

Congressional Budget for the United States Government for the Fiscal Year 2006-Continued

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Mr. CONRAD. Mr. President, the Senator is correct on both counts. No. 1, there is $70 billion of tax cuts that are in this budget before us; that is, net tax cuts. Ironic, given the fact that we are running record budget deficits. Secondly, with respect to Medicaid, the two drivers that are very adversely affecting Medicaid are, No. 1, we have had millions of additional people come into the system, so the number of people who are dependent on Medicaid is growing dramatically. Of course, as the Senator well knows, medical inflation is running much higher than the underlying rate of inflation. That has put enormous pressure on the Medicaid program.

It is also fair to say it is undeniable that there are people who are engaged in spend-down schemes to reduce their assets so they qualify for Medicaid. That is also putting pressure on the overall circumstance we face. We have had, between 2000 and 2003, 8.4 million new enrollments in Medicaid. That is because, as the Senator so well knows, of the economic downturn. The recession meant millions of additional people were pushed onto the Medicaid rolls. That has put enormous pressure on spending.

We also have the hard reality, as I mentioned this morning, of the United States not being able to pay its bills. We face an incredible challenge going forward with respect to Medicare. In fact, the shortfall in Medicare is many times the shortfall in Social Security. I indicated this morning, the shortfall in Medicare is eight times the shortfall in Social Security.

I wanted to talk a little bit about the Social Security problem because we are going to be addressing that a lot. One of the things that gets too little attention is the underlying assumption about Social Security. The forecast for economic growth that is the basis for the concern about Social Security is a very low rate of economic growth over the next 75 years. They are projecting a rate of economic growth of about 1.8 to 1.9 percent. Economic growth over the previous 75 years was 3.4 percent.

One of the major components of economic growth is productivity growth. This chart shows the Social Security actuaries are assuming productivity growth at this red line. They are assuming productivity growth of 1.6 percent for the next 75 years. Yet in recent years, we have been getting much higher rates of productivity growth than their estimates. You can see in 2000 to 2004, the productivity growth has been in the range of 3.6 percent.

It is important for people to know that the underlying assumptions about a problem in Social Security assume quite pessimistic views of economic growth, and of course productivity growth is one of the central components of economic growth going forward. The actuaries are assuming over the next 75 years productivity growth of 1.6 percent, when in the most recent 4 years we have had productivity growth of more than double that amount.

Here is the problem we face with Social Security, and we face this problem with Medicare and, to an extent, we face it with Medicaid as well. This is the number of Social Security beneficiaries who are going to retire. Currently we are at about 40 million beneficiaries. As this chart shows, that number is going to grow dramatically to over 81 million by 2050. It is this demographic bulge that is putting enormous pressure on the Social Security Program, Medicare Program, the Medicaid Program, and what makes the overall budget circumstance utterly unsustainable.

Curiously enough, the President acknowledges we have a shortfall in Social Security of $3.7 trillion. But in his budget, the first thing he does is take another $2.5 trillion out of Social Security over the next 10 years. I want to be clear about this. The President says we have a shortfall in Social Security. He is right. The estimates are widely put at $3.7 trillion over the next 75 years. Again, that is based on a very pessimistic forecast of economic growth, much lower economic growth for the next 75 years than we have had over the previous 75 years.

The President's first move is to take all the money that is available to take out of Social Security over the next decade, $2.5 trillion worth, something he had promised not to do. So he is making the problem much worse.

In fact, when the President submitted his budget in 2002, he said:

None of the Social Security surplus will be used to fund other spending initiatives or tax relief.

Now let's look at what he is doing. He is doing precisely the opposite. He is taking every penny of Social Security money that is available and using it to pay for other things. Over the next 10 years, from 2006 to 2015, here are the Social Security surpluses during that period. I use the word ``surpluses'' advisedly because it is really not surplus. It is a temporary surplus. There is more money coming in from the Social Security trust fund than is going out in each of these years for the next 10 years, $184 billion in 2006 income over and above outgo. That builds up by 2015 to a $300 billion surplus in Social Security. That is, we are getting more revenue than we are spending in benefits.

Under the President's budget and under the budget that has been submitted by our colleagues, every penny of this money is being used to pay for other things, every penny of it, instead of being used to prepay the liability or pay down the debt to better position us to meet the promise of Social Security. Instead, under the President's plan, he is taking all of it, $2.5 trillion, and using it to pay for other things.

When the President says there is a shortfall in Social Security of $3.7 trillion, again that is based on an assumption. The assumption is the economy is going to grow at about 1.8 or 1.9 percent every year for the next 75 years.

In the previous 75 years, the economy has grown at 3.4 percent. So this is a very pessimistic forecast. But using that forecast, the shortfall of Social Security over 75 years is $3.7 trillion. Over the same period, the cost of the President's tax cuts is much more--$11.6 trillion. So I hope that helps to put this in some perspective for those who are listening.

The President's answer is to, first of all, cut the benefits dramatically. He proposes moving from an indexing of the benefits from a so-called wage indexing to price indexing. The benefit reductions that flow from that decision are the following: Those retiring in 2022 would see a 10-percent reduction; in 2042, a 26-percent reduction; in 2075, almost a 50-percent reduction. So that is what happens to those folks.

Then there is another part of the President's proposal that deserves attention, and it has gotten virtually none. That is the offset provision. The way the offset provision works is quite unusual. Under the President's plan, if you set aside money for your private account--let's say you set aside, over 40 years, $1,000 a year. That account balance assumes a real rate of return of 3.7 percent. Real rate of return is rate of return plus inflation. The rate of return is 6.5 percent. The loan is compounded at a 5.8-percent nominal rate. To put it in plain English, say you put aside $1,000 a year and you get a 6.5-percent rate of return during that period. At the end of the period, you would have $92,000 in your account in today's dollars. But that is not yours free and clear under the President's plan, because they assume the Social Security trust fund loaned you that money. They want to get paid back and they want to get paid back with interest. So when you hear the President say that is your account, you got your name on it, nobody can take it away from you, that is true as far as it goes. But it leaves out a very important fact. The very important fact it leaves out is that you owe the money--underlying money, the thousand dollars a year plus interest--you owe it back. But you don't pay it back out of your individual account. You pay it back out of your other Social Security benefits. Under this scenario, where you have put aside $1,000 a year and you have gotten a 6.5-percent rate of return, you would owe back $1,000 plus the real rate of return of 3 percent, or roughly 5.8 percent, including inflation. So you would owe back $78,000--not out of your individual account, but out of your already reduced Social Security benefits.

I have never heard the President describe it this way, but I have gone over his plan in great detail with his people and that is how it works.

Let me give you another possibility, because you know this is assuming--the first chart here--a 6.5-percent rate of return. What if you don't get that good a rate? What if you get a lower rate than 6.5 percent on your investment? Under the President's plan, workers earning 5 percent must repay 120 percent of the value of their individual accounts. I know that sounds unbelievable, but that is the way it works, because they are making an assumption that the money that went into your individual account was loaned to you by the Social Security trust fund; they expect to be paid back and they expect to be paid back with interest. Whether you made money on your account or not, they are expecting you to be paying back the money that was theoretically loaned to you, plus interest. So in this case, let's assume you put $1,000 a year aside in your account, and that your account only got a 5-percent rate of return. At the end of the period, you would have $64,000 in your account, but you would owe back $78,000 because they are expecting that thousand dollars a year back, plus interest. They are expecting a real rate of return--3 percent plus inflation--roughly 5.8-percent rate of return on what you have to pay back.

Now, I want to go through this again because I don't think a lot of people understand that is how these private accounts work. I hope it is clear to people from looking at this, you could wind up owing back more than you have in your account. OK. Let's go over it one more time so that people have a chance to see how this works.

Under the President's plan, you are able to put aside $1,000 a year into your account. You are able to earn a return on that. In this example, over a 30-year period, if you set aside $1,000 a year and you have a 6.5-percent rate of return, you would have $92,000 in your account in today's dollars. But, remember, you have to pay back what was theoretically loaned to you from the Social Security trust fund. You have to pay back the $1,000 a year, plus interest. The interest that they are expecting to get back is 5.8 percent. So you owe back, under this example, $78,000 in today's dollars. Again, you don't pay it out of your individual account or your personal account; you owe it back out of your traditional Social Security benefits.

I am going to conclude on this example. I see the leader is here. I want to make sure we go to him next. He has a lot of other things to do.

In this example, let's say you only earned 5 percent a year for 30 years. Actually, this example is over 40 years. If you only earned 5 percent a year, you would have $64,000 in your account, but you would owe back $78,000--again, not out of your personal account, but out of your already reduced Social Security benefits. So I think it is very important for people to understand how this works.

The final point I will make is, at the very time the trust funds of Social Security and Medicare go cash negative, the cost of the President's tax cuts explodes. Remember, he is making these tax cuts permanent. The cost increases dramatically over time. What this chart shows is the green bars, which are the Social Security trust fund, running, as we described, surpluses now. The blue bar is the Medicare trust fund. When those go cash negative out here, at that time, the cost of the President's tax cuts explodes, driving us right over a cliff into huge deficit and debt.

This is a plan that does not add up. It does not make sense and it fundamentally threatens the economic security of the country.

I thank my colleagues and yield the floor.

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Mr. CONRAD. Mr. President, I will take a couple of brief minutes to respond to the leader and indicate that the problem I see is the words continue to be good, but the words are almost totally divorced from the reality of this budget. The longer I am here, the more stunned I am at what a gap there is between rhetoric and reality.

The rhetoric is all about fiscal responsibility and restraint, but that is not what this budget does. That has almost no connection to this budget.

What am I talking about? I am talking about going back and looking at what this budget is doing and adding back the costs it has omitted. The majority leader talked about the $80 billion of the supplemental it has for the war. Yes, it does. Unlike the President, he has no money for the war past September 30. At least this budget has $50 billion in a reserve fund for the war, but nothing beyond that.

The Congressional Budget Office says that is not the cost of the war. The cost of the war is over $380 billion, not $130 billion. There is a $250 billion difference. Well, if we put that back in and we put back in the alternative minimum tax that costs $700 billion to fix, there is not a dime in this budget to do it. We all know it is going to have to be done. Three million people were affected last year. Ten years from now it is going to be 40 million people. Does anybody believe we are not going to do anything?

Last year, the President at least said, here is the money for 1 year. Now he has nothing. This budget from our colleagues has nothing. The $700 billion is left out. I said to the President's people when they showed me this budget, why did you not leave out some more things and claim you balanced the budget?

They said they are going to cut the deficit in half. They are going to cut the deficit in half by imagining. They are going to cut the deficit in half by leaving things out. When we put back the Social Security money that they are taking, $2.5 trillion that they do not count, here is what one sees: Operating deficits every year approaching $600 billion.

Somebody out there may be saying, well, that is Senator Conrad. He is from the other side. He is the loyal opposition. He is giving his view of it.

No, it is not just my view of it, this is their own budget document. Looking at their own budget document, this is what it shows. This is their projection of what the debt will increase by every year of this budget. This is a copy of their budget document, page 5. Here is what it shows. This is their estimate of how much the debt is going to increase every year if their budget is adopted.

Remember what the words were that we just heard. He said the deficit is going to get cut in half over the next 5 years. Is that not what he said? Did he not say he is going to cut the deficit in half over the next 5 years?

Well, here is what their budget document says is going to happen. They say the debt is going to increase in 2006 by $636 billion. This year, they say it is going to increase by $669 billion, then $636 billion, then $624 billion, then $622 billion, $611 billion. Does one see it getting cut in half? Where is it getting cut in half?

They are talking about a deficit projection that leaves out things. When the things are put back that are left out, the amount that is getting added to the debt every year is not getting cut in half. It is hardly being cut at all. This is their budget document.

In this town, words seem to matter more than reality. If the deficit is going down, how can it be the debt is going up so fast? Could it be something is being left out?

Here is what has happened to the debt: $3.3 trillion in 2001, headed for $9.4 trillion in 2015. This debt is going up like a scalded cat. And that is the publicly held debt. Here is the gross debt: $5.8 trillion in 2001. We are headed for $15.8 trillion in 2015, all at the worst possible time, right before the baby boomers retire.

They can put any characterization they want on this budget. They can use any words they want. They can talk about fiscal restraint and getting serious about the deficit. The numbers do not lie. The numbers in their own budget show the debt going up $600 billion a year every year of this budget. Those are their numbers. So when they say they are cutting the deficit in half and they are being fiscally responsible, it is all words, but it is totally detached from the reality of this document, and it is totally detached from the reality of this budget because their own numbers show--and I will go back to it. This is their document out of their budget. They say the debt is going to go up $669 billion, and then the next year it is going to go up $636 billion, and then the next year it is going to go up $624 billion, and then the next year $622 billion, and the next year $611 billion. Where is the deficit getting cut in half?

These are not my numbers. These are their numbers in their budget document. None of this adds up. Running massive budget deficits, running massive trade deficits, $600 billion a year of trade deficits, we are borrowing money all over the world.

Foreign borrowing by this President has gone up 92 percent. We had a trillion dollars of foreign holdings of our debt in the first 200 years of this country. Under this President, in 4 years it has gone up almost 100 percent. As a result, we owe Japan over $700 billion. We owe China almost $200 billion. We even owe South Korea $69 billion. So what? What difference does it make? The difference it makes we have seen twice in the last 2 months. We saw South Korea announce they were going to diversify out of dollar-denominated securities. The stock market went down 170 points in a day.

The dollar went down sharply. Then, just a week ago, the head of Japan said they are going to diversify out of dollar-denominated securities. The dollar took another big hit. The dollar is down 33 percent against the Euro in the last 2.5 years. Is anybody watching? Is anybody paying attention? Does anybody care? Does anybody understand the consequences of the risks that are being run here, of massive deficits, of massive debt, of massive borrowing from countries all around the world that makes us more and more vulnerable to decisions they make in their central banks, and the warning signs?

First South Korea says: Boy, I don't know about holding all these dollars. These dollars keep going down in value. Why should we hold onto them? Maybe we should get into some other currency.

The head of Japan says: Boy, this is risky business. I don't know if we should keep doing this.

Warren Buffett, one of the most successful investors in the world, says he is betting against the dollar in 2005. Last year, he made a $300 million bet against the U.S. currency, and he made a lot of money on that bet. This is risky business.

I indicated the last few weeks I talked with somebody who, last year, had been at the annual meeting of one of the most wealthy families in America. They told him they are getting ready to diversify out of dollar-denominated securities because of these massive deficits that are being run and the risks of a run on the dollar. This budget just continues that risky strategy.

I see the Senator from New Mexico is here. I yield 20 minutes off the resolution to the Senator from New Mexico.

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Mr. CONRAD. Mr. President, we are headed for a vote at about 5:30 just so my colleagues who are listening are aware of that situation.

For a moment, I want to discuss the pending amendment of Senator Bingaman.

Mr. CONRAD. Mr. President, the Senator from Tennessee raised questions about figures that Senator Bingaman was using in terms of the shortfall in the No Child Left Behind Act, and Senator Bingaman apparently had referenced a shortfall of $39 billion in No Child Left Behind in the last 6 years. The Senator from Tennessee was challenging that number and did not know how it was possible. Well, let me just share with my colleagues why it is not only possible, but it is the reality.

Senator Bingaman was talking about the levels of funding that have been authorized in No Child Left Behind versus what has been appropriated. If one looks at 2002, one sees that the appropriation compared to the authorization was $4.2 billion short. If we would look at the succeeding years, what we would find is that the combined shortfall, the difference between what was authorized and what was actually appropriated, is $38.98 billion below what was authorized.

I was not privy to the agreements that were made at the time, although I was serving in Congress, serving on the Budget Committee, but the understanding was that new obligations were put on the States and that the Federal Government was going to fund those new requirements. The determination at the time was the amount that was authorized was the amount of money necessary for the Federal Government to cover the new obligations it was requiring.

The hard reality here is that the appropriations have not kept pace with what was authorized. As I indicated, in 2002, it was $4.2 billion; 2003, $5.4 billion; $7.6 billion short in 2004; $9.8 billion short in 2005; $12 billion short in 2006; for a total combined shortfall of $38.98 billion.

Senator Bingaman was exactly right in his assertion. I just wanted to make that clear.

I commend Senator Bingaman for offering his important education amendment. It provides $4.8 billion to restore funding for more than 48 education programs that are eliminated or significantly reduced in the Senate budget plan. I know the Budget Committee chairman will say that his budget resolution does not eliminate or reduce funding for these programs because his budget resolution does not contain specific programmatic assumptions and that the funding levels will be determined by the Appropriations Committee. It is true that the budget resolution does not dictate policy decisions to the Appropriations Committee. Policy assumptions, nonetheless, are embodied in the numbers in the budget resolution and allocated to the Appropriations Committee.

Since the spending levels in the Senate GOP budget plan for 2006 are the same as those in the President's budget--except for a $100 increase in the Pell grant maximum, costing something over $400 million--I think it is only fair to assume that the resolution is tied to the President's policies. In fact, I have been assured on numerous occasions that is the case, that the budget they are putting before us in the Senate really embodies the President's priorities. I do not think anybody would expect anything else given that the President's party controls the Senate, controls the House, and they are, in effect, presenting the President's budget. That is why the amendment of Senator Bingaman is important--to pay for these shortfalls in the programs that the President's budget is cutting and that the Senate budget plan adopts.

Among the programs proposed for elimination are all vocational education programs. Let me repeat that. The President's budget--and we assume by extension the budget before us by our colleagues on the Senate Budget Committee--eliminates all vocational education programs. Vocational education programs are important. Not everybody is going to go to college. Senator Kennedy presented information moments ago that showed that 40 percent of those who are in the school-age population go to college. Only 18 percent complete college education on time. So a lot of people are dependent on vocational education programs to be competitive in this globalized world economy. If they are going to be able to compete with the best trained, best educated people in other parts of the world, they are going to need additional education. For many people it is vocational programs that offer them that opportunity.

The President says eliminate vocational education programs. Eliminate education technology State grants. I must say I think that is a mistake. I have been in the classes that benefit from the technology grant program so that young people have an opportunity to learn the latest technology. The President says eliminate that.

TRIO, Upward Bound and Talent Search--again, I have seen the TRIO Programs and the difference they have made in schools all across my State. This provides an area of interest and opportunity for kids who might not be interested in school otherwise. The President says eliminate them.

Safe and drug-free State grants--the President's budget says eliminate that. We have an epidemic in my State of methamphetamine abuse. Recently I was at a luncheon. A man was seated next to me whom I have known very well for many years, and I could tell he was very down. He seemed depressed to me.

I said to him: What's wrong?

He said: Nothing is wrong.

I knew something was wrong. I continued to press him. He finally told me that his son had just been picked up as a methamphetamine user, and they had taken him to a treatment center. The treatment center told him that morning that his son was addicted. This is something very prominent back in my home State of North Dakota. He was devastated. Here he has a son hooked on methamphetamine. It has been devastating for the family. It has been a financial disaster. It has been a disaster in every way for that family. We are going to say: We are just not going to do drug-free State grants anymore, forget that--that is what the President's budget says--because it is more important, apparently, much more important to give additional tax cuts to the wealthiest among us.

I indicated this morning that under the President's budget, tax cuts for those earning over $1 million a year will cost $32 billion in this next year, and $32 billion is the cost of the tax cuts just for those earning over $1 million year. We could restore the safe and drug-free State grants for $437 million. That is one-eightieth of what we are doing for the very wealthiest among us. Comprehensive school reform, smaller learning communities, teacher quality enhancement grants so that teachers get additional training--he is going to eliminate them all.

So Senator Bingaman has come before us and has said: No, we should not be eliminating them all. That does not make sense. Instead, what we should be doing is restoring those programs, and we should pay for it. He says: Don't add to the deficit, don't just spend the money, raise the money to pay for it. If education is critical to our future, and it is, if it is critical to our ability to compete in this intensely competitive world community, and it is, then let's pay for it. Senator Bingaman does.

He doesn't just pay for it.

He also provides a like amount of deficit reduction. How does he pay for it? He pays for it by closing certain corporate tax loopholes. And, goodness knows, we have loads of them. When I was tax commissioner, I found one company that did business and had a series of shell corporate entities, some of them operating out of the Cayman Islands. The most profitable part of their worldwide company was in the Cayman Islands with one employee. I used to say that was the most successful, the most productive employee anywhere in the world because they showed hundreds of millions of dollars of profit in that one entity because they avoided taxes everywhere else. They showed their profits in the Cayman Islands. They would have pricing between shell corporations, and they would sell at what it cost from one corporation to another in places that had taxes, and then in the Cayman Islands they didn't have any taxes. All of a sudden, they showed hundreds of millions of dollars of profit. It is amazing--one person doing all the work.

We have something going on in the country today that is a stunning abuse. We have individual cities and towns that are selling their sewer systems and their transit systems. They are selling them to companies, and then depreciating those assets and taking the tax advantages from it, and then they make a big payment to the localities for the privilege. If that isn't a dodge and a scam, I don't know what is.

Let me repeat that. It is hard to believe.

We have companies that go out and buy a sewer system from a town, and then depreciate the sewer system, getting the tax advantages from the depreciation. Those sewer systems were bought with taxpayer dollars in the first place. Then the company gives the city a fee, buys the sewer system, at least gets it in their name for tax purposes, and then depreciates the value of the system to cut down their taxes. They do the same thing with transit systems and bus systems.

Congress moved, at the request of Senator Nickles and myself last year, to close down some of these abusive operations, but more remain. They didn't do them all. They didn't shut down all of them. We are talking about billions of dollars.

Why wouldn't it be a better priority to shut down those scam operations and have vocational education in our schools? That is not what the President's budget does, and that is not what the budget before us does.

The largest reductions are in adult education assistance, which is cut by 63 percent in the budget before us. Some people may say, Adults should have gotten educated when they were kids. It is a great idea, but a lot of people didn't get educated when they were kids. They didn't get sufficiently educated. Are we to say to them when they come back, Well, too bad, they are too late. Or, are we going to say, Good for you, we are glad you have come back, and we are going to help make sure that you take every advantage of your God-given talents.

To me, that is a wise expenditure. The better educated we are, the better trained we are, the better we are going to do as a society. But that is not the priority of this budget.

Let me say I think Senator Bingaman has done a favor to the body by bringing this matter to our attention. I hope my colleagues will support it.

On another matter, in these discussions today we have heard repeatedly from our colleagues on the other side that if you cut taxes, you get more money. I don't know where they came up with this idea: You cut taxes and you get more money. That is not what the evidence shows. You cut taxes, you get less money. I have shown repeatedly on the floor today the charts that demonstrate the facts--not some ideological view, but the facts.

The facts are that after 2001, with the significant tax cuts that were passed and the subsequent tax cuts that were passed, signed by the President, the revenue of the United States dropped like a rock. For the first time since World War II, we got less money year after year than we had the year before. The last time we saw significant drops in revenue was during the Reagan tax cuts of the 1980s.

I don't know where our friends get this idea that when you cut taxes you get more money. It doesn't work that way. In the real world, we can test these theories. It is fine to have a theory, but let us deal with facts. The facts show conclusively that when taxes have been cut, we get less revenue than we would otherwise have received.

That doesn't mean you never have a tax cut. In 2001, I supported a $900 billion tax cut because our economy was weak, and it needed a lift. In fact, I supported a much bigger tax cut than the President's initial proposal because he back-ended all of his tax cuts. He didn't design tax cuts to give lift to the economy at a time of weakness. He was back-ending the tax cuts--small at the beginning and large at the end. We wound up with the worst of both. We wound up with large tax cuts in the beginning where we needed them to give lift to the economy and large at the end when we can't afford them, when the baby boomers are starting to retire.

I have showed the charts repeatedly here to demonstrate that the President has us on a course that does not and cannot possibly work. What we see in the President's plan is as the trust funds of Medicare and Social Security go cash negative, which happens in the next 20 years, at that very time the cost of the President's tax cuts explodes, driving us right over a cliff into deep deficits and deep debt. And we are already running record deficits. We are already running up unacceptable levels of debt. But for every problem, the President has the same answer: Borrow the money. Got a problem with Social Security? Borrow--borrow over $4 trillion to solve it. You got a problem with financing tax cuts? Don't worry about it, borrow the money.

The President is fond of saying, It is the people's money. He is absolutely right. It is the people's money. But guess what. It is also the people's debt. This President is running up the people's debt at a record rate. The debt this year is going to increase by over $600 billion. And every year of this budget that is before us--this budget which they have described as fiscally responsible, according to their own numbers--every year of this budget they are going to drive up the debt of the country by another $600 billion--$600 billion, $600 billion, $600 billion. Do that five times, that is $3 trillion in 5 years of additional debt.

The President says, Well, there is a shortfall in Social Security. He is right. He says the shortfall over 75 years is $3.7 trillion. That is what the actuaries say.

What is the President's answer for the budget that he has sent us? His answer is, First, take another $2.5 trillion out of Social Security to pay for his tax cuts and other things. Before you are done with that, establish private accounts that cost another $750 billion over the next 20 years. Take that out of Social Security, and borrow that.

The President ran as a compassionate conservative. The one thing I know for certain is this is not conservative. There is nothing conservative about record deficits and record debt.

The President has said, Well, I came into office and we were attacked, and we had economic slowdown. Fair enough. That is true. We were attacked, and that required us to spend more money. I think virtually every Member here supported that. We had to spend more money for defense and for homeland security. But the President also says he came in a time of economic slowdown. That is also true. That is also fair.

So we had tax cuts to give lift to the economy.

I didn't agree with his particular mix of tax cuts because they overwhelmingly benefited the wealthiest among us. The top 1 percent received 30 percent of the benefits of the President's tax cuts, and they are not paying 30 percent of the tax load in this country. They are paying substantially less than 30 percent. Yet they got the biggest benefit.

We are past the point of having been attacked. We are still at war. That is certainly the case. The President, in his budget, did not provide the funding for the war past September 30 of this year. He did not provide the money for this war. So that misleads the American people as to our true fiscal condition. He did not provide the money to fix the alternative minimum tax. He did not provide the money to make the Social Security changes that he has recommended. That is not really a budget. I don't know exactly what I would term it, but it is not really a budget. A budget is when you put down what you are going to spend and how much money we are going to bring in to pay for that spending.

The greatest fault I have with the budget before the Senate is it makes no serious attempt to have the spending match the revenue. Instead, it tries to be all things to all people: More tax cuts for those who want that, more spending for those who want that and, as a result, massive deficits and a massive buildup in debt, all of it at the worst possible time.

Why is it the worst possible time? It is the worst possible time because the baby boomers are about to retire. In 2008, just 3 years away, the leading edge of the baby boomers start to retire. Over a very short period of time the number of people eligible for Medicare and Social Security will double.

The President talks about that shortfall, but he does not do anything about it. He said, no, he does not want to do anything about Medicare, although the shortfall there is eight times the shortfall of Social Security. He said we just passed a bill, so we should let that work before we do anything. That bill did not help reduce the Medicare shortfall, it increased it. It increased our unfunded liabilities by $8 trillion.

The President said in his budget, cut the taxes more, increase the spending, leave out a lot of things that we know are going to cost us money and, lo and behold, he says, it will cut the deficit in half over the next 5 years.

My colleagues on the other side of the aisle say the same thing about their budget proposal. They say it will cut the deficit in half over the next 5 years. But when you go to the budget document itself, what you see is quite a different story. When we go to the budget document itself, what you see is what they predict the debt will increase by every year of this budget. What we find is the debt will go up by $600 billion a year each and every year of this 5-year budget. It is in their own document.

They say they are cutting the deficit in half. They have a very tortured definition of what the deficit is.

When I grew up a deficit was the shortfall. A deficit was a shortfall between what you are spending and what you are taking in. That is a deficit. And the amount of the deficit is added to the debt. They have said in their document the debt will increase by $600 billion a year every year for this 5-year budget. There is no cutting it in half. There is no cutting it. It is almost the same year after year. And all of this before the baby boomers retire. The result is we are borrowing money from all over the world.

It is not only the budget deficit. The trade deficit is the biggest factor. That is over $600 billion a year in a trade deficit. Our foreign borrowing in just 3 years under this President has increased almost 100 percent. We had $1 trillion of foreign debt, debt held by foreigners in 2001. Now it is approaching $2 trillion. That is just through December of 2004. We ran a $600 billion trade deficit last year, so the indebtedness, what we owe foreigners, has been skyrocketing. That is utterly unsustainable. That puts us at great risk. If they decided not to show up to take our debt, we would be in big trouble very fast.

This budget, I regret to say, does absolutely nothing about the serious problems facing our country. The overarching challenge facing America is a buildup of deficits and debt, without question. The hard reality about this budget is it actually adds to the deficit in each and every year over just doing nothing. If we just put the Federal Government on autopilot and went home, we would be $130 billion better off in the deficit than if we pass this budget.

For 2006 alone this budget increases the deficit by $63 billion. Yet they come to the Senate and talk about fiscal responsibility and fiscal restraint and they are doing something about the deficit. They are doing something about the deficit. They are making it worse. We do not ever hear them talk about doing anything about the debt because their budget increases the debt every single year by over $600 billion, according to their own calculations. They will increase the debt of this country by $3 trillion in 5 years. And this is the crowd who said they were going to have maximum paydown of the debt just 3 years ago. The President told us he had a plan, that he could have these big tax cuts, defense buildup, massive tax cuts, that he was going to protect Social Security, going to protect Medicare, and going to have maximum paydown of the debt.

The only problem with it is none of it worked. None of it added up. And the result is instead of paying down the debt, the debt has skyrocketed.

I see the Senator from Hawaii is in the Chamber. How much time would the Senator like?

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Mr. CONRAD. Mr. President, our dear colleague left out one very important fact about this amendment. This amendment does restore the cuts to education, but it does another thing: it reduces the deficit by a like amount. So this amendment restores the cuts to education, but it raises additional money through the closing of corporate tax loopholes to also reduce the deficit by $4.75 billion.

When the Senator talks about fiscal responsibility--I know it is a new idea on their side--fiscal responsibility is actually reducing the deficit. This amendment supports education and reduces the deficit. That is something that is critically important that we do. I know the budget from our friends on the other side doesn't reduce the deficit, though they say it does. If you examine the document itself, look on page 5 and see how it increases the debt each and every year by more than $600 billion, by their own calculation. It demonstrates that this is not a fiscally responsible budget. To use ``fiscally responsible'' in attachment to this budget is truly farfetched.

The Senator from Massachusetts is seeking time to speak. How much time would the Senator like? We have the vote at 5:30. We should probably retain some time for Senator Bingaman, if he would like to close.

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