April 3, 2001 Mr. CONRAD. Mr. President, we have begun debate on the budget resolution, the budget resolution for the country for the next year. Under the rules of the Senate, we are also required to put it in the context and the framework of a 10-year budget, and so begins what is in many ways perhaps the single most important debate that we will have this year. It is the question of choices we make with respect to the priorities of the Nation. Our President has said on many occasions that it is the people's money; we ought to give the money back to the people. I think all agree that the President is exactly right when he says it is the people's money. Of course it is. That is exactly right. But I think we also understand that there are more choices than just giving the money back to the people by way of a tax cut. There are certain things that we do collectively as the people of a nation which we cannot do individually: for example, providing for our national defense. There are other things that we do as a society to make it a better nation. We have a Social Security system to safeguard our elderly. We have a Medicare program to provide for the health of our senior citizens. We have support for education because we all understand that is the Nation's future. We also have a national debt, a publicly held debt that, as we meet here today, is $3.4 trillion. But there is another debt that we don't talk very much about. That is the gross debt of the United States. That gross debt is $5.6 trillion. While we say many times we are paying down the publicly held debt, and that is true, it is also true that the gross debt of the United States is actually increasing. I think that confuses many people. The publicly held debt is that debt which is held by people outside of the Government. It is debt held by the public. And the public is not just the public here in America; the debt is also held abroad. It is held by Japan, by Germany, and by other countries. That is the publicly held debt, $3.4 trillion as we meet here today. But the gross debt of the United States is the debt not only owed to the public but the debt that is owed to other government entities. For example, the trust funds of the United States--the general fund of the United States owes the Social Security trust fund hundreds of billions of dollars. Under the President's proposal and under all other proposals, the way we are going to be paying down the publicly held debt is to take the surpluses that are in Social Security and use those to pay down the publicly held debt. Because the money is not needed by Social Security at the moment, and will not be needed for the next decade, that money is in surplus. It is those surpluses--the surpluses that are in the trust funds--that are being used to pay down the publicly held debt. While we pay down that publicly held debt, obviously we are creating another debt. The debt we are creating as we pay down the publicly held debt with trust fund moneys is a debt to the trust funds from the general fund of the United States. That debt is increasing. While we talk about surpluses, I think we should be ever mindful that these surpluses are temporary. When we get past this 10-year period, we are going to face, instead of surpluses, deficits. We know that. The Comptroller General of the United States has warned that we will face a demographic tidal wave when the baby boom generation retires. And then these surpluses turn to substantial deficits. With that in mind, the Democratic alternative to the budget proposed by our colleagues on the other side has adopted these fundamental principles. First, we protect the Social Security and Medicare trust funds in every year. Second, we pay down a maximum amount of the publicly held debt. Third, we provide for an immediate fiscal stimulus of $60 billion to give some lift to this economy. In fact, we believe that is what we ought to be debating on the floor of the Senate this week. We think we ought to be talking about the fiscal stimulus package. Instead of a budget resolution talking about the next 10 years, we ought to be talking about a fiscal stimulus package for this year. Fourth, we believe we should provide significant tax relief for all Americans, including rate reduction, marriage penalty relief, and estate tax reform. In addition, our budget reserves resources for high-priority domestic needs, including improving education, a prescription drug benefit, strengthening of our national defense, and funding agriculture. Those are very clear priorities of the American people. The American people tell us in meeting after meeting: We want you to improve education. We want you to invest in our kids. And they are right. Our budget responds to that call. They also say: We want a meaningful prescription drug benefit. We know that the pattern and practice of medicine have changed since Medicare was enacted and we ought to have a modernized Medicare, one that includes a prescription drug benefit. That is costly. But we have provided for it in our budget. And strengthening our national defense; there is broad bipartisan consensus that our defense must be strengthened. Additional resources must be provided. If they are going to be provided, they have to be in the budget. That is what we have done with our budget. Finally, we have provided $750 billion to strengthen Social Security and to begin to address our long-term debt. We think that is critically important. The budget on the other side provides nothing for this purpose--no dollars to strengthen Social Security for the long term. Not any investment in dealing with our long-term debt which is coming as certainly as night follows day. We believe these are the priorities of the American people that ought to be included in any budget. I will go to the specifics that demonstrate we have kept faith with those principles. We start with the projected surplus of $5.6 trillion. As I said last night, it is important that we remember this is just a projection. It may not come true. In fact, if there is one thing of which we are certain, it is the uncertainty of this forecast. Even the agency that made the forecast says it is highly uncertain. The people who made the forecast say to us there is only a 10-percent chance that number is going to come true--10 percent. They say there is a 45-percent chance there will be more money. They say there is a 45-percent chance there will be less money. Which way would you bet, after the events of the last 8 weeks since this forecast was made? Is the economy strengthening or weakening? Is it more likely the money will be less than forecast or more than forecast? I feel safe in predicting it is likely to be less than was forecast. Whether that is right or that is wrong, the reality is we know $5.6 trillion over 10 years is a very uncertain projection. When the forecasting agency made the estimate, they informed us, looking at their previous forecasts and the variance from what they projected and what actually came true, they said this could be anywhere from a $50 billion deficit to over a $1 trillion surplus in the 5th year alone, based on the previous variances in their forecasts. So it is highly uncertain. Then we take out the Social Security trust fund. We protect it. We protect the Medicare trust fund. That leaves us with a non-Social Security non-Medicare remainder of $2.7 trillion that is left. The Senator from Texas, Mr. Gramm, put up a very interesting chart last night. He started with the same projection of surplus, but when he subtracted out trust funds, he only subtracted out the Social Security trust fund. There was not any mention of the Medicare trust fund in his presentation. There was no mention at all. I guess that should not be surprising because he has argued there is no Medicare trust fund. He said there is no surplus in the Medicare trust fund. That is not what the law says. That is not what the actuaries say. That is not what the reports of the Congressional Budget Office say. That is not what the President's own budget document says. All of them make very clear there is a trust fund surplus in Social Security and there is a trust fund surplus in Medicare. Medicare Part A has a surplus of anywhere from $400 billion to $500 billion. The Congressional Budget Office says it is $400 billion. The President's budget document says it is over $500 billion. Medicare Part B is in rough balance over the 10-year period. The Senator from Texas says: Oh, no, Part B is in deficit. It is not in deficit. That is just not so. He tries to make the case by saying only 25 percent of the funding for Medicare Part B comes from premiums; 75 percent comes from the general fund. That has nothing to do with being in deficit. That has to do with the law that we have passed in the Congress. We have said 25 percent of the funding of Part B will come from premiums and 75 percent will come from the general fund. It has nothing to do with being in deficit. So the reality is there is a trust fund surplus in Medicare of $400 billion, according to the Congressional Budget Office--$500 billion according to the President's own budget documents. We believe every penny of it ought to be protected. It should not be raided for any other purpose. That is a fundamental difference between the budget offering on this side and the budget offering that we make. We believe this money should not be shuffled off to some contingency fund available for other uses. We believe it ought to be protected in each and every year. Of what is left, we believe a third ought to go for a tax cut. That would be a net tax cut excluding the interest cost of $745 billion over the next 10 years. We believe that is affordable. Then we believe about a third ought to go for these high-priority domestic needs. We have made very clear and very specific what those needs are: $311 billion for a prescription drug benefit. That funds a prescription drug benefit that would be available to all who are Medicare eligible. It would be on a voluntary basis. It would be a significant benefit--not the most generous, by any means, of those that have been offered on the floor of the Senate in various proposals but nonetheless a significant benefit. The President's proposal is half as much. But of course 75 percent of people who are on Medicare will get no benefit under the President's plan. We do not think that is a serious prescription drug benefit plan. We provide $193 billion for infrastructure and education. It is not enough to just talk about these as priorities. If they are priorities, they need to be funded, and no one is more important than education. Third, we provide $100 billion over the 10-year period for additional resources for our national defense because we think that is critically important as we go forward and, fourth, we provide another $140 billion for other mandatory and health care expenditures. A very big chunk of this is for health care expansion so more people can be covered. We do not make the specific decision in the budget resolution about how that should be done, but we provide the resources so it can be done. Then we take a third of the non-trust-fund money and use it to address our long-term debt: $750 billion to strengthen Social Security because that is the source of most of our long-term debt. This $750 billion is also available as a strategic reserve in case these projections aren't ready. Then the interest costs associated with the other elements of the plan, because anytime you cut taxes, anytime you spend money, that increases your interest cost because the money is not paying down debt. If we are not providing a tax cut, if we are not spending money, then we are using it to pay down debt. To the extent we pay down debt, we reduce interest costs. So if we use the money for other purposes, if we provide a tax cut as we do, or if we spend money on high-priority domestic needs as we do, then there is less money going to pay down debt and that means additional interest costs. Let me make the point that we are doing far more dedicating of resources to paying down debt than our friends on the other side of the aisle. The President has said he would dedicate $2 trillion to paying down debt and his $2 trillion comes from the Social Security trust fund. We have reserved all of that money from the trust funds for paying down publicly held debt, $2.5 trillion plus $400 billion for the Medicare trust fund. So we are dedicating more money to paying down the publicly held debt than is the plan on the other side. In addition, we have reserved $750 billion for the long-term debt. We have tried not only to emphasize the short-term debt and the publicly held debt but to also focus on the long-term debt facing our Nation. If you add the one-third of what remains after we protect the trust funds with the trust funds money which will go to paying down debt, we have a combined total of nearly $3.7 trillion out of the $5.6 trillion for paying down short-term and long-term debt. That is the fundamental difference between our plan and their plan. They have a much bigger tax cut. We have much more for paying down short-term and long-term debt. The Senator from Texas tried to say last night that the real difference is spending. No, it isn't. There are some differences in spending because we make more of a commitment to these high-priority domestic needs--education, prescription drugs, national defense, health care, and expansion. We spend more money in those high-priority areas. But that isn't the biggest difference between us. The biggest difference between us is that we have reserved over two-thirds of these projected surpluses for paying down short-term and long-term debt. The President has reserved about 35 percent of the money for that purpose. I have done this comparison chart to try to get at the heart of the differences between our proposal and their proposal. You can see from the GOP budget that while the President says he will only use $2 trillion to pay down publicly held debt, his budget numbers actually show that he is using all of the Social Security money for paying down publicly held debt. We do the same. On the Medicare trust fund, we have reserved all $400 billion. The President's proposal has taken that money and put it in an unallocated category. We will get to that as we go through this comparison. On tax cuts, the President proposes $1.6 trillion; we propose $745 billion. On spending, the President proposes $713 billion over the 10 years above the so-called baseline. We are at $743 billion because of the high-priority domestic needs of education, health care, prescription drugs, and national defense. Here is the place where there is a major difference. We have the strategic reserve to strengthen Social Security and deal with our long-term debt. They have nothing for that purpose in their budget. We have $750 billion. As I indicated before, the interest cost on the Republican budget is $472 billion; $490 billion in our plan. If you add up the totals in the Republican plan, it comes to $4.8 trillion, ours is $5.6 trillion, and they have left unallocated $846 billion. Let's remember that $400 billion of that is from the Medicare trust funds. They call it unallocated. It is fully allocated. It is fully committed. It is committed to the trust fund. By saying it is unallocated, by saying it is available for a contingency, they are opening up the Medicare trust fund for the raid--the raid that has gone on in the past, the raid we have been able to stop the last 3 years. They are getting ready to raid the Medicare trust fund all over again. If we take that out of their contingency fund, we are left with just under $500 billion. That is not enough to cover education, prescription drugs, national defense, and the alternative minimum tax reform that is made necessary by the President's tax cut plan because the President's tax cut plan which he advertises as costing $1.6 trillion actually will cost a great deal more than that because it will require us to change the alternative minimum tax. Currently, about 2 million people are caught up in the alternative minimum tax. The President's plan will put over 30 million people under the alternative minimum tax. Boy, are they in for a big surprise. They thought they were going to get a tax cut. They thought they were going to get a reduction. What they are going to get is caught up in the alternative minimum tax. Thirty-million taxpayers--nearly one in four taxpayers in our country--are going to be caught up in the alternative minimum tax under the President's plan. It costs $300 billion to fix. On top of his $1.6 trillion tax cut, it will cost another $300 billion to fix the alternative minimum tax. Then, of course, you have the interest cost associated with the President's tax cut and fixing the alternative minimum tax. That is another $500 billion. Now we are talking real money. The reported cost of $1.6 trillion, of course, is reestimated by the budget experts of the Congress. I can tell you that they reestimated just part of his plan and they found it costs much more than $1.6 trillion. Over in the House, they reestimated just part of his plan and it went up in cost by $126 billion. The $1.6 trillion plan, the $1.7 billion plan, then you have to fix the alternative minimum tax, which is another $300 billion, and then you have the associated interest costs, which is another $500 billion. Now you are talking real money--$2.5 trillion from their supposed projected 10-year surplus of $5.6 trillion. Unfortunately, $3.1 trillion of that, according to the President's numbers--because his is slightly different from the Congressional Budget Office number--$3.1 trillion of that $5.67 trillion is trust fund money. It is trust fund money--$3.1 trillion of $5.6 trillion is trust fund money. Then you take the President's tax plan; it costs $2.5 trillion when you include all of the costs. You can see he has used all the non-trust-fund money for his tax cut plan. That is the fundamental problem with the President's plan. That is the fundamental problem with trying to find a way to get his plan to add up. For just a moment I would like to talk about the question of reconciliation. Very soon we may face the vote on reconciliation. I think it may be one of the most important votes not just in this debate but it may be one of the most important votes in all of our service time in the Senate. It may be one of the most important votes that affects the role of this institution. Why do I say that? Reconciliation was created for deficit reduction. It was created to short-circuit the normal way of doing Senate business, giving Senators the right to extend debate and giving Senators the right to amend legislation. The reason Senators were given those rights was that our Founding Fathers believed it was critical to the constitutional functioning of the U.S. Congress. They created the House of Representatives with Members serving 2-year terms to respond to the heat of the moment, to respond to the public passion. They created the Senate to be the cooling saucer, to be the place where debate and amendment could prevent serious mistakes. That is the constitutional role of the Senate. It is absolutely critically important to the functioning of our democracy. Reconciliation sweeps all of that away. Reconciliation has special procedures that allow only 20 hours of consideration of legislation on the floor of the Senate--no extended debate, no right by every Senator to amendment. That is all out the window. That reconciliation process was put in place for a purpose. The purpose was the deficit crisis that was facing the country. It was designed to be a way to raise taxes and cut spending to reduce deficits. That is why reconciliation was put in place. It was not designed for programs to increase spending or to cut taxes. That is just the opposite of for what reconciliation was created. I repeat, reconciliation was created for deficit reduction. It would be a perversion of the reconciliation process to use it for spending or for tax cuts. That is not deficit reduction. That is the opposite of deficit reduction. That is for what reconciliation ought to be reserved. Everything else ought to be under the regular order of the Senate, permitting Senators the right to extended debate, permitting Senators the right to amend because that is the constitutional role for this body. To change that role is a fundamental threat to the constitutional structure of the Senate. Nothing could be more important in this debate because if we fundamentally make the Senate of the United States into the House of Representatives, we have fundamentally changed the nature of this institution. We have fundamentally--and perhaps for all time--altered what our Founding Fathers intended for the Senate. I remember so well back in 1993-1994, there was a different administration, there was a different hot issue of the moment; it was health care. A group of us, including the father of the distinguished occupant of the chair who was part of a group, a bipartisan group, were given the primary responsibility to write a health care reform bill. That administration very much wanted that legislation. It was their highest priority. But they knew they could not get it through the regular order. They could not get it through the regular Senate process. They could not get 60 votes to stop a filibuster. So they came to a group of us and asked us if we would support the use of the reconciliation process for a massive new spending program, a $138 billion spending program to expand health care coverage. And that group of us said: No. As much as we wanted to reform the health care system, as much as we wanted to expand coverage, we said that would be an abuse of the reconciliation process because it was not for deficit reduction, it was for new spending, and we could not go along with that request. We could not support it because it went beyond a procedural question. That was a fundamental question of the operation of this institution, a fundamental question of the operation of the Senate and its constitutional role. We could no more support the use of reconciliation for a spending program as we could for a tax-cutting program because neither were intended to be used under the special rules of reconciliation that reduced the rights of each and every Senator to extended debate and the right to amendment. In fact, under reconciliation we are limited to 20 hours on the floor of the Senate, and one side or the other can give back all of its time. They can give back 10 hours. Then you are down to 10 hours, 10 hours of debate and amendment on a bill that would provide a $2 trillion tax cut. Is that what our Founding Fathers intended? Is that what the Founding Fathers intended for the Senate, that there would be a limitation and a restriction on debate, on something that would provide a $2 trillion tax cut, that that should be limited to 10 hours of debate and amendment? I do not think so. I do not think that is what they intended. I do not think that is what they intended for a spending measure either. I do not think they ever intended you could only have 10 hours of debate and discussion on something that could spend hundreds of billions of dollars. No, no. That was not the role of the Senate. That fundamentally threatens the role of the Senate. That undermines the role of the Senate. That neuters this Senate. And if we neuter that role, we have fundamentally altered what our Founding Fathers intended. This goes way beyond the question of a tax cut. This goes to everyone's vision of what this Chamber should be about. I believe, as our Founding Fathers did, that the role of the Senate is to be the cooling saucer. This is where we should have extended debate. This is where Senators should have the right to offer amendments, and to have them voted on, and to have our colleagues ultimately held accountable as to their votes. There should be no rush to judgment. There should be no process that short-circuits all of the protections that are given to individual Senators so they can represent their individual States and protect the rights of a minority. When I am asked what the fundamental problem is with the budget plan that has been offered by the other side, I go back to this chart because, to me, the numbers tell the story. We start with a projected surplus of $5.6 trillion. But $2.6 trillion of that is Social Security; $500 billion is Medicare. Now, these numbers are slightly different than the numbers I used on my chart because I was using CBO numbers. We are required to do that in the Budget Committee. These are the President's numbers. Instead of a Social Security trust fund that the Congressional Budget Office says amounts to $2.5 trillion, the President says it is $2.6 trillion. The Congressional Budget Office says the Medicare trust fund is $400 billion; the President's office says $500 billion. This is the President's budget. So I am using the President's numbers. That leaves us with $2.5 trillion of non-trust-fund money. We take out the Bush tax cut--$1.7 trillion, as reestimated by the House--we take out the cost of the alternative minimum tax reform that will be required by his plan--it is not part of his plan, but it is required by it--that costs another $300 billion, the interest cost--$500 billion--of the tax cut and the alternative minimum tax fix and the Bush spending proposals above the baseline of $200 billion. That adds up to $2.7 trillion, and the President is ``in the hole'' by $200 billion. Where does it come from? There is only one place I can find it can come from, and that is the trust funds. That is the problem with the President's plan. It does not add up. It is right into the trust funds before we ever get started. Mr. President, I see there are Members waiting to offer amendments. By prior agreement, I am going to stop talking for the moment, and we will have remarks from the other side of the aisle, and then we will go to the first amendment, which will be an amendment from our side on prescription drugs. With that, I thank the Chair and yield the floor.