Concurrent Resolution on the Budget for Fiscal Year 2005 - Part III

(1) the current tax system has been made increasingly complex and unfair to the detriment of the vast majority of working Americans;
(2) constant change and manipulation of the tax code have adverse effects on taxpayers' understanding and trust in the Nation's tax laws;
(3) these increases in complexity and clarity have made compliance more challenging for the average taxpayer and small business owner, especially the self-employed; and
(4) this budget resolution contemplates a comprehensive review of recent changes in the tax code, leading to future action to reduce the tax burden and compliance burden for middle-income workers and their families in the context of tax reform that makes the Federal tax code simpler and fairer to all taxpayers.
SEC. 514. SENSE OF THE HOUSE ON ACCELERATING INCREASED REFUNDABILITY OF THE CHILD TAX CREDIT FOR LOW-INCOME FAMILIES.
(a) Findings.-The House finds that-
(1) work is essential to promoting self-sufficient families which help children set goals in life and achieve them;
(2) workers of low and modest incomes have seen their ability to provide for their children eroded since 2001;
(3) members of the armed services serving in combat should have all the means necessary for providing for their children; and
(4) 12 million children of American workers (at least 200,000 in military families) will not benefit from the expanded child tax credit in 2004.
(b) Sense of the House.-It is the sense of the House that the increase in the refundability of the child tax credit from ten to fifteen percent of income between $10,500 and $26,625 should be accelerated by one year and should take effect in 2004; furthermore, other provisions in the tax code notwithstanding, combat pay for members of the Armed Services should be counted as earned income for the purposes of calculating refundability of the child tax credit.
SEC. 515. SENSE OF THE HOUSE REGARDING A TRIGGER MECHANISM FOR PRESCRIPTION DRUG PRICE NEGOTIATION.
(a) FINDINGS.-The House finds the following:
(1) The cost of the new Medicare law, estimated by the Congressional Budget Office before its passage to be $395,000,000,000 over ten years, has now been estimated by the Department of Health and Human Services to be $534,000,000,000 over ten years. Rising drug prices can increase the cost of the drug benefit and could end up shifting additional cost burdens to Medicare beneficiaries.
(2) Prescription drug spending increased 15.6 percent in 2002. These rising costs are one of the primary drivers of increasing health care spending, which grew 9.3 percent in 2002.
(3) The Veterans' Administration as well as every private insurer depends on bulk negotiation to keep drug prices down.
(4) According to a study by the Inspector General of the Department of Health and Human Services, Medicare payments for 24 leading drugs in 2000 were $887,000,000 higher than actual wholesale prices available to physicians and suppliers and $1,900,000,000 higher than prices available through the Federal supply schedule used by the Department of Veterans Affairs and other Federal purchasers.
(5) The private prescription drug plans provided for in the Medicare law do not exist in the marketplace. Therefore, it is impossible to predict whether these private plans will in fact be able to acquire substantial discounts through negotiation. In addition, private plans cannot take advantage of the full purchasing power of 40,000,000 beneficiaries.
(b) SENSE OF THE HOUSE.-It is the sense of the House that-
(1) legislation should be adopted which would establish a trigger mechanism for negotiation of prescription drug prices by the Secretary of Health and Human Services; and
(2) this legislation would mandate that at any point when the expected ten-year expenditures for fiscal years 2004 through 2013 for Public Law 108-173 exceed the Congressional Budget Office estimate for this legislation, the Secretary of Health and Human Services would be required to immediately enter into direct negotiations with pharmaceutical manufacturers for competitive drug prices.

The CHAIRMAN. Pursuant to House Resolution 574, the gentleman from South Carolina (Mr. Spratt) and a Member opposed each will control 30 minutes.
The Chair recognizes the gentleman from South Carolina (Mr. Spratt).

Mr. SPRATT. Mr. Chairman, I yield 2 minutes to the gentlewoman from Connecticut (Ms. DeLauro).

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Mr. SPRATT. Mr. Chairman, I yield 3 minutes to the gentleman from Maryland (Mr. Hoyer), the Democratic whip.

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Mr. SPRATT. Mr. Chairman, I yield myself 1 ½ minutes to respond to the gentleman.
The gentleman may not be aware of it, but this budget resolution which I am now offering as an alternative provides $6 billion more for homeland security than the Republican resolution, the committee resolution; it provides $5 billion more for law enforcement programs under the Justice Department; it provides the very same amount for national defense. So his criticisms are highly off the mark.
Let me also take a minute to respond to my good friend, the gentleman from Iowa (Chairman Nussle) with respect to tax cuts.
This resolution in section 201 says very clearly, it is the policy of this budget resolution to balance deficit reduction to middle-income tax relief. In that respect, we call for the Committee on Ways and Means to reconcile and extend the child tax credit, which will expire otherwise; the marriage penalty relief; the 10 percent bracket; to provide relief from the alternative minimum tax; to eliminate estate taxes on all but the very largest estates; to extend the research and experimentation tax credit; to accelerate the refundability of the child tax credit from 15 percent; and to include combat pay in determining refundability; and on down the list with five more illustrations of where we are calling for middle-income tax relief.
Mr. SPRATT. Mr. Chairman, I yield 2 ½ minutes to the gentleman from Missouri (Mr. Skelton), the ranking Democrat on the House Committee on Armed Services.

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Mr. SPRATT. Mr. Chairman, I yield myself 1 minute to respond to my good friend, the chairman of the committee on which I also serve with the gentleman from California (Mr. Hunter).
I think he would readily agree, having served in the Army, that morale is an important operational necessity. What we are trying to provide for in our resolution is, we have $422.7 billion next year for national defense, plus a huge supplemental. We are simply saying, can we not give some primacy to personnel benefits and move around just a bit of that money to address a long-standing bone of contention, namely, the fact that widows of deceased service members have drastic reductions in their pensions when they reach the age of 62.
The gentleman knows that amongst reservists there is a big issue about TRICARE. We should be doing something to extend TRICARE to reservists in certain situations. Certainly, I think the gentleman supports the selected pay increases for the senior NCOs and junior officers, critical to keeping that core component of the services intact.
That is what we are trying to provide for, Mr. Chairman. That is all. We are trying to say, out of $422 billion, that kind of money, surely we can give some primacy to these priorities.

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Mr. SPRATT. Mr. Chairman, I yield myself 30 seconds just to say to the gentleman, the House Republican resolution calls upon the House Committee on Armed Services, by May 15, to come up with $2 billion a year in permanent savings out of operations that are now deemed to be wasteful or inefficient, and then to allocate those savings to some additional priorities.
We are saying the same thing. We simply picked up on that idea and said, fine, here are three good personnel priorities to which this $2 billion in savings could be committed every year.

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Mr. SPRATT. Mr. Chairman, I yield myself 15 seconds. Selected pay increases and TRICARE for reservists are for fighters, warfighters, not for nonoperational purposes or retirement purposes.
Mr. Chairman, I yield 2 minutes to the gentleman from Chicago, Illinois (Mr. Emanuel).

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Mr. SPRATT. Mr. Chairman, I yield 30 seconds to the gentleman from Illinois (Mr. Emanuel).

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Mr. SPRATT. Mr. Chairman, I yield 1 minute to the gentleman from Illinois (Mr. Emanuel).

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Mr. SPRATT. Mr. Chairman, I yield 30 seconds to the gentleman from Illinois (Mr. Emanuel).

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Mr. SPRATT. Mr. Chairman, I yield 1 minute to myself.
Mr. Chairman, I think the gentleman was off the floor when I read page 87, title II, section 201, outlining the tax cuts that we are calling for and stating the purpose of the resolution, which is to preserve and serve middle-income tax relief.
I would defy the gentleman to take this and in the four corners of this report show me where the $1.2 trillion additional tax increases are coming from. How is that number derived?

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Mr. SPRATT. Mr. Chairman, I yield 30 seconds to myself.
The only bracket we refer to is the bracket that would include those making over, earning, having incomes over $500,000 a year, which is our definition of a wealthy person. So we are saying do not take all the benefits away from those taxpayers that have been provided by the 2001 and 2003 tax cuts, but consider cutting them in half, for example, in order to raise the revenues, to offset the costs of extending middle-income tax provisions like the 10 percent bracket, the child tax credit and the marital penalty provisions.
Mr. Chairman, I yield 2 ½ minutes to the gentleman from Texas (Mr. Edwards).

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MODIFICATION TO AMENDMENT IN THE NATURE OF A SUBSTITUTE NO. 4

Mr. SPRATT. Mr. Chairman, I ask unanimous consent that the manager's amendment be modified with the modification I have placed at the desk.

The CHAIRMAN. The Clerk will report the modification.

The Clerk read as follows:

Modification to amendment No. 4 in the nature of a substitute offered by Mr. Spratt:

Delete section 509, Sense of the House regarding the Arctic National Wildlife Refuge.

The CHAIRMAN. Is there objection to the modification offered by the gentleman from South Carolina?

Mr. NUSSLE. Mr. Chairman, reserving the right to object, and I will not object, but just for clarification I would yield to my friend from South Carolina (Mr. Spratt) under my reservation and just ask the question, Is there any bottom line impact on a monetary basis to the budget?

Mr. SPRATT. Mr. Chairman, will the gentleman yield?

Mr. NUSSLE. I yield to the gentleman from South Carolina.

Mr. SPRATT. There is not at all.

Mr. NUSSLE. That is my understanding; and, therefore, I have no objection and believe that can be supported.

Mr. Chairman, I withdraw my reservation of objection.

The CHAIRMAN. Without objection, the modification is agreed to.

There was no objection.

Mr. SPRATT. Mr. Chairman, I yield 2 minutes to the gentleman from Texas (Mr. Rodriguez).

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Mr. SPRATT. Mr. Chairman, I yield 1 additional minute to the gentleman from Texas (Mr. Edwards).

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Mr. SPRATT. Mr. Chairman, I have no further requests for time, and I am prepared to begin the closing arguments, if I may reserve the time not yet used and add it to the 5 minutes for closure.

The CHAIRMAN. The gentleman from South Carolina (Mr. Spratt) has 5 ½ minutes remaining on this amendment, and the gentleman from Iowa (Mr. Nussle) has 8 ½ minutes remaining.

PARLIAMENTARY INQUIRIES

Mr. NUSSLE. Mr. Chairman, parliamentary inquiry. Does the gentleman ask unanimous consent to have this added on?

Mr. SPRATT. Mr. Chairman, we have to bring to conclusion this resolution, and then we move to a final conclusory debate on the surviving resolution, if this resolution does not prevail. Is that the sequence?

The CHAIRMAN. Under the rule, the last 10 minutes of general debate comes after the vote on this amendment.

Mr. NUSSLE. Mr. Chairman, parliamentary inquiry. Is it appropriate to make a request to expand that last minute by unanimous consent?

The CHAIRMAN. The debate on this amendment can be extended by unanimous consent as long as it is congruent, so both sides have the same amount of time; and so debate on the Spratt amendment could be extended by unanimous consent, but the vote has to be taken after the debate has concluded.

Mr. NUSSLE. Mr. Chairman, we have no further requests for time, so if the gentleman from South Carolina would go ahead and close debate on the Spratt amendment, I will close on it as well.

The CHAIRMAN. The gentleman from South Carolina (Mr. Spratt) is recognized for 5 ½ minutes.

Mr. SPRATT. Mr. Chairman, I yield myself such time as I may consume.

(Mr. SPRATT asked and was given permission to revise and extend his remarks.)

Mr. SPRATT. Mr. Chairman, here are the facts. In the year 2000, the last year of the Clinton administration, our budget was in surplus by $236 billion. Members can see it right there. Our deficit reduction efforts went from a deficit of $290 billion in 1992 to a surplus of $236 billion in the year 2000.
Today, this year, we are told by the Office of Management and Budget that the budget will be in deficit by $521 billion. That is a swing of $757 billion in the wrong direction.
This budget before us sails into these tidewaters calling for additional tax cuts even though the budget is $521 billion in deficit, mired in deficit as far out as the forecasts go, and even though these additional tax cuts can only have one effect, they will add dollar for dollar to the deficits that are already enormous, $521 billion this year. If Members want to see what happens if we go on this course, if we take the course plotted by the President's budget, which is essentially what this budget is all about, Members can see on the first page of the CBO analysis of the President's budget, it will add $5.132 trillion to our national debt of $7 trillion over the next 10 years. It will raise the national debt to $12 trillion.
We have heard it said on the House floor repeatedly that taxes are not part of the problem. Taxes are not all of the problem. We have had a terrible toll taken on our economy and budget by terrorism, by war, and a recession that was not fully foreseen. But look at the tax cuts on the bottom of this graph. But for the tax cuts in 2008-2009, we would be close to balance again. That is the effect that the tax cuts have on the effort before us.
Part of the problem is that not just the tax cuts have taken a big bite out of the revenue stream of the government, but the surplus of $5.6 trillion, forecast 3 or 4 years ago, has now proved to be wrong. That left about half of the pie to be divided up, and fully 60 percent of that has been allocated to tax cuts, at least over the last 2 years. It has made it extremely difficult to bring this budget to balance, and additional tax cuts that the President proposes in his budget will make the problem even more intractable, more difficult to resolve.
Here is the tax cut agenda. It adds up to $3.7 trillion over the next 10-year period of time. Add up everything that has been done to date, everything that is pending and what we believe to be politically unavoidable, such as a fix to the Alternative Minimum Tax, and the revenues to the government will be reduced by $3.7 trillion over the next 5 years.
Now, the budget before us claims it will halve the deficit in just 5 years' time. It leaves the implication to many people that this reduction in the deficit will be linear. In truth, if Members read deeply into the budget, go into something called the Analytical Perspectives prepared by President Bush's own Office of Management and Budget, here is what happens to the budget deficit after 2009: It gets worse and worse and worse over time.
It does not self-correct. It will not go away with growth. We simply cannot glide to the objective that we all seek and get there without a bold budget plan, and the budget before us, the Republican budget before us, does not do the job.
What we offer as an alternative has great merit to it.
Now, what the Republicans have said repeatedly here on the floor is that spending is the source of the problem, and surely that is part of the problem. That is a significant share of the problem. But if Members look realistically at where the spending has occurred in the budget, they will find that 90 to 95 percent of the increased spending in the budget over the last 5 years has occurred in homeland security, defense, and the response to 9/11.
The administration says we have to have progrowth policies and we have to rein in spending, but it is unlikely that defense and homeland security are going to be reined in much, and if anything, they are likely to grow in the near future. So the spikes in the budget, the ones that Members would go to if they really wanted to get the deficit down and do it by spending, would be defense.
This chart is difficult to understand, but it shows over 10 years, from 2002 to 2011, the cost of defense over and above inflation, over and above inflation, has gone up by at least $1.3 trillion, and this assumes, as this hump shows, that we do not have any cost for Afghanistan and Iraq after 2004.
If those are added in, we have a $1.5 trillion increase in defense. So then we begin to see the problem. We have a $3.8 trillion tax cut agenda, reducing revenues by that amount, and we have a defense bill, a defense program, that is costing $1.3 trillion to $1.5 trillion over and above inflation and over and above what was budgeted just 3 or 4 years ago. When we put those two together, we have in a thumbnail the problem that confronts us right now.
Here are the numbers that correspond to what I was saying, that show that defense was going up by $1.3 trillion. That assumes that the cost of Iraq ends this year; hopefully, it will, but that is doubtful. If it does not this could easily be $1.5 trillion over and above where we were a couple of years ago.

The CHAIRMAN. The time of the gentleman from South Carolina (Mr. Spratt) has expired.

Mr. SPRATT. Mr. Chairman, I ask unanimous consent to proceed for 1 additional minute.

The CHAIRMAN. Without objection, the gentleman from South Carolina may proceed for 1 additional minute.

There was no objection.

Mr. SPRATT. Mr. Chairman, we have come up with a budget which takes these difficult facts and, number one, tries to set a target date for bringing the budget to balance. We do that in 2012.
Secondly, we have tried to bring the deficit in at lower and lower rates each year, and lower than our opposition, the Republican budget on the floor. We have succeeded in doing that. We adopt the full PAYGO bill. As a consequence of what we propose in our budget resolution, we bring the budget to balance in 2012.
At the same time, within this fiscal framework, we provide for middle-income tax relief, we provide more for education, more for veterans' health care, more for science under the NSF function of the budget, for example, more for the National Institutes of Health, more for health care.
Usually we are bringing spending back up to baseline. It is not a great deal more, but it is more in almost every respect, proving we can deal with the deficit without pulling up the drawbridge. We can be compassionate conservatives, conservative in the sense that we bring the budget to balance, compassionate in the sense that we deal with the needs of the American people and our country and do not turn our backs on them.
This is a good resolution we are offering as a substitute. It is fiscally and morally responsible, and I urge that every Member vote for it.

The CHAIRMAN. Without objection, the time of the gentleman from Iowa (Mr. Nussle) is also extended by 1 minute.

There was no objection.

The CHAIRMAN. The Chair would advise Members that the 10 minutes of debate remaining after the vote is taken on this amendment is general debate time and cannot be extended in the Committee of the Whole.

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The CHAIRMAN. The question is on the amendment in the nature of a substitute, as modified, offered by the gentleman from South Carolina (Mr. Spratt).

The question was taken; and the Chairman announced that the noes appeared to have it.

RECORDED VOTE

Mr. SPRATT. Mr. Chairman, I demand a recorded vote.

A recorded vote was ordered.
The vote was taken by electronic device, and there were-ayes 194, noes 232, not voting 7

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The result of the vote was announced as above recorded.

The CHAIRMAN. It is now in order for a period of final general debate on the concurrent resolution. The gentleman from Iowa (Mr. Nussle) and the gentleman from South Carolina (Mr. Spratt) each will control 5 minutes.

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Mr. SPRATT. Mr. Chairman, if the gentleman would allow me to do something he did earlier, and that is acknowledge the indefatigable work that our staff did. Tom Kahn, my chief of staff, Joe Minarik, and the staff members in back of the aisle, Sarah Abernathy, Arthur Burris, Linda Bywaters, Dan Ezrow, Jennifer Friedman, Jason Lumia, Sheila McDowell, Diana Meredith, Kimberly Overbeek, Scott Russell, Andy Smullian, Lisa Venus, Andrea Weathers, Jason Venner and Allison Colflesh, they have worked extremely hard over the last several weeks to bring this to fruition, and I am grateful for all of their support. By the same token, I know the chairman feels the same way about his staff.

Mr. NUSSLE. If the gentleman would permit me, I would say the same about the majority staff and all of our staff, and the members of our floor staff that are here that have endured the discussion over the last number of days. I hope they got their "millions" and "billions" all in the right places. We appreciate their help as we moved through this debate

Mr. SPRATT. Mr. Chairman, I yield myself 4 minutes.
Mr. Chairman, this has been a long debate for which I am grateful because the gravity of this problem calls for it.
I wish all our effort could have been devoted to the search for common ground for a better solution; but I am afraid, as we bring it to a close, we find ourselves diverging more than converging. That is unfortunate, because the longer we put off the resolution of this problem, the more difficult it is going to become.
Here is the situation in a nutshell: the government will run a deficit this year of $521 billion. The President and our Republican colleagues claim that their budget will cut that deficit in half over the next 5 years; but, pardon me, I doubt that.
For one thing, on the spending side, they leave out any supplemental funding beyond 2005 for Iraq and Afghanistan. I wish they were right about that, but I doubt it. On the revenue side, they leave out any fix for the Alternative Minimum Tax, even though the Treasury Department tells us it will soon affect 30 million tax filers. So it is unrealistic to project revenues without it.
Worse still, after 2009, the Republican budget quits; and that is when it really gets tough. That is when I am afraid the budget gets worse. They leave us expecting that the budget is linear and that over time the deficit will be reduced, the half that is supposedly left in, but I do not think it will work out.
Let me just show you a few charts. At the expense of maybe showing you some things you have already seen, the first chart is a roller coaster. What happened when Bill Clinton came to office, President Clinton came to office with a $290 billion deficit. He put it in surplus by the year 2000 by $236 billion. It took really three budget agreements to bring it to resolution like that. Then in the last 4 years, you see this precipitous decline.
Now, I know that recession, terrorists, and war have all taken their toll on the economy and the budget; but there were conscious, deliberate choices made that caused this budget to skyrocket down.
There in another graphic portrayal is what happened. This is the Clinton administration building up surpluses, moving from deficit to surplus. Every year the bottom line of the budget is better. And here is the Bush administration, every year it gets worse and worse.
This chart shows on the far left side where we are today, looking at a deficit this year of $521 billion, a swing in the budget over the last 4 years of $760 billion, a phenomenal reversal of fiscal discipline.
Despite the claims the President makes that he will cut this in half, when we make what we regard as basic, realistic, politically inevitable adjustments to his budget, this is where you end up in 2014, not with a diminished deficit, but about where we started out, $502 billion as opposed to $521 billion. It treads water, at best.

[Time: 17:30]

The problem does not go away. It does not go away with growth; it does not go away with anything but an effort to bring it to healing.
Here is part of the problem. We have heard the Republicans say here that tax cuts have not done all of that. That is true. Part of the problem is that these surpluses were overestimated by 50 percent to start with. Now, when we look at the size of their tax cuts, the wedge taken out of the tax cuts, by the tax cuts out of the remaining surplus, that is about 50 to 55 percent. It is about half the problem that we are looking at today.
Here is another aspect of the problem right here. The tax cut agenda is $3.77 trillion over the next 10 years. This is pending, enacted tax cuts already. On top of that, we are increasing defense over the same period of time by about $1.3 trillion over inflation.
That is why, as this chart right here shows, the big hump is the cost of Iraq and Afghanistan. If we extend it, taper it off, and it concludes up here, we will add about $1.5 trillion over and above inflation to defense between 2002 and 2011, more than we anticipated spending in current services.
I am not saying it is not needed. What I am saying is, when the Republicans say we have to bring spending to heel, we have to bring spending under control, this is where it is occurring, as this next graph shows. As these three bar graphs show, over the last 4 fiscal years, 90 to 95 percent of the increase in spending over and above current services has occurred in these accounts, and they are not likely to be reined in.
Mr. Chairman, we are not coming to grips with the budget today in this resolution. Unfortunately, the resolution avoids bold strokes and it will take bold strokes, believe me, to untie this Gordian knot.
If we want to strike a bold stroke, if we want to do something about the deficit, if we want to do something about saving and making solvent Social Security, vote against this budget resolution. That is the single best thing we can do for deficit reduction and for putting our country back on fiscal track. Vote against it, send us back to the drawing board. Let us come to the House with something worthy of passage, something that will put us back on a path to a balanced budget. This resolution will not do it.

Mr. Chairman, I reserve the balance of my time.

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Mr. SPRATT. Mr. Chairman, I yield 1 minute to the gentlewoman from California (Ms. Pelosi), our distinguished minority leader.

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Mr. SPRATT. Mr. Chairman, I yield 3 minutes to the gentleman from North Carolina (Mr. Price).

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Mr. SPRATT. Mr. Chairman, I yield 6 minutes to the gentleman from Ohio (Mr. Brown) and ask unanimous consent that he be allowed to allocate portions of his time.

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Mr. SPRATT. Mr. Chairman, I yield myself 2 ½ minutes.
Mr. Chairman, the gentleman just said that we have cut taxes and revenues have gone up. In fact, taxes were cut in 2001. Revenues, individual income taxes were $994 billion that year. The next year they went down to $858 billion. The next year down to $793 billion. This year the estimate is $765 billion, well below the $994 billion level when taxes were cut on individuals. The facts simply do not bear out the statement he made.
Let me also straighten out some other facts. First with respect to Medicare. The chairman, in putting together his mark, decided that he would adopt the CBO baseline for Medicare spending as opposed to the OMB baseline, which was $535 billion. CBO is $400 billion. So ignoring the President's actuaries, he put in the lower number. We, in order to have an apples-to-apples comparison with that resolution, have adopted the CBO baseline. Also, there is no difference between us in Medicare benefit spending. However, because the administration of the program can be improved, we provide $805 million more over 5 years for Medicare administration.
Also, on the mandatory side, we provide $8 billion for the Family Opportunity Act, an act that has enjoyed bipartisan support because it provides Medicaid coverage to children with special needs in families who otherwise would not qualify for Medicaid and cannot obtain private insurance. This is compassionate conservatism. We provided $8 billion to fund that program so we can finally get it established, and we added two more provisions in our budget resolution.
First, we said if the price of Medicare, in fact, exceeds $400 billion, then the prohibition against negotiating drug prices included in the Medicare prescription drug law should be suspended and we should negotiate lower prices. Secondly, we said take some of the excessive subsidies provided for the HMOs and redeploy that money. In the Committee on Ways and Means, we have got reconciliation instructions to that effect. Redeploy that money to make the Medicare prescription drug benefit better. We have a manifestly better set of provisions for Medicare and Medicaid in our budget resolution.
Mr. Chairman, I yield the balance of my time to the gentlewoman from Oregon (Ms. Hooley).

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