CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 2007
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Mr. GREGG. Mr. President, I rise to speak to the pay-go amendment. Pay-go is a term that has sort of taken on a motherhoodlike atmosphere around here. There are some terms which occur in the legislative process or in the political arena that become perceptionwise different than what they are in substance. The perception becomes the issue versus the substance.
Pay-go has taken on that sort of status because it sounds like something that makes sense. But to be honest, what pay-go is is a tax increase. It is that simple. The way this amendment is structured, it guarantees a tax increase. Rather than saying they are for tax increases, they are saying they are for pay-go. In fact, the last chart the Senator referred to which showed very large numbers in this bill which he didn't call taxes were just that--taxes.
If you want to adjust those numbers, you are going to have to raise taxes by the $214 billion he cited in that chart. So pay-go is a stalking horse for a tax increase. It is really that simple. It is also technically not an appropriate approach, and this is why.
CBO scores things around here, and CBO basically drives the decisions of the budget process because what the Congressional Budget Office says is what the baseline is; in other words, how much a program will cost in the outyears, how much tax revenue will occur in the outyears as a result of a tax proposal. But CBO uses different standards for different groups of spending and taxes. For discretionary spending, they have one set of standards. For entitlement spending, they have another set of standards. For tax revenues and tax cuts, they have another set of standards.
So when you create this pay-go language, which the Democratic side is offering, you are creating a one-size-fits-all and applying it to different accounting systems, and it produces perverse effects. The most perverse effect is it basically means you have to raise taxes, but you will never actually impact entitlement spending.
Why is that? Because under the way CBO works, they say entitlement programs never end. It is amazing. You can have an entitlement which had an authorization life of, say, 10 years, but CBO would score it as if it went on forever, never sunsets, never is perceived by CBO as having to be reduced or in any way adjusted. That is the decision they have made in scoring entitlements.
On the tax side, however, they take the exact opposite approach. If you have a tax cut which is authorized for 5 years or 10 years, at the end of the 5 years or 10 years, they presume that tax cut is followed by a tax increase and, as a result, they presume there has to be more income coming in because taxes will go up.
The practical effect of that is that this pay-go proposal will never actually be applied to an entitlement that already exists, but it will always be applied to a tax cut that already exists, which results in tax cuts being significantly prejudiced by this approach because it is a one-size-fits-all approach.
If CBO were to change its scoring mechanisms and say that entitlements didn't go on forever, then it would be logical to have this type of an approach--potentially logical--because then you would actually have to pay for entitlements and you would have to pay for tax cuts. But under this proposal, that is not the case. Under this proposal, only tax cuts would have to be adjusted and paid for and would be affected by pay-go, and it would essentially be, therefore, a tax increase mechanism. So when our colleagues vote for this, they are voting for tax increases. It is that simple.
Another problem with this technical problem is it again goes to CBO scoring. For example, under the CBO scoring, CBO uses capital gains as a revenue loser. It does not score capital gains for the dynamic effect it has on the economy. When we cut capital gains rates--it has been proven every time we have done it--we generate revenue. Why is that? It is called human nature, and human nature usually overwhelms accountants. They just sometimes cannot handle the concept of human nature, but human nature goes to work when you cut the capital gains rates because when somebody owns an asset and has owned it for a while, it is an asset which they know if they sell they are going to have to pay 30 percent taxes on. Then we cut the tax rate on that asset to 15 percent, if they sell it, and there is an incentive for them to sell that asset and to reinvest those dollars in something that is probably more productive. But if the tax rate stays at 30 percent, there is no incentive for them to go out and make that sale because they recognize they are going to pay a very high level of taxes on it. So assets get locked up. Stocks that might be sold get locked up, investments in real estate that might be converted get locked up, small businesses that might be converted get locked up, and farms that might be sold get locked up because the incentive to sell is reduced by the high level of taxes.
So when we cut capital gains rates, which is what we have done, we create this huge infusion of economic activity. People start to sell assets which they wouldn't otherwise have sold, and that generates income to the Federal Government because taxes are being paid that would not have been paid before and there would be no tax revenue coming in because people would sit on these assets. We generate a tax event.
More important, the money which was invested in that asset is reinvested and, by human nature, it is reinvested in something that, to the person doing the investing, is going to be more productive. By creating more productive investments, we end up creating more economic activity, more jobs--many more jobs--and, as a result, once again, we generate more revenue to the Federal Government.
A capital gains cut actually generates a lot of revenue.
We see on this chart that CBO--the blue line--simply is not willing to score that type of economic activity, the real economic activity, the actual economic activity generated from capital gains cuts. We have had a huge infusion of revenues into the Federal Treasury as a result of the capital gains tax, huge--$60 billion, $75 billion, $81 billion.
What happens is CBO uses these artificially low numbers to score that capital gains cut even though capital gains is paying for itself. If they used the accurate numbers, then pay-go wouldn't even apply to a capital gains cut because capital gains would pay for itself. It would pay for itself because it would generate so much revenue. But CBO scores it as a loser, even though it is a winner, so a capital gains cut is subject to the perverse approach under the CBO scoring rules of having to pay twice if you have pay-go in place. First, it would pay because it would generate the revenue to cover the cost of the cut, which CBO claims is a cost--it is not a cost; it is actually a revenue winner--and then it would have to pay on the presumption it was going to cost money, when, in fact, it is not going to cost money, and then you have to find revenues to cover it.
There is a perverse accounting mechanism working here if we put pay-go in place relative to items such as capital gains reductions. That is a technical reason this proposal does not work.
The bottom line of this proposal is simple: It is a tax increase. The basic engine of this proposal, the basic effect of this proposal would be the engine to drive tax increases.
There is a fundamental disagreement between the two parties as to whether we should have tax increases driven by an accounting mechanism or whether we should have them driven by policy. It may be we should do some tax increases around here in certain areas. The Senator from North Dakota has pointed out some loopholes that should be closed, and I am for that. And he has suggested we should collect more taxes that are owed. I am for that, too. But I don't think we should use an accounting mechanism to basically repeal the capital gains rate and the dividends rate, which is the purpose of this amendment.
This amendment is targeted to two tax cuts: dividends and capital gains. And then later on, when the rates adjust, when the rate adjustment comes to an end, it will be targeted on rates. It is like a laser beam aimed at those two issues. If it were to be in place today, it is unlikely we would have a capital gains rate or dividend rate at the present levels.
The result, in my opinion, would be to chill the economic recovery because I think a huge part of our economic recovery has been these numbers right here, capital gains activity: people realizing their gains, selling an asset, and reinvesting it in something more productive, which creates economic activity, jobs, and revenue.
There is a fundamental disagreement here. This is a stalking horse for a tax increase, in my opinion. It is doing it through a technical vehicle, but it is clearly going to have that result. If we were to put a major new entitlement on the books, it would actually impact that, I give it credit for that. But we already have on the books a pay-go which affects new entitlements--new entitlements. I would love to have a pay-go that affects existing entitlements, and if they want to redraft the amendment to do that, I would be happy to take a look at that.
The practical effect of this amendment is singular in purpose: It will force a tax increase.
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Mr. GREGG. Mr. President, let me briefly respond to the Senator from North Dakota. I was right then, and I am right now. Times change and dynamics of what is happening around here change substantively.
The only thing that will be impacted by this pay-go amendment, if it is adopted, is tax increases. That is it, because there isn't a major new entitlement being proposed. In fact, as I mentioned before, the way the scoring occurs around here, all the entitlements will continue.
These are the entitlements that are exempt: Food Stamp Program, TANF, Commodity Credit Corporation, veterans compensation, child care, State children's health, rehabilitation services, ground transportation, Federal unemployment insurance, child nutrition, and the list goes on of entitlement accounts exempt from the Senator's pay-go and pay-go generally. There is a pay-go in the bill.
What isn't exempt is the fact if this were in place today, capital gains and dividends would be subject to it. And that is totally inconsistent because capital gains, as I pointed out--what happened to my chart? Somebody took it down, I guess as a courtesy to the Senator from North Dakota because this is such a devastating chart and he didn't want it to undermine his arguments.
As this chart points out definitively, the money is in the bank, or at least it is in the Federal Treasury until we spend it. We are generating huge amounts of revenues from capital gains.
Under this pay-go amendment, were it in place, you would have to pay for capital gains because CBO does not score it relative to what it actually does.
The next event to which this is going to apply is the death tax, if pay-go is in place. That is the only thing it will impact in this budget window over the next 5 years because the only thing that is planned in this next 5 years will be the death tax and the rates, and it will be used as the club to generate tax increases. That is all it is for in the context of today.
You look over this 5-year window of what this budget says, you take this pay-go language and lay it over that 5-year window, and the only thing it will impact is taxes, and it will basically be used as a lever, as a club, to raise taxes. It shouldn't be called pay-go, it should be called tax-go. The Senator from North Dakota made this case for us when he held up his chart that showed all these bars--and he didn't identify what they were--of numbers that this budget allegedly doesn't cover that are losses of revenue, according to the Senator from North Dakota, because we have cut taxes. He didn't actually say they were loss of revenue from tax cuts, he used some other term for it. I don't know what the term was, but he had one bar that was $216 billion. Well, that is death taxes, rate cuts, dividends and interest, for the most part.
There might also be some R&D tax credits in there and some State and local deductibility. So it is ironic, to say the least, that they would claim that this is a balanced approach.
Another ironic thing is we have heard the Senator from North Dakota and other Members come to the floor and say the AMT is an outrage, the alternative minimum tax. Well, I haven't heard them suggest how they are going to pay for fixing the AMT, but under their amendment, they would have to, and that is an $800 billion hole. I happen to think we should fix the AMT, and we should fix it in the context of revenue neutrality. But I don't see any amendments floating around here, and I haven't seen any amendments floating around here to accomplish that.
So I don't see how you can argue anything other than the fact that this proposal, as it is presented, has one fundamental impact: and that will be that over the next 5 years any attempt to extend any tax cut will be put to a 60-vote point of order and will be, therefore, pressure to raise taxes. It will be pressure to raise taxes to do that extension. It will have no impact on anything else because there are no new entitlement programs planned in this bill. And because CBO scores all entitlements that already exist as going on forever, they won't be hit by this proposal.
So as I said earlier, it is a one-size-fits-all proposal that disadvantages tax cuts. The irony is the tax cuts that pay for themselves, such as capital gains and dividends cuts, which generate economic activity, which generate income, will end up having to be paid for twice. That really doesn't make any sense, and it will be driven by an accounting mechanism. I don't think policy should be driven by an accounting mechanism when it is so unfairly applied where it basically impacts tax policy one way and entitlement policy another way. I would rather see something that was fair. But, in any event, I don't support this because it is a tax increase mechanism.
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Mr. GREGG. Mr. President, let me simply respond to some of the things the Senator said.
We haven't seen a budget plan from the Democratic side of the aisle for the last 2 years. In fact, even when they were in control of the Senate, we didn't get a budget across the floor from the other side of the aisle. I think one of the reasons is because they would have to openly admit to the fact that what they are basically saying, in language which is not specific but which is clear, is that they are going to raise taxes, that they want to raise taxes, and pay-go is just a stalking horse to accomplish that. It is that simple. The facts are very clear.
If you take this pay-go language and you template it over this budget, there are no entitlements that are going to be impacted. None. But there are taxes that are going to be impacted: specifically, capital gains, dividends--if they aren't addressed in this reconciliation package that is still being worked on--and the death tax.
I think most people in this country know that when their rates go up, they are getting a tax increase. And the effect of the pay-go language will be that if you get to the time when the rates have to be extended, the pay-go language will either force them to go up or force taxes to be raised somewhere else. It will be basically a major club used for the purpose of defeating the maintenance of things like the capital gains rate, dividend and interest rate, the dividend rate, and the death tax. That is the purpose, and it couldn't be any clearer from the facts.
I wish the Senator would present a budget because I think if he did, you would see that. Clearly, he hasn't addressed how they are going to do AMT. That amendment has been offered from their side. It was in committee, and it is, I presume, going to be offered again before we finish. Are they going to offset that with tax increases, that almost $1 trillion tax event? If they are going to stick to their language, they should. I don't think they will. So there is a different standard.
The point is obvious. This language, as it is presently structured, because of the facts that we have before us, which is a 5-year budget which has no new entitlements in it, and because CBO scores entitlements as going on forever and therefore they are never impacted by this pay-go language, this pay-go language will not affect the spending side of the ledger at all. But it will affect the tax side of the ledger. And when the death tax needs to be extended, this pay-go language will require a tax increase. When rates need to be extended, this pay-go language will require a tax increase. When dividends and interest, dividends and capital gains, should they not be extended in this reconciliation agreement need to be extended, this pay-go will require a tax increase, and that is the purpose of this.
This concept that CBO writes us back and says: Well, we can't really figure out that the capital gains cut generated capital gains income, that is one of the problems here. The CBO is taking a very strict green-eyeshade approach to budgeting. The way they build their baseline, they use four or five different major assumption groups. The assumption group they use for entitlement, the assumption group they use for taxes is entirely opposite and unfair and disproportionately impacts the capacity to do anything on the tax side of the ledger around here. And this amendment, if it were agreed to, would lock in that unfairness.
Clearly, capital gains generate revenue. Now, maybe the Senator from North Dakota wants to repeal the capital gains rate. He is saying in the outyears they don't generate revenue, they lose revenue. I happen to think they create a great deal of capital activity and investment and people are willing to take risks because they have a tax rate that is reasonable.
In the industrialized world, in major industrialized countries, we still have one of the highest rates of taxation on capital there is. Most industrial nations don't even tax capital formation because they recognize it creates jobs.
We do, and the rate we have is reasonable, in my opinion. But if the Senator from North Dakota wants to raise it because he thinks in the outyears it is a revenue loser--fine. Say so. Offer a budget that does that. I would be happy to debate that rather than move under the terminology that is misleading, this motherhood terminology of pay-go, which is nothing more than ``tax-go'' in the way it will be applied to this bill and to the next 5 years. Obviously I oppose this amendment.
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Mr. GREGG. Mr. President, I appreciate the Senator from North Dakota telling us what I am saying. I do wish the Senator from North Dakota had brought forward a budget so we could see what he is saying and what their side thinks they should do. Right now their budget is a blank piece of paper as an overall document, and it has been for the last few years. But if we look at what they did in committee, I think you can get an idea. They proposed amendments which would have increased discretionary spending by almost $19 billion and mandatory spending by $127 billion. That is a lot of new spending. And they raised taxes by about $130 billion. That is a lot of new taxes. So there is no discipline on their side of the aisle relative to controlling the rate of growth of this Government. In fact, just the opposite. They want to expand the rate of growth significantly and they want to raise taxes on the American people to accomplish that. That has always been their position and we are going to see amendment after amendment offered to this budget which will essentially increase spending.
We have already got a few in line here. I think Senator Kennedy is going to offer one for $6.5 billion as the next amendment, or one of the coming amendments here. There are others coming down the pike. They are all going to be paid for by raising taxes.
The position of the other side of the aisle on this, although they manage to keep it a little foggy because they don't put forward their own budget, is pretty clear. They want to increase and grow the size of this Government significantly and they want to raise taxes to do that.
What the pay-go amendment does is raise taxes. You can't deny this. There are only three items of any significance that they are going to impact in this budget. My budget has no new entitlement spending in it so pay-go won't apply to any entitlement spending. It has a lot of entitlement spending presumed in it because entitlement spending is, of course, a big part of the budget. But none of that entitlement spending is affected by pay-go because, as a practical matter, pay-go will be exempting those entitlement accounts.
This reflects what were the amounts of tax increases offered from the Democratic side in committee when we marked this bill up: $133 billion, and the amount of new spending, $127 billion. It puts in stark terms how much new spending was proposed in committee by the Democratic membership, and new taxes.
Now they want to use this vehicle of pay-go to essentially repeal the tax cuts. That is what they are trying to do. The only items, as I mentioned, that are going to be impacted by this pay-go language will be the extension of the tax cuts. What tax cuts will need to be extended in the next 5 years? There are the rates, there are capital gains and dividends, and there is the death tax. Those are the big ones. Also maybe State and local deductibility in that category; I am not sure. That may be extended further than this window. But in any event, those are the big ones.
They are saying to a person whose rates go up: Your rates are either going to go up or taxes are going to have to be raised somewhere else to keep them at their present level. This argument that you are going to cut spending around here, and to raise taxes--I would love to see the other side of the aisle come forward with that proposal. I might be willing to do that and there might be two other people on this side of the aisle who might be willing to do that, but I have not seen a proposal from the other side of the aisle to cut spending anywhere.
The Senator from North Dakota argues that this budget adds enormously to the debt. It adds a lot less to the debt than anything the Senator from North Dakota has presented because he is not willing to freeze nondefense discretionary spending. He has not put forward a budget that reduces debt.
What this budget at least does is put in place discipline on the discretionary side of the ledger. It sets a cap--$873 billion. As long as you have that cap you have something around here to enforce so you can limit spending. It doesn't do as much as I would like to do on the entitlement side, but at least it puts in place a mechanism for us to have a point of order should entitlement spending get out of control--should more than 45 percent of an entitlement account, which is supposed to be an insurance account, end upcoming out of the general treasury--and I understand they are going to try to repeal that point of order. And then they claim they are for budget discipline?
The inconsistency of their position is reflected by the facts on the ground and the facts on the ground are pretty clear. The only thing this pay-go amendment will affect is taxes and it will force tax increases and it will make the extension of the tax cuts much more difficult to accomplish, which will be a tax increase.
If your rates go up, if your tax rates go up, that is a tax increase. I think everybody in America probably understands that. You can call it pay-go if that is the term you want to use. If that is the new term we are going to use around here for raising taxes, we will call it pay-go and I guess that is what they want to say. When you raise taxes around here, we will call it pay-go.
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Mr. CONRAD. Mr. President, the chairman says we have offered no budget. The chairman well knows the majority has the responsibility to offer a budget. Our responsibility is to critique that budget. We have done so by pointing out that this is the effect of the chairman's budget. It increases the debt every year by over $600 billion. That is the budget that has been offered by the majority. When we were in control, they didn't offer alternative budgets.
Mr. GREGG. That is because you didn't offer a budget.
Mr. CONRAD. They didn't offer alternative budgets.
Mr. GREGG. Will the Senator yield on that point?
Mr. CONRAD. I am afraid I have only got a minute left.
Mr. GREGG. I will give you another minute if you want to yield on that point.
Mr. CONRAD. I will be happy to complete my thought and finish.
Over all the years when we were in control, Republicans did not offer alternative budgets.
With respect to what we did in committee, every amendment we offered was paid for. The Senator is entirely correct. We offered amendments with revenue of $133 billion and with increased spending of $126 billion. So we paid for every amendment. We didn't pay for it with tax increases. We paid for it by closing the tax gap, money that is owed that is not being paid, which the revenue commissioner has said could be collected.
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Mr. CONRAD. And we offered to close tax loopholes, these egregious tax loopholes that we have pointed out repeatedly. That is not a tax increase. It is more revenue. It is not a tax rate increase on anyone.
But that gets us back to the fundamental question of, What is the direction we are going to take? Are we going to continue to run up the debt of the country, as the chairman proposes? Or are we going to take a new turn and go back to the budget disciplines that have worked in the past? I urge my colleagues to go back to the budget disciplines we have had in the past. If you want to spend more money, you have to pay for it. If you want to have more tax reductions, you have to pay for them. It is a simple principle. We have had it in the past. The chairman has endorsed it in the past. It is the right course.
The PRESIDING OFFICER. The Senator from New Hampshire.
Mr. GREGG. Mr. President, I think the Senator is making my case. Basically, he is admitting the fact that he is proposing to raise taxes by $133 billion. You can't do it the way he is reflecting. You are going to have to do it some other way. In fact, all his offsets raise about $11 billion, according to the Finance Committee. The uncollected taxes there--sure, we would like to get them, but CBO won't score them so we can't use it. The fact is the pay-go language is one way to generate a lot of new revenue because it will essentially say you can't extend the tax cuts and you are going to have to raise taxes dramatically if you do try to extend those tax cuts, so if you want to raise some big-time taxes around here you vote for this pay-go language.
Simply as an aside, I have to say the reason we didn't offer a budget, in response to the Senator, when they were in control of the Senate was because the last year they were in control of the Senate, they didn't offer a budget themselves. They haven't offered a budget now for 6 years, I think--maybe it is 5. We would love to have them offer a budget because then we would see very specifically this philosophy which is reflected in the amendment process, which is one of growing the Federal Government, spending a lot more money and raiseing a lot of taxes to do it.
Mr. President, I understand under the prior order the Senator from Missouri is to be recognized to offer an amendment.
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Mr. GREGG. Mr. President, this amendment is a classic tax-and-spend amendment of which we have seen a large number coming from the other side during markup. In fact, $133 billion in new taxes and $126 billion in new programs were offered by the other side. That is called growing the Government--dramatically. It is also called putting a lot of burden on people working to pay taxes.
This amendment is a continuation of that approach. The euphemism ``loophole'' is used to try to avoid the fact that what we are proposing is major tax increases to pay for this. If you are going to have a responsible budget, you have some budget discipline. You have set priorities. We have attempted to do that with this budget.
Certainly this Presidency has done a great deal in the area of education. The Senator from Massachusetts says we need a massive effort in the area of education. I would say adding $9 billion just last month into the higher education accounts is a pretty big effort. The Senator from Massachusetts voted against that. It was in the Deficit Reduction Act where we took a big chunk of money and put it into higher education. I believe $4.5 billion went to low-income students who were college bound. There was about $4 billion which went to reduce origination fees for students who want to go to college. Those are big numbers. And $1.9 billion went to people who were taking up special education as their vocation when they got out of college or math/science. There was loan forgiveness for those folks who decided to pursue those disciplines which are in great need. That was a huge infusion, and this administration supported that.
In general, this administration's support for education has been so much more dramatic than the last Democratic administration that it is almost embarrassing, I would think, for members of the other party to come to the floor and claim this administration hasn't done too much in this area when you consider what they have done in comparison to what the Clinton administration did.
This chart reflects that in dollar terms, the type of increases we have seen on an annual basis. You can see that the Clinton increases for title I, for example, were about a third of what this President did. Clinton increases in IDEA special education were about one-seventh of what the President has done. The Pell grants, this President has significantly increased Pell grant funding. The Clinton administration actually reduced it. And the total discretionary funding on an annual basis, this administration has added an annual $3 billion increase; the Clinton administration about half a billion dollars. Those are big numbers, a big commitment to education.
Yes, the President's budget, as it was sent up, in some of those accounts that have grown so dramatically did limit the rate of growth this year. But we actually adjusted that in our bill, and we have put another $1.5 billion into these accounts which is reasonable.
Of course, I have to emphasize that we don't actually control that number. That is controlled by the Appropriations Committee. All we do is control the top number. The Appropriations Committee makes the allocations. We have departed from the guideposts which the President put out there and put in some ideas of our own, but they will all be decided, of course, by the allocations made by Senator Cochran, chairman of the Appropriations Committee.
The number commitment which is shown by this chart is dramatic, and it is reflected in the fact that we just did a $9 billion infusion in the higher education accounts over 5 years, which is significant. Every time we have done a Republican budget, the Senator from Massachusetts has, in his own inimitable way, come to the floor and offered an amendment to dramatically increase spending. This year isn't any different. I am not surprised by the amendment. But I do think if you are going to have a disciplined budget, you have to live within the spending restraints with which you are confronted.
We have heard a lot from the other side about the failure to address the issue of debt. The failure to address the size of the Federal Government is what drives debt. If you are going to allow the Federal Government to grow by $6.3 billion, which is what this amendment does, if you are going to raise the cap so that spending is not limited but is suddenly exploded by $6.3 billion, you are going to aggravate the debt. You are going to pay for it with loophole closings, but we all know it is a little difficult to do that. The spending is easy, but the paying for it is hard. As a result, you will end up without any discipline.
This amendment is essentially an attempt to break the caps, to eliminate fiscal discipline, and to do it in account areas in which every account could use more money, but these accounts have not been underfunded. These accounts have been aggressively funded by this administration, especially in comparison with the prior administration. It is hard to argue that on top of these dramatic increases, the $9 billion which we specifically put in for higher education is not a fairly significant commitment--in fact, a very large commitment--to funding higher education. Where this money is going to flow, I am not sure. That will be the decision of the Appropriations Committee. But I am confident that, because year in and year out the Appropriations Committee has supported programs such as TRIO and GEAR UP, those accounts will be funded because we have adequate resources to do it.
I strongly oppose the amendment on the grounds that, A, it breaks the caps and therefore ends fiscal discipline; B, it is a tax-and-spend amendment in the tradition of some of our more liberal colleagues; and, C, it is spending money in accounts where we have already made very strong commitments as a party and as a Government under this President. Those accounts have received substantial increases and will continue to receive strong support.
I yield the floor and reserve the remainder of my time.
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Mr. GREGG. Mr. President, I am not sure what budget the Senator from Maine is talking about, but it is not the budget we brought to the floor as a Republican Senate. The budget that was reported out of committee by the Republican membership funds vocational education. The President's may not have, but our does, and there is $1.4 billion in the budget for that program. We actually put in money that would allow the TRIO Program, the GEAR UP Program, the LEAP Program, and the Perkins loan programs to be increased if the committee wants to do that. We added $1.5 billion of additional funding.
What the Senator from Maine and the Senator from Massachusetts are suggesting is that we should blow the caps by $6.3 billion, raise taxes by $6.3 billion, and do that to fund accounts which already have received significant dollars and which are going to continue to receive significant dollars.
As I mentioned, the higher education funding has received a $9 billion infusion just by the passage of the reconciliation bill in February which was voted against by the Senator from Massachusetts.
This budget has a very strong commitment to education, as have budgets that have come before this body, as has this President who has done more for title I, IDEA, and Pell grants by a factor of three, four, five times what the prior administration did and has made a stronger commitment in the education accounts than probably in any other account, with the exception of accounts necessary to fight the war on terrorism that are discretionary.
It does seem to me a bit over the top to say that within the number $873 billion, which is what we are already spending in discretionary money, there is no ability to adequately fund education in light of the track record that we have funded education very well.
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Mr. GREGG. Mr. President, there is an inconsistency in the argument coming from the other side of the aisle. The Senator from New Jersey and the Senator from Massachusetts argue that we need a significant infusion of funds into higher education funding to assist students going on to college. Yet they both voted--I believe the Senator from New Jersey, in the House at the time, and the Senator from Massachusetts, in the Senate--against the deficit reduction bill which included a $9 billion infusion into higher education. That was a big number.
The argument that Pell grants haven't been increased flies in the face of the fact that we have created a new account which actually allows up to $8,000 of the cost for a low-income individual to go to college, to be reimbursed on the basis of the Pell structure, and as a result those funds which weren't available prior to the deficit reduction bill are available today. That is $8,000 for low-income students who pursue certain types of disciplines that they can get.
In addition, our commitment as a Federal Government since President Bush took office has been dramatic in the area of title I. These are the numbers. They have gone up exponentially--exponentially--under President Bush. Look at what they did under President Clinton. They just crept along. They just crept along. President Bush came into office and we increased them dramatically.
What about the IDEA? IDEA funding, once again, under President Clinton, just crept along. When President Bush came into office they increased dramatically. Massive increases in funding in IDEA, massive increases of money in title I, massive increases of money going into higher education accounts to assist people wanting to go to college. Not enough. Not enough. You have to come here and propose an amendment which breaks the caps and ignores the fact that we put an extra $1.5 billion into these education accounts over what the President requested with our budget and ignore the fact that we fully funded the vocational accounts over what the President requested and say, no, we have to raise taxes by $6.3 billion and raise the caps by $6.3 billion. Tax and spend.
I have to say this President has had a commitment to education which has been unique in the history of this country relative to dollars, relative to philosophy, and relative to results. I take a back seat to no one on funding education in this institution, and I believe we have a record to stand by, and this budget continues that record.
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Mr. GREGG. I appreciate the Senator's passion. I just wish he had been there when we voted on the deficit reduction bill and we put $9 billion in student assistance and increased the Pell grant concept $8,000 per student, students with low income to pursue academic careers which are needed in this country so we could be more competitive.
As I have mentioned before, the numbers are pretty staggering, what we put into education accounts, and this budget puts in another $1.5 billion over what the President suggested, although again it is not binding. Nothing we do in this budget is binding in a specific account. The only binding number we have and we should keep is that top line on the issue of how much we are going to spend as a Government. I would say not only is it important to pass along good education to our children, but it is also important to pass along a healthy economy to them and a nation which they can afford to live in. But raising their taxes as this amendment does is not going to make us more competitive or make them have a better lifestyle. It means they end up paying more taxes. Not living within your budgets is not a good idea for government, it is not a good idea certainly for students, and I think this amendment sets a bad precedent. It establishes a precedent of saying, well, we will just blow the cap off with either higher taxes or more debt. It is a very inappropriate approach and certainly unfair to those kids who want to go to college and have a country they can afford to live in and be able to make a decent living in and not have to pay too much in taxes.
This amendment, in my opinion, is excessive, inappropriate, and clearly, as a result of busting the budget, is not constructive to fiscal responsibility and to maintaining fiscal discipline here at the Federal level.
Now I would yield back the remainder of my time. I understand the next amendment will be offered by the Senator from Rhode Island.
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Mr. GREGG. Mr. President, first I want to congratulate the Senator from Rhode Island. I think this is a good amendment, and it is done the right way. He has basically come to the conclusion--and a lot of us agree--that IDEA could use some more money, that there is an unfunded mandate.
There are some issues here, of course, as to whether, like a dog chasing its tail, we can ever catch up with the level of Federal funding that should be in IDEA because some States in some ways are overcoding too many kids in the system. But that is a debate for another time.
We have already tried to address that in the most recent IDEA reauthorization. But his initiative of putting $2 billion into this account is an appropriate one and he has done it the right way. He basically says within the budget we are going to set the priorities working with a spending cap. He is saying let us do it as an across-the-board cut and put the additional money we would have into the IDEA account. It is a legitimate way to approach this 920 act because it actually delivers the message which the Senator from Rhode Island wishes to deliver, and as it is executed the Appropriations Committee would actually get the money over there into that account with an across-the-board cut.
The argument which is made is, Well, this has no substance because the 920 account is going to be left up to the appropriators as to whether they would take the approach of the across-the-board cut, which is equally applicable in moving this budget, other than the top line cap number. The top line cap number, which is $873 billion, is the only number in this budget that has force of law. Everything else below that--$400-plus billion that we have allocated in this budget theoretically to defense, an extra $1.5 billion we put into education, the money we put into health care, the money we put into environmental protection--all of those are suggestions essentially to the appropriate committee, which is the Appropriations Committee in this context, in the discretionary account. They may or may not follow it.
But I think the Senator from Rhode Island is bringing this forward in a way which is responsible, staying within the caps provision increase, and proposing an across-the-board cut to pay for it. He is giving responsible suggestions to the Appropriations Committee, which is all the budget does, anyway. It gives suggestions, and they have no binding effect other than the top line cap number, as I mentioned before. I congratulate him on the proposal. Considering the cards which we played, which were dealt relative to the budget, he is doing it in the proper way.
We all recognize that there is a certain illusoriness to all of these numbers because they do not have the force of law. But even the amendment offered by Senator Kennedy has no impact other than to raise the cap by $6.5 billion. It doesn't raise taxes. He claims it does. But we have no authority to raise taxes in this resolution, and we are certainly not doing anything that would legally bind the Finance Committee to raise taxes. All he is doing is raising the caps by $25 billion. That could be spent on defense, all of it, if the Appropriations Committee wants to do that. He is suggesting that it be spent somewhere else.
The Senator from Rhode Island is at least doing it the right way, which is living within the spending priorities which will make the Government fiscally responsible on the discretionary side of the ledger, but within those let us allocate some more money for IDEA. He has a good proposal. It is the way it should be done. I congratulate the Senator from Rhode Island.
Mr. CHAFEE. Mr. President, will the Senator yield for a question?
Mr. GREGG. Certainly.
Mr. CHAFEE. Mr. President, the State of New Hampshire doesn't have an income tax or State sales tax. All of its revenue is generated by a property tax. Am I correct?
Mr. GREGG. We do have a State corporate income tax but all of the school funding in the State essentially is generated by local property taxes--the vast majority of it. There is a sliver of it that comes from the State government but it is not a significant amount in the treasury overall.
Mr. CHAFEE. Does the Senator hear from his school committees and local councilmen about the rising costs of special education and the difficulty that places on the property tax payer?
Mr. GREGG. Mr. President, there is no question that the Senator from Rhode Island has touched on an important subject with this amendment, which is the fact that the Federal Government has never fully lived up to the commitment to special education as initially made. We have made dramatic progress under this President, especially in comparison to the prior Presidency. We are almost up to 20 percent of funding. But there was an original commitment of 40 percent. Certainly every community in New Hampshire--and I am sure Rhode Island--feels they have to pick up a Federal share from here and take it from some other part of the education which they think is important in order to pay the Federal share of special education.
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Mr. GREGG. Mr. President, the practical effect of this is to raise taxes. That is the only effect it has. If you take the pay-go language and put it on top of the 5-year budget we offer today, the only thing it will impact is the fact that taxes will have to be increased to pay for extending the rate cuts, for extending the repeal of the death tax, and capital gains and dividends. It is not pay-go, it is tax-go.
For all practical matters, this is a vote on whether you want to raise taxes.
I yield back the remainder of my time.
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Mr. GREGG. Mr. President, this budget commits a tremendous amount of resources to education, as has this President. A few weeks ago, we voted for an additional $9 billion for student assistance for students who are going to college. This budget adds in an extra $1.5 billion. In addition, it sets up a reserve fund with $6 billion for the American competitiveness proposal. It fully funds vocational technical education.
So the commitment is strong in this budget, as it has been for many years under the leadership of this President, with dramatic increases in education.
This amendment would significantly raise the caps by $6.3 billion and in turn would raise taxes by $6.3 billion. It is a classic tax-and-spend amendment.
I hope Members will vote against it.
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Mr. GREGG. Mr. President, I rise in opposition to the amendment, although I yielded time off my time in support of the amendment to Senator Harkin. I was happy to do that, obviously.
First, on the substance, Senator Harkin was speaking to the President's budget, not to this budget. I can understand, he probably has a lot of things going on and maybe has not had the time to take a look at this budget. But we actually--assuming we had any force of law in allocation, which I pointed out a number of times is not the case--took $3 billion and moved it from Defense over to the Labor-HHS bill--$3 billion; $1.5 billion for education, $1.5 billion for health care.
In fact, we address some of the concerns specifically. We upped NIH by $1 billion. We put enough money in so the GEAR UP and TRIO and voc ed was fully funded. We increased funding for bioterrorism. So we adjusted.
Furthermore, we put in a reserve fund of $6 billion to address the American Competitiveness Initiative, which is the initiative of the Senator and the Presiding Officer. And that is a big number.
We have made a strong commitment toward education, and we have basically relieved the pressure that was put there by the President's budget--which would have actually cut, by going to levels slightly above a freeze--with our budget. So I think a lot of what the Senator from Iowa said may have been directed to the President's budget, but it is not accurately directed at this budget.
Secondly, I have a problem with the way this is paid for. This is an advance appropriation. What is an advance appropriation? Well, basically, it is borrowing from next year to fund things this year, which creates a hole in the next year, which then has to be filled.
So as a practical matter, what you are doing is adding to debt, but, more importantly, you are adding to the base and you are basically creating a problem for the next budget, as well as creating significant increases in spending in this budget.
This advanced appropriation in this amendment is, I think, about $8 billion, or something in that range. The practical effect of it would be that advanced appropriations--which have grown over the years, unfortunately, and are now up to about $23 billion--would jump to about $30 billion--$30.1 billion, $30.2 billion. That is a big number because that number gets carried forward every year. It is not good budgeting to do that type of action, where you borrow from a future year to fund this year and represent that you are basically doing sound budgeting. That is not sound budgeting.
Advanced appropriations are a thin ice of budgeting to step on. We should not be moving in that direction. We should not be expanding the advanced appropriations. We have carried the $23 billion advanced appropriation number in this bill. That has, over the years, been built up. But I do not want to have to, next year, have a $30 billion advanced appropriation, which is what this amendment would create if we were to approve it.
So I must, regrettably, oppose this amendment. I understand the position the chairman and the ranking member of the subcommittee for Labor-HHS find themselves in. But I think there are other ways to solve this problem. I hope we would not do it in this manner. Plus, I do think we did make a genuine attempt within this budget to try to address these concerns by moving $3 billion into these accounts.
With that said, I believe we are on to the amendment by the Senator from Michigan.
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Mr. GREGG. Mr. President, I greatly respect the Senator from Michigan. I especially respect and appreciate her dedication to trying to make sure we straighten out this issue of interoperability because she clearly has identified it as a critical issue in the area of first responders. And we know it is. We know it has to be addressed. I don't, however, agree with the approach she is taking, which is essentially to put significantly more dollars into the pipeline. Why? Basically for this reason: In the last budget process, the Commerce-State-Justice committee put $2 billion of additional money into the interoperability pipeline. Then in the deficit reduction bill, which no Democrats voted for, but this was not the big item that caused that to happen--actually, I am sorry, I think two Democrats voted for it--we put an additional billion dollars into interoperability. And really a large part of that was in response to some of the points that have been made by the Senator from Michigan. So she has done a pretty good job of energizing money flowing into these accounts--in fact, so much so that when you tie that in with the first responder funds which are already in the pipeline, $5 billion of which have not been drawn down yet, which funds will go disproportionately, I suspect, toward interoperability issues, easily being a plurality the way the funds will be spent, if not a majority of the way the funds will be spent, you literally have a huge amount of money in the pipeline headed out to the States, to communities for the purposes of addressing the issue of interoperability.
The problem isn't dollars right now. The problem is the technical ability of different agencies to agree on an interoperable standard. Every State sees it. You certainly see it across State lines where State police organizations have trouble communicating with local police organizations and fire departments have a different system than the other police in the community. And then the Federal agencies on top of that--Customs, Immigration, FBI, ATF--have problems communicating with the State people. The county people have problems communicating with the State people. They have all, over the years, bought different systems. There is already in place a massive amount of communications equipment out there, and you can't just replace it all. We could never afford to do that. You have to create an atmosphere where, as they either upgrade or they change or they basically agree to try to work together, there is a system to accomplish that.
The problem we have today is that those systems are not in place. Most of the State plans we have received that involve interoperability as an element--every State plan has interoperability as one of its priorities--have not been executed because of the fact that they can't figure out how to do interoperability. Literally, they have been negotiating now for 5 or 6 years on a regime, an understanding, a protocol for general interoperability, and they can't reach agreement.
What is happening is--and the Senator from Michigan makes this point, too. I don't know if she did in her statement; I regrettably had to leave the Chamber--there is a lot of inventiveness out there. We have turned loose the creative juices of America on this because there is a lot of money in the pipeline, and a lot of people want to participate in it. There are a lot of good ideas coming up quickly as to how to do interoperability without having to do massive hardware changes, and how you can get different systems built by different contractors to communicate with each other. They are not in place yet, but the dollars are there to buy them. A lot of money is there to buy them. We do not need this money at this time.
At some point in the future, we are going to need the money--when the house starts to get in order and there is a sugaring off of what the proper technology is and maybe there is an agreement on a national standard or something, then we will need some more money. We will put more money in at that time. To put more money in at this time is unnecessary, to be very honest. I am afraid we will simply overwhelm the system with dollars and end up with a lot of blue lights and cruisers being purchased and not a lot of good, standardized, interoperable communications systems. That is one reason I oppose it.
The other reason I oppose the amendment is it would raise the caps. I don't think we should be raising the caps in this budget. I made that case about 15 times in the last 2 days, so I won't state that case. It is a pretty valid case. We are opposed to this amendment. I appreciate the energy of the Senator from Michigan on this issue. I think she has had an impact already, and I believe it is reflected in the fact that there is so much money presently in the pipeline. But it has not been spent. Until there is a better plan to spend it, I don't think we need additional funds.
I yield back our time on this amendment. I think the Senator's time has expired; is that correct?
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Mr. GREGG. Mr. President, this amendment, as the Senator from New Jersey mentioned at the end, raises taxes. It raises the cap, so it spends a lot more money. And in the context of overall port security, although it makes a statement, it is not necessarily going to do a whole lot more than what we are doing already.
There is, of course, because of the Dubai Ports World situation, a human cry for more port security. We have attempted over the last few years to try to address port security, and there is still a lot more to do. But there has been a very large commitment to port security, and there has been a lot done. Over $10 billion has been committed to port security since 9/11. By next year, 2007, 85 percent of all cargo coming into the United States will be screened. We have in place at the 42 largest shipping ports that ship to the United States significant infrastructure which actually checks the cargo that is going on those ships.
What has happened here is that there has been a decision made, and it is the right decision, that the best way to protect ourselves is not to wait for the cargo, the container to end up on a shipping dock in Newark or a shipping dock in Long Beach, but to have that container checked before it gets on the boat that is going to bring it across the ocean to Long Beach or to Newark.
So a huge amount of infrastructure commitment, people and personnel and technology, is being put into that goal. Of course, it doesn't get scored as port grants, which is what this amendment is offering up, a port grant. Rather, it actually does what the port grant money can't do: it gives us offshore protection of cargo coming into the United States.
As I said, by 2007, as a result of this initiative, 85 percent of all cargo will be screened. In addition, the Coast Guard has been tooled up so that it can actually physically go out and stop a container vessel or a tanker on the open ocean if it is concerned that the vessel is coming from a port that doesn't have adequate security relative to the loading of the ship, or if it has some other concern, such as information that the ship might have some threatening cargo. We have put in place an outer curtain, which the Coast Guard is pursuing. So a lot has been done.
Not only has a lot been done, but we are still doing more. In the last budget from Homeland Security, we dramatically increased port security funding for this type of a grant program that the Senator from New Jersey has proposed. In this budget, we propose $2 billion of new spending for border security, which can be used for port security in the underlying budget over what the President asked for, and then we proposed another $2 billion of border security which can be used for port issues in the supplemental budget, which runs parallel to this basic budget.
So that is $4 billion of new funds which are going to flow into border security, of which a fair amount will go into the ports. So the commitment has been significant and continues to be significant, and it is hard to claim that we aren't actually starting to get results from what we are buying.
A lot of this port grant money, on the other hand, which goes to the port that is in place, that goes to the facility on American soil, is ending up, unfortunately--maybe not so much going to--it is going to security needs, but it is going to security needs which traditionally would have been paid for by the managers of these ports. Basically what they are doing is they are taking the Federal grant money, and instead of building a fence, which they should have built anyway and they needed anyway, or instead of building major lighting which they needed and should have put in place anyway out of their own funds, they are replacing those funds with Federal dollars and using Federal dollars to do what they should have done anyway. So there is an issue there as to whether we are getting the most bang for the buck through the Port Security Grant Program.
But, in any event, independent of that, to represent that this has not been a very robust effort in the area of port security is wrong. Is there a way to go? Of course there is a way to go.
The Senator from New Jersey is suggesting that we should physically inspect every cargo container coming into the United States. We don't physically inspect every car that comes across our border. We don't physically inspect every individual who comes across our border, or every piece of luggage that comes across our border. And there is a reason for that. It is called: You can't do it and still have an economy that is going to function.
What we do, however, is set up a very aggressive regime at these various ports around the world that are shipping to us, especially the major ports where we check for what we think is the most threatening potential cargo, which we all know what it is. And we are expanding that regime out beyond those shipping ports to the actual place where the containers are filled and putting in place certification programs which are reviewed and which have on-the-ground inspection capability.
Is there more to do? Yes, there is more to do, no question about it. But the point is, this budget assumes there is more to do and puts the money in it to do more, significantly more. However, this is the cause du jour--I recognize that--and the relevance of what is actually being done isn't considered. The relevance of the money that is in the pipeline isn't considered. It simply becomes an issue of throw more money at it and therefore claim that we are resolving the problem faster.
As a practical matter, the $4 billion that we have allocated towards border security in this bill is a huge increase, and it significantly increases accounts. The $10 billion that we have already put into this effort is showing results, and we are on the path to a very organized approach toward how we deal with our ports. We intend to do more, and we believe we have funded that adequately in this bill.
However, I know there are going to be additional amendments. I think the leader has an amendment on this point which is at least paid for directly. The biggest problem with this amendment is it is not only a large number, especially in the context of the $4 billion that is already there on top of that, but it is a number that is paid for with a tax increase. I do not believe increasing taxes is the right way to go, nor do I believe breaking the cap is the right way to go.
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Mr. GREGG. Mr. President, I appreciate the amendment of the Senator from West Virginia. I understand the personal involvement and concern he has for the mine safety in his State and the extraordinary tragedies they have experienced. I hope there is a way we can work this amendment out. In its present form it does raise taxes to pay for it, which I will not be able to support, but I am hopeful we can work something out.
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Mr. GREGG. Mr. President, in a second we are going to go to the Senator from Ohio, who is going to speak relative to the resolution. But I want to quickly respond.
The Senator from Washington has proposed an amendment which raises the cap, and it raises taxes. There is a better way to do it. The better way is Senator Santorum's amendment, which will come tomorrow, which says we identify CDBG as a priority, and within the caps we find the money for CDBG recognizing we may have to do an across-the-board cut of other accounts. That is the right way to do this. It sets priorities.
The Senator from Washington is the ranking member on the appropriating committee which will have responsibility for this. Historically that committee has always funded this account. They have always found this to be a priority, and they have always found the money to do it. I do not think that history is going to change this year.
I do think Senator Santorum has the right way to do this. We should not be passing a tax-and-spend amendment, which is what this amounts to.
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