Omnibus Appropriations Act, 2009

Floor Speech

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Mr. GREGG. Madam President, I rise today to speak a little bit about where we are in our economic situation in this country and specifically as it is affected by the President's budget as he has brought it forward. I want to begin by acknowledging my respect and appreciation for what this administration has tried to do in the area of stabilizing the financial industry of this country. They, in conjunction with the Chairman of the Federal Reserve, Treasury Secretary Geithner, and Larry Summers, the Special Adviser to the President, along, obviously, with the input of Chairman Volcker, have put together a very comprehensive effort to try to use the strengths of the Federal Reserve and the Federal Government to basically inject liquidity into the system and put stability into the financial system of the country.

There has been a tremendous amount of commentary on this and much of it has reflected a lack of confidence in the initiatives that have been brought forward by this administration because, in many instances, they have not been as specific as they might have been. But the general thrust of what the administration has done in this area has been positive and I believe we are starting to see it work. The initial TARP dollars, which were put in by the prior administration, did stabilize the banking industry during a critical time. That has been followed on with additional TARP dollars from this administration, followed on by the initiatives from the Fed in the area of TALF, which basically is potentially over $1 trillion of support for new loans in the area of consumer credit and maybe commercial real estate; trying to do something in the mortgage area--initiatives have begun there using the FDIC and also the Treasury and the Fed again; in the area of basically underwriting the stability of major banking systems in the country, significant efforts have been made; and we are now hearing there is going to be an additional effort made to take toxic loans off the balance sheets of the banks using the leverage from the private sector.

All this has been, in my opinion, the right way to go. I didn't support the stimulus package because I thought it was unfocused and I did not think the dollars were used as effectively as they might. I wanted to see the dollars in the real estate area. But as a very practical statement, on balance the efforts of this administration to try to stabilize the financial industry, because stabilizing the financial industry is critical to getting the economy going, have been positive in my opinion. There is still a long way to go and there are more specifics that need to come and I guess more of that is going to come this week.

But that initiative to try to get this economy going and try to address the issue of people's concerns about their jobs and the value of their homes and their ability to live their lives in a constructive way in the face of severe financial distress which is being caused by this recession, stands in juxtaposition to this budget they have sent up. It is as if they have a ying and yang personality down there at the White House because they sent us up a whole group of ideas in the area of stabilizing the financial industries and trying to get the economy going with their stimulus package, the purpose of which is to lift the economy using the Federal Government.

Then they sent us up a budget which essentially creates a massive expansion in spending, a massive expansion in taxation, a massive expansion in borrowing, not only in the short run when you might be able to justify more spending, when you can justify more spending and borrowing, but as far as the eye can see with the practical effect of having a dampening effect, throwing a wet blanket on top of this country's productivity capabilities and this country's ability to be moving forward as an entrepreneurial society.

Look at the budget in specifics. The budget, in the short run, spikes the deficit dramatically. I am not going to argue with that. That may be necessary--maybe not at the levels they are doing it, but it may be necessary. It is necessary in order to put liquidity into the market, put liquidity into the American economy.

But then it continues to expand the size of Government; 28 percent of GDP will be the size of the Government this year. That is massive compared to our historical size of the Government as part of the GDP. That has got to come down. It does come down, but it does not come down all that much. By the fifth, sixth, seventh year, we still have Government spending that is 22, 23 percent of GDP. We have a deficit in the fifth year that is 3 to 4 percent of GDP.

The debt of the Federal Government, the public debt, is doubled in 5 years under this budget. It is tripled in 10 years under this budget. Taxes are increased by $1.4 trillion under this budget, $1.4 trillion. What are those taxes used for? Not to reduce the deficit but to expand the size of the Government even further.

Health care is essentially put on a track toward nationalization. Educational loans are nationalized. Discretionary spending goes up by almost three-quarters of a trillion dollars. And there is absolutely no restraint in any accounts of any significance on the spending side of the ledger in this budget. So that by the time we get to the fourth and fifth year of this budget, rather than seeing the numbers come down to something that is manageable for our society, rather than seeing the debt-to-GDP ratio come down to what might be a manageable number, it remains at a very high level, 67 percent.

Historically, debt to GDP in this country has been about 40 percent. Those are numbers. What do they mean? Well, essentially, instead of having a traditionally strong industrialized society, where your debt is manageable at 40 percent of your GDP, you are heading toward a banana republic society or country where your GDP-to-debt ratio is up around 70 percent. You cannot sustain that. Yet this budget presumes we are going to have a debt-to-GDP ratio of the banana republic type as far as the eye can see.

And the deficit? It is claimed that it is cut in half. Well, if you increase the deficit four times, and then you cut it in half, you do not gain very much. That is like taking four steps backward and only two steps forward. The practical effect of that is that we still end up with a deficit 4 or 5 years out, well after we are past this recessionary period, hopefully. I am sure we will be past it by then because we are a resilient nation. A deficit which is still way above the historical norm for this country, a $712 billion deficit is projected by the year 2019 under this budget, 3 to 4 percent of GDP. That is not sustainable. What is the practical effect of this?

Well, the practical effect is that we give our kids a country they cannot afford. We put on them a debt burden which basically stymies their ability to succeed and prosper.

In addition to this, you have got to look at the policies underlying this budget. What are the policies that are driving this massive expansion of Government in this massive expansion of debt? Well, they are basically policies which say, we are going to take the Government and we are going to explode its role relative to the private sector activities.

There is a proposal in this budget, as I mentioned earlier, to nationalize the student loan program. That is certainly an unnecessary act. We had a very vibrant private sector student loan program and a vibrant public sector student loan program. There is no reason we cannot have both. That is no longer acceptable. We are going to nationalize the student loan program.

There is a $636 billion place holder in this budget for the expansion of health care. They say it is a downpayment. Well, if it is a downpayment, we are talking about health care expenditures exceeding $1 trillion under this budget, growth in health care costs. Well, health care already absorbs 17 percent of the gross national product. That is about 5 percent higher than any other industrialized nation. It is not that we do not put enough money in our health care system, it is that we do not use it very well. And to increase the dollars going into health care by those numbers means what you are proposing is essentially for the Government to take over the entire health care system at some point in the future--another great expansion in the size of Government.

Then you have got this expansion on the discretionary side of the account. Every discretionary program expanding, except for defense, where they play a gimmick for the purposes of claiming budgetary savings that do not even exist on spending that will not occur.

So the goal of this budget is not to contain or to slow the rate of growth of
Government in the outyears after we are past this recession, it is rather to explode the size of Government as we move out of this recession, and put in place a government that continues to grow at a rate which the economy cannot afford and which obviously our children cannot afford.

How is this paid for, this dramatic expansion of Government? Well, most of it is borrowed, borrowed money. But some of it comes out of taxes. There are major new taxes proposed. We have all heard about the taxes on the wealthy. Let me point out that essentially what is being proposed here is that if you make more than $250,000, your income is going to be nationalized. Well, there are a lot of wealthy people who make more than $250,000, but there are also a lot of small businesses in this country that make $250,000.

That is where jobs come from in this country--the person running the local restaurant, the person running the local garage, the person who started a software company, the person who has initiated a new product, a new catalog product, maybe, selling something. All of these are small businesses, and they are across this Nation, and they are what create jobs. When you say to those folks, well, we are going to tax away whatever you make above a certain amount, $250,000, you are saying to them they do not have the assets to reinvest in their small businesses. You are basically going to create a huge disincentive. This creates a huge disincentive for small businesses to expand and for people to be added, for employees to be added to their businesses. It throws a wet blanket on the expansion of small business.

There is another tax in here that is not talked about too much. They call it a carbon tax. This is a massive new tax on everybody's electric bill. If you described it fairly, it should be described as a national sales tax on electricity. If you use electricity for anything, something in your home, if you use energy basically for anything--and almost every American does; I cannot think of anyone who does not--you are going to find yourself hit with a new tax, this carbon tax, this national sales tax on energy.

And what does it amount to? It is not a small sum. It is scored in this budget. It is understated in this budget. It is scored at, I think, $70 billion a year or something like that. That is still a lot of money, by the way. But it is understated. According to the MIT study and according to the numbers which were being used last year when this was being discussed, the actual number is closer to $300 billion, $300 billion in a brandnew tax burden on the American consumer.

And what is this tax used for? Well, it is used, in large part, for walking-around money for various constituencies who have an interest in getting money from the Federal Government. It is not used to contain the Federal Government or to reduce its size by reducing the deficit. A large percentage of these tax revenues are going to be added to various initiatives around here which are the projects of Members--worthwhile, I am sure.

But it is pretty hard to justify hitting Americans with a brandnew national sales tax on their energy bills for the purposes of expanding this Government, which is already too large to begin with. And, remember, none of this expansion in the Government taxes takes into account the huge costs which we have coming at us which we do not know how we are going to handle. Those are the costs of the retirement of the baby boom generation, for as this baby boom generation continues to retire--it has begun retiring now--it is going to generate massive costs on our Government.

We know we have $60 trillion of unfunded liability to pay for Medicare, Social Security, and Medicaid for the baby boom generation as it retires. And why is that? Why are there all of those trillions of dollars? Why is all of that money out there and obligated?

Because we have created a massive cost, and we have the largest generation in America retiring that is going to push that cost onto our children. We go from 35 million retired people to 70 million retired people, and most of that is going to occur by the end of this administration's term in office should the President be reelected.

So you would think that in this budget they would have said, well, we better start addressing that issue. We better start disciplining ourselves relative to how we are going to handle this massive increase in spending, which we know is coming at us--I call it a fiscal tsunami--as a result of the baby boom generation retiring. But, no, not one word in this budget about containing or slowing down or in any way addressing the issue of entitlement spending as a result of retirement of the baby boom generation.

The practical effect is there is an elephant in the room that we know we are going to have to address relative to cost that is not addressed, but at the same time the budget radically expands the size of Government, using resources that might have been used to address entitlement reform.

It is a budget which, if you look at it, essentially says to the productive and entrepreneurial side of our Nation: We are going to tax you. We are going to regulate you. And we are going to create an atmosphere where we are going to crowd out your ability to borrow money because the Federal Government is going to borrow so much money.

It is simply an attack on the entrepreneurial elements of our society, the people, the small business people who go out there and create jobs. That is why I said there is a conundrum here. On the one side this Government is proposing all sorts of initiatives, which I agree with, to try to float the economy using the liquidity of the Federal Government in a lot of different areas but primarily focused on getting stability back into our financial system and helping people who have mortgages that they cannot pay.

But, on the other side, you have this budget sent up here which is a clear and present attack essentially on the productive side of our ledger as a nation, while it expands radically the size of Government. So you can understand why the stock market and others are saying, whoa, what is happening here? Who am I to believe, the part of the administration which says we are going to try to get this economy going or the part of this administration that says, once we get it going, we are going to stuff it down with a major new tax burden and a dramatic expansion in Government?

So much more could have been accomplished in this budget than what has been proposed. If it had come forward with any reasonable ideas in the area of disciplining and managing the entitlement accounts, there would have been strong bipartisan support for that. But none were put on the table.

The opportunity to move forward in the area of Social Security was not taken. The opportunity to do something significant in the area of Medicare was certainly not taken in this budget, and the practical effect of that is, that if you are looking at this budget, and you are an investor from somewhere around the world buying American bonds--and, remember, most of our debt today is being bought by people outside the United States. They are basically funding our capacity as a nation to function--you are going to look at this budget and you are going to say, do I have confidence that the bonds I am buying are going to have the value that I am putting into them 5 or 10 years from now?

If I look at this budget, I am going to conclude that the American Government is not going to discipline itself, that it is going to continue to run a debt-to-GDP ratio that is not sustainable, and that, therefore, it is very likely that maybe my debt that I am buying from the United States, the Treasury bonds I am buying, are not going to be the value I am paying for them.

This budget not only stifles the entrepreneurial spirit of America in the outyears--and people looking 4 or 5 years down the road are not thinking that far now, but in October, this budget repeals many of the tax initiatives which create entrepreneurship and tax people at a heavier rate; it starts pretty soon here--at the same time it is putting at risk the value of our currency and the value of our debt. It is saying to the world: We are not going to discipline ourselves in the outyears.

When we raise taxes, which this administration is proposing--and that is what they said they would do--one presumes they would do what President Clinton did when he raised taxes. He used it to try to reduce the deficit. With the help of a Republican Congress, which limited spending, we were able to accomplish that. This budget does not accomplish that. This budget takes $1.4 trillion in new taxes and spends it on a massive expansion of the Federal Government in the area of health care and the way we finance student loans, all the different initiatives basically expanding Government's role.

The practical effect of that will be to weaken the dollar, our currency, and to cause people to question the value of our debt. That is serious. That is very serious for us as a nation.

I agree with those who say the market is confused by this administration. It is confused because, on one hand the administration is pursuing what is a necessary policy to get liquidity into the market and stabilize the financial industry, stabilize the housing industry, but, on the other hand, it has put forward a budget which is probably the largest expansion of Government in the history of the country or the largest proposed expansion of Government in the history of the country, unpaid for and, therefore, threatening the future of our children with debt they can't possibly afford.

As we move forward in this effort, I suggest a better course of action would be for this administration to come forward with some fiscal discipline. Why don't they propose some specific ideas which will address the impending fiscal tsunami? There are bipartisan initiatives in the Senate to do so. Senator Conrad and I have proposed a procedure which would allow us to put in place a process which would lead to policy, which would lead to a vote, which would actually limit and make affordable a large percentage of the outyear cost of entitlement programs as we try to fund the retirement of the baby boom generation.

Take us up on that offer. It has very significant bipartisan support. Why not take up an initiative in the area of trying to get the deficit and the debt back to the prerecession period? When we went into the recession, the debt was 40 percent of GDP. The deficit was down to about 1.5 percent of GDP. Let's get back to those numbers. If we are going to raise revenues, let's use them to reduce the deficit, not to expand the size of Government.

These are initiatives that would get a lot of Republican support, certainly on the first point. There might even be some support on the second idea of getting the deficit down. I would certainly support lowering the debt. But the proposal as put forward now is confusing. Not only is it confusing, but if it were actually put in place, it would put our country in a very serious situation as our children try to lead their lives and move forward in a nation which gives them an opportunity for prosperity.

I yield the floor and suggest the absence of a quorum.

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