The Budget

Mr. CONRAD Mr. President, the budget circumstance we confront as a nation is clear. We are on a completely unsustainable course. The occupant of the chair knows this well as a very valued member of the Budget Committee. We are currently borrowing 40 cents of every dollar we spend. That, obviously, cannot continue.

The other side has criticized those of us on our side for not going to a budget markup. The reason we have not is this is not a typical year in which the Republicans put up a budget resolution in the body they control and we put up a budget resolution and we go to conference committee to work out the differences. Something very different is occurring this year. There is a leadership negotiation with the highest leaders of the Republican Party in the House and the Senate, the highest leaders of the Democratic Party in the House and the Senate, meeting with the Vice President of the United States, on a plan to put in place a 10-year effort or perhaps a 5-year plan to deal with the deficits and debt.

In fact, the Republican leader has made this observation:

[T]he discussions that can lead to a result between now and August are the talks being led by Vice President Biden. ..... That's a process that could lead to a result, a measurable result, in the short term. And in that meeting is the only Democrat who can sign a bill into law; in fact, the only American out of 307 million of us who can sign a bill into law. He is in those discussions. That will lead to a result.

It makes no sense for us to go to a budget markup at this moment that would simply be a partisan markup when bipartisan efforts are underway.

Last year, for 8 months, I participated in the President's fiscal commission--10 Democrats, 8 Republicans. At the end of that emerged the only bipartisan plan that has come from anywhere so far. Five Democrats supported it; five Republicans supported it; one Independent. Mr. President, 11 of the 18 commissioners voted for that plan to get our deficits and debt under control. We have underway this new effort, a leadership effort, with the President represented at the table. We ought to give that a chance before we pass a budget resolution that may be required to implement any plan they can come up with.

The hard reality of what we confront is simply this: This chart shows the spending and revenues of the United States going back to 1950--more than 60 years of the revenue and expenditure history of the United States. The red line is the spending line. The green line is the revenue line. What jumps out at you is that spending as a share of our national income is the highest it has been in 60 years. On the other hand, revenue is the lowest it has been in 60 years as a share of national income. So that is the reason we have record deficits.

I hear all the time the other side of the aisle: It is a spending problem. When you have a deficit, that is the result of the difference between revenue and spending. We have a spending problem, yes, indeed--the highest spending as a share of national income in 60 years. We also have a revenue problem--the lowest revenue we have had as a share of national income in 60 years.

So now the House has sent us a plan, the Republican budget plan, and the first thing they do is cut the revenue some more. Revenue is the lowest it has been in 60 years, and the first thing they do to address the deficit is to cut the revenue some more. In fact, they cut, over the next 10 years, more than $4 trillion in revenue. For those who are the wealthiest among us, they give them an additional $1 trillion in tax reductions. By extending the top rate cuts, by extending a $5 million estate tax exemption, by cutting the top rate down to 25 percent from the 35 percent it is today, they are giving massive new tax cuts to the wealthiest among us.

Their average revenue during the 10 years of their plan is 18.3 percent. You can see from this chart, the last five times the budget has been balanced, revenues have been around 20 percent: 19.7 percent, 19.9 percent, 19.8 percent, 20.6 percent, and 19.5 percent. The revenue plan they have would have never balanced the budget in the last 30 years.

If we look at what has happened on the revenue side of the equation, here is what has happened to the effective tax rate for the 400 wealthiest taxpayers in the United States. Since 1995, when the effective tax rate on the wealthiest 400 was about 30 percent, that effective rate declined to 16.6 percent in 2007.

Warren Buffett has said that his executive assistant pays a higher tax rate than he does. Well, how can that be? The reason that happens is because Mr. Buffett has most of his income from dividends and capital gains, taxed at a rate of 15 percent. His executive assistant is probably taxed at a rate somewhere in the 20, 25-percent range.

We have a circumstance in which we have the lowest revenue in 60 years, and the House Republicans have sent us a budget that says: Let's cut it some more. Let's cut it another $4 trillion, and let's give $1 trillion of that to the wealthiest among us.

If you look at what our friends are proposing, when we have the largest deficits since World War II, they are proposing to give those who earn over $1 million a year a tax cut, on average, in 2013, of almost $200,000. For those earning over $10 million, they would give them, on average, a tax cut of $1,450,000--this at a time when we have record deficits. What sense does this make? It makes no sense.

What are they doing to offset these massive new tax cuts for the wealthiest among us? They have decided the answer is to shred the social safety net that has been created in this country over the last 60 years. They have decided to shred Medicare--shred it. They have decided to shred program after program so they can give more tax cuts to those who are the wealthiest among us.

Here is what a top former President Reagan adviser said when he looked at the House budget proposal. Remember, this is not a Democrat. This is a top former Reagan economic adviser. This is what he said. His name is Bruce Bartlett. He said in his blog about the proposal from the House Republicans on the budget:

Distributionally, the Ryan plan is a monstrosity. The rich would receive huge tax cuts while the social safety net would be shredded to pay for them. Even as an opening bid to begin budget negotiations with the Democrats, the Ryan plan cannot be taken seriously. It is less of a wish list than a fairy tale utterly disconnected from the real world, backed up by make-believe numbers and unreasonable assumptions. Ryan's plan isn't even an act of courage; it's just pandering to the Tea Party. A real act of courage would have been for him to admit, as all serious budget analysts know, that revenues will have to rise well above 19 percent of GDP to stabilize the debt.

Let's go back to that chart that makes the point that Mr. Bartlett is making: that the five times the budget has been balanced around here in the last 30 years, the last 40 years--1969, 1998, 1999, 2000, and 2001--by the way, those last four all during the Clinton administration--you can see what the revenue has been: nearly 20 percent of GDP in every one of those years. Revenue today is 14.5 percent of GDP. It is no wonder we have a problem with deficits. You combine the high spending we have now with the low revenue, and you have record deficits.

Our friends on the other side have decided the first thing you do when you have record deficits and the lowest revenue in 60 years is to go out and give more tax breaks to the wealthiest among us.

Here, as shown on this chart, is what they do to health care in the United States. No. 1, end Medicare as we know it. Replace it with a voucher system. They would reopen the prescription drug doughnut hole that means seniors have to pay more of their prescription drug costs. They would block grant Medicaid that ends the countercyclical nature of the program. They would defund health reform, increasing the number of uninsured by 34 million people. Mr. President, 34 million more Americans would not have health insurance if the plan that is before us would pass.

When I say they are ending Medicare as we know it, here is why I say that. Right now, in traditional Medicare, the individual pays about 25 percent of the cost. The rest is paid by Medicare. But look what the House Republican plan would do. It would dramatically increase the health care spending by seniors. Instead of paying 25 percent of the bill, seniors would be expected to pay 68 percent of their health care costs.

That is what the Republican plan is about: very generous additional tax breaks to the wealthiest among us. For those earning more than $10 million a year, they would give, on average, a $1,450,000 tax reduction. To make up for it, they would say to seniors: Instead of paying 25 percent of your health care costs under Medicare, you pay 68 percent. What would that mean in dollar terms? Seniors would go from paying $6,150 a year to $12,500 a year.

That is the Republican plan that is before us. That is the budget plan we are going to vote on later this evening. Anybody who cannot see that is a shredding of Medicare, that is a shredding of the social safety net, just is not looking very closely.

The former Republican Speaker called the House Republican Medicare proposal ``right-wing social engineering.'' Those are not my words. Those are his words. Here is the interview. On ``Meet The Press,'' on May 15, Mr. Gregory, the host, asked this:

Do you think that Republicans ought to buck the public opposition and really move forward to completely change Medicare, turn it into a voucher program ..... ?

Mr. Gingrich's answer:

I don't think right-wing social engineering is any more desirable than left-wing social engineering. I don't think imposing radical change from the right or the left is a very good way for a free society to operate.

This budget that is before us is not just radical with respect to what it does to Medicare, what it does to the revenue of the United States. You look at every part of this budget, there are no savings in defense after we have had this massive defense buildup. From 1997 to 2011, you can see spending on defense has gone from $254 billion a year to $688 billion a year. Even the House Budget Committee chairman, Mr. Ryan, who is the architect of this plan, has said:

There are a lot of savings you can get in defense. There's a lot of waste over there, for sure.

That is what he said about defense spending. Here is what he did about it. He increases it dramatically, from $529 billion--this is just the underlying defense budget; this does not count the war funding--he increases the regular defense budget from $529 billion, in 2011, to $667 billion by 2021.

He did not cut one thin dime. After saying there is lots of waste there, lots of places for savings, after the Secretary of Defense himself has said they have to restrain spending, after the Secretary of Defense himself has proposed $178 billion of savings, the budget before us does not save one dime out of defense. Instead, it increases it dramatically from $529 billion to $667 billion, and that does not count war funding. War funding would be on top of it.

This budget before us, the Republican budget from the House, also takes some of the fundamentals of making our country strong and cuts them dramatically.

Education is No. 1. I was raised by my grandparents. My grandmother was a schoolteacher. She used to say: In our household, No. 1 is education, No. 2 is education, and No. 3 is education. We got the message.

Let me read what two of the country's foremost economists have said about the importance of education to the U.S. economy: an educated population is a key source of economic growth. Broad access to education was, by and large, a major factor in the U.S. economic dominance in the 20th century and in the creation of a broad middle class. Indeed, the American dream of upward mobility, both within and across generations, has been tied to access to education.

What does the budget that has come over from the Republican house do? It cuts education 15 percent, from $91 billion to $77 billion, from 2011 to 2012. Education, obviously, is not the only important pillar to our economy. Another important pillar is the infrastructure of the country; our roads, bridges, highways, airports. These are the things that support a vibrant and strong U.S. economy.

Here is the engineers' report card on America's infrastructure. Aviation, a D; bridges, a C; rail, a C-minus; roads, D-minus; transit, a D; the infrastructure grade point average, a D.

What do our colleagues propose in the budget that is before us? They propose cutting it 30 percent. Can you imagine what it is going to be like to try to get around this country if you go out and cut transportation 30 percent? Anybody who has driven on any of the roads across America, certainly the roads in any of the major cities, anybody who has gone through any of the airports, anybody who has gone on a rail system in this country, you think we are going to be better off if we cut the funding 30 percent? That is exactly what the Republican budget that is before us proposes.

We also know one of the near-term threats to the economy is what is happening to the price of gasoline. Since December of 2008, gasoline has gone from $1.81 a gallon to $3.85 on May 23--up $2 a gallon.

Every economist has said this is hurting the economic recovery in this country. What do our colleagues in the House send us as a budget for energy, things that can be done to reduce our dependance [sic] on foreign energy? They cut it 57 percent--57 percent cut in the strategies designed to reduce our dependance [sic] on foreign energy--cut it 57 percent.

It does not add up. It does not make sense. It is not in the mainstream of thinking. This is a budget that if we poll the constituent elements, the American people, they reject it out of hand. They do not believe Medicare should be shredded. They do not believe that those who are the most fortunate among us ought to be given more tax reductions at this time.

With record deficits and a debt growing out of control, the first to be done is not to say to those earning over $1 million a year: You get a $200,000 tax cut; to those earning over $10 million a year: You get a tax reduction of $1,450,000 and then to turn around and slash much of what helps middle-class families in this country, whether it is education or infrastructure or transportation. That is the budget that is before us from our colleagues on the other side of the aisle.

We have other budget plans, the Paul budget plan, the Toomey budget plan. I will comment on those later. But I very much hope colleagues are listening, that they pay close attention to this debate, that they have a chance to evaluate what should be the position of this Chamber when we vote later this evening.

I believe this is a defining vote for this Chamber. Are we going to approve a budget that is truly radical in its scope and dimension, that fundamentally ends Medicare as we know it, and at the same time gives massive new tax cuts to the wealthiest among us? At a time when we are having the lowest revenue in 60 years, that cutting the revenue of the United States by over $1 trillion to give additional tax reductions to those who have already enjoyed dramatic tax reductions--I pointed out early in my presentation, the effective tax rate on those who are the wealthiest among us has declined dramatically during the recent years.

This proposal from the House of Representatives says: We will do even more to reduce the tax load on those who are the wealthiest among us. I do not think it adds up. Let me say to those who think: Well, at least the Ryan budget--the Republican budget--will reduce our deficits and get our debt back on track, we will solve that problem. Let me leave you with one number. The Republican budget from the House of Representatives that we will vote on later today increases the gross debt of the United States by $8 trillion.

So anybody who thinks that shredding Medicare and giving these giant tax breaks to the wealthiest among us is going to solve the problem, that it is going to stop the explosion of debt is wrong. In the budget before us, the Republican budget from the House of Representatives, the gross debt of the United States in the next 10 years is increased by $8 trillion.

For those who think the debt is already too high, you want to vote for a plan that is going to increase the debt, the gross debt of the United States another $8 trillion? That is the Republican plan from the House of Representatives. That is the budget that is before us. That is the budget we are going to vote on later this evening.

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Madam President, I thank the ranking member. Those hearings would not have been possible without the active working together of my office and his office, and I do think they were an excellent set of hearings talking about the dimensions of the problem we confront and that we are on an unsustainable course, where we are borrowing 40 cents of every $1 we spend. It cannot continue.

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Madam President, just briefly, I wish to address this question of why we on our side have not laid down our budget proposal. Let me repeat, we are in an unusual year. This is not going to be a circumstance in which there is a Republican budget, a Democratic budget, you go to conference committee, and they are resolved because we have a new process underway at the leadership level involving the White House. This is what the Republican leader himself said about that process:

[T]he discussions that can lead to a result between now and August are the talks being led by Vice President Biden. ..... That's a process that could lead to a result, a measurable result. ..... And in that meeting is the only Democrat who can sign a bill into law; in fact, the only American out of 307 million of us who can sign a bill into law. He is in those discussions. That will lead to a result.

We do not need a Democratic budget and a Republican budget. We need an American budget. We need a budget that is bipartisan because all of us know that is the only budget that can possibly be adopted. The Republicans control the House of Representatives. The Democrats control the Senate. The only possibility for us to make progress is a bipartisan budget.

That is why I was deeply involved in the process on the President's fiscal commission--18 of us for 1 year--and it is the only place a bipartisan budget has so far emerged. Madam President, 11 of us supported it--5 Democrats, 5 Republicans, and 1 Independent--11 of us out of the 18 on the Commission.

We now have underway a group of five talks--Democrats and Republicans working together. But, most important, we have, at the leadership level, Republican leaders from the House and the Senate, Democratic leaders from the House and the Senate, and the Vice President of the United States. What sense would it possibly make for us to go to markup of a budget before we have seen the results of these leadership talks? That makes no sense. We have a bipartisan discussion underway--Republican leaders, Democratic leaders, and the White House. We ought to have the courtesy and the patience to see if they can come up with a plan that would then form the basis of the budget.

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