April 24, 2001
Mr. CONRAD. Mr. President, I thank my colleague, the chairman of the Senate Budget Committee. I think neither of us believes we need 4 hours for this discussion. In fact, we need a relatively brief period of time on our side. I just want to go through the decisions that were made in the Senate in contrast to what President Bush proposed and in contrast to what we
proposed on our side, just to put in some perspective where we are going as we go into the conference.
I have prepared this chart in order to help me do that in as efficient a way as I can. In this column, we have what President Bush proposed. The second column is what we proposed in the Democratic alternative. The third column is what the Senate passed.
If we look at the top, this is the projected surplus over the next 10 years, and we are all in agreement. The agencies that make these forecasts have told us we can anticipate $5.6 trillion over the next 10 years. I am quick to point out that I would not bet the farm on any 10-year forecast or any 10-year projection. The agency that made this forecast themselves warned us of its uncertainty. They have said very clearly there is only a 10-percent chance that number is going to come true. There is a 45-percent chance that there will be more money, according to them. There is a 45-percent chance there will be less money.
After the performance of the economy over the last 8 weeks, since the forecast has been made, I would be willing to bet a lot more money that there is going to be less than what is forecast. With that said, that is the official forecast. Then we go to the various elements of the proposals by the President, and by us on our side, and what passed the Senate.
The next major item is the Social Security trust fund. The President forecasts $2.6 trillion of Social Security surplus over this next 10 years. He allocates $2 trillion of it to paying down national debt. We allocated $2.5 trillion to paying down the debt.
By the way, we had a somewhat different estimate by the Congressional Budget Office as to the amount of the Social Security trust fund surplus. The President's people said $2.6 trillion. The Congressional Budget Office said $2.5 trillion. We are compelled to use the Congressional Budget Office numbers. So we have reserved all of the Social Security trust fund money
for the Social Security trust fund because those moneys are not needed immediately. They go to pay down debt. The Senate passed $2.5 trillion.
In the Medicare trust fund, the President reserved none of it for the purpose of paying down the debt. In fact, he moved all of it--in his forecast, it is $526 billion. He moved it to an unallocated category. That is something with which we strenuously disagree. We don't believe that money is unallocated, uncommitted. We believe it is fully committed to the Medicare trust fund.
Unless you use it for that purpose, you hasten the insolvency of the Medicare trust fund. So we don't believe it is available for other spending. We don't believe it can be used for any other purpose, nor should it be.
So in our alternative--again, there is somewhat of a different estimate from the President's, who estimates there is over $500 billion in that category, and the CBO estimates $400 billion--we reserve it all for the Medicare trust fund. That is what the final Senate result did as well.
I should make very clear that while, in total, they reserve the full amount for the Medicare trust fund, in 4 of the years they have raided the Medicare trust fund. In 2002, 2005, 2006, and 2007, they go into the Medicare trust fund to fund other priorities. We don't support that; we don't believe in it. We don't believe any private sector company could do such a thing. We don't believe we should be doing it either. That left, under the President's proposal $3.6 trillion and under both the Democratic alternative and what passed the Senate, $2.7 trillion available
for other uses.
The President proposed, of the $3.6 trillion in his plan that was available, using $1.6 trillion for a tax cut. We proposed $745 billion. The Senate passed $1.2 trillion--roughly halfway in between the two proposals.
Then we go to the question of high-priority domestic needs. The President proposed $212 billion of spending for high-priority areas. We proposed on our side $744 billion. The Senate actually passed $849 billion. The Senate actually passed spending of $105 billion over and above what we on the Democratic side proposed. If you look at the constituent elements, you can see
the President proposed on education over the next 10 years $13 billion--a very modest sum of new money in the President's plan. We don't believe that is sufficient. We proposed $139 billion to strengthen education in the country. The Senate actually passed $308 billion, which is far more than we proposed and obviously dramatically more than the President proposed.
On prescription drugs, the President proposed $153 billion over 10 years. We proposed $311 billion, and the Senate actually passed $300 billion, very close to what we suggested.
On defense, the President proposed $62 billion above the baseline. We proposed $100 billion above the baseline. The Senate actually passed $69 billion more than is in the baseline assumption.
On agriculture, the President actually proposed a cut of $1 billion. We proposed in our Democratic alternative some $88 billion to match what our major competitors are doing for their producers or match it as closely as we can under current trade law. One can see the Senate actually passed an increase of $58 billion, again somewhere in between our proposal and the
President's proposal.
On health care coverage, the President proposed no new money. We proposed $80 billion to expand health care coverage, to begin to cover additional people who now do not have the benefit of health care coverage. The Senate actually passed $36 billion, again somewhere in between.
On environment, the President proposed very substantial cuts, $48 billion in cuts on environmental protection. We proposed an $18 billion increase. The Senate actually passed cuts of $41 billion. We believe that goes too far. We believe that is not wise given the environmental threats we face--clean air, clean water--and this is an area that should be addressed in the conference.
In a category we call ``other,'' the President proposed some $33 billion in spending priorities. We proposed $8 billion. The Senate actually passed $119 billion, most of that for our Nation's veterans. Some $68 billion of what passed in the Senate was for our Nation's veterans, $14 billion in home health care, and the rest in other items.
Next is the category of strengthening Social Security. This is where we have a very significant difference. The President proposed using $600 billion from the Social Security trust fund itself to strengthen Social Security for the long term. We believe that is double counting. We do not believe we can take money from the trust fund itself and use it to fund private accounts or
anything else. We believe that is double counting, that it hastens the insolvency of the Social Security trust fund itself, and that we ought to reserve every penny of the Social Security trust fund for Social Security, and any additional money to strengthen Social Security should come from outside the trust fund itself.
That to us is the more conservative approach and one that has more prospect of working given the demographic tidal wave we face when the baby boomers start to retire. One can see under our alternative and what passed the Senate, neither of us agreed to take money from the Social Security trust fund for that purpose.
We proposed using non-Social Security, non-Medicare trust fund money to strengthen Social Security in the amount of $750 billion. This is the area in which what finally passed is, frankly, most deficient. There is not a dime in what passed in the Senate to strengthen Social Security for the long term other than reserving the Social Security trust fund surpluses for Social Security.
That is important. It is necessary. It is not sufficient. We simply must do more.
All of the testimony before the Senate Budget Committee made very clear that we face a demographic tidal wave just beyond the 10-year window of this budget resolution. That is when the chickens are going to come home to roost. That is when we see these massive surpluses now turning to dramatic deficits. That is why we believe not only should we reserve every penny of the Social Security surplus for Social Security, but in addition to that, we ought to take money out of this general fund surplus to strengthen Social Security for the long term as well. We believe that is just common sense.
We hope very much before this conference is done that not only will we reserve the trust fund moneys for the trust funds but that we will make an additional commitment in a contribution from general fund surpluses that are projected.
Remember, these are projections. This is not money in the bank. This $5.6 trillion is not money in the bank. This is money that is forecast. That is why we think the President's proposal is especially unwise because he is taking virtually all of the non-trust-fund money and committing it to a tax cut. We just do not think that is wise. We do not think that is prudent.
We do not think any institution, if they were faced with a similar set of facts, would make this kind of decision. We do not think they would say we are going to take virtually all of our non-trust-fund money and put it out in a tax cut or, if you were a private sector enterprise, if you were a company promising a shareholder dividend, lock it in now for the next 10 years, virtually
every penny outside the trust funds for the retirement funds of your employees and the health care trust funds of your employees. That is what the President has proposed.
Is that really what people would do if they were running a company? Is that what they would do? I do not think so. I believe they would pay down their debts to the full extent possible. They would invest in the future. Yes, they would have a dividend for the shareholders, but they certainly would not commit all of their non-trust-fund money for that purpose based on a 10-year
forecast that the people who made the forecast themselves say is highly uncertain.
Then we have the final differences in the interest costs. The President's interest cost is $461 billion. Ours is $490 billion. The Senate-passed package will cost $572 billion.
People say to me: Gee, what are you talking about, interest cost? What is that about?
Simply, to the extent we provide a tax cut or we spend money, that requires additional interest costs because to the extent we have a tax cut, to the extent we have additional spending, that reduces the amount that is going to pay down the debt. That means we have more debt than we would otherwise have. That means higher interest costs.
Most of the President's additional interest cost is generated by his tax cut. In fact, his tax cut that is advertised to cost $1.6 trillion does not cost $1.6 trillion. It costs, just with the interest cost associated with it, at least $2 trillion.
Then, of course, there are other things that have not been factored into the President's proposal because we now know that because of his proposal we are going to have to reform the alternative minimum tax.
The alternative minimum tax currently affects 2 million American taxpayers. Under the President's proposal, 35 million people are going to be affected, and it costs over $300 billion to fix it. It is nowhere in the President's budget, but we know that cost is there. We know this Congress is never going to allow one in every four taxpayers in America to be caught up in the alternative minimum tax. It makes no sense. It will not happen, and it should not happen. It costs money to fix it. It is not in the President's budget, but it should be because it is a hidden cost.
In addition to that, there are a whole series of other things the President has not included that also cost money. We know that certain tax breaks currently provided in law are going to be extended. Research and development is going to be extended. We certainly are not going to change the energy tax credits that are in current law in the middle of an energy crisis, and we should not.
That costs money, but it is not in the President's proposal. Oh, it is there, it is just not funded, and that is another part of the problem of the President's plan.
He imposes a lot of costs, but he doesn't fund them. You can stick your head in the sand and say we will not fund them, but we know the reality is different.
Finally, on the unallocated category, the President has $845 billion; we propose nothing in the unallocated category. What actually passed the Senate was $129 billion. On the President's side of his $845 billion, I hasten to point out that $526 billion of that is from the Medicare trust fund. His unallocated category is really much less than is advertised. About two-thirds of that
money is Medicare trust fund money. All of a sudden he uncommits that money. I don't know from where that idea came. You cannot unallocate it. You cannot uncommit it. It is fully committed. Doing such a thing as the President proposes moves up the insolvency of the Medicare trust fund by 16 years. By 16 years sooner the Medicare trust fund goes broke--sooner than if the money is left where it is supposed to be in the Medicare trust fund.
These are the fundamental differences between what President Bush proposed, what we proposed on our side, the Democratic alternative, and what actually passed the Senate. The major differences are in the areas where the President proposed a tax cut, twice as big as what we proposed. On the other hand, we proposed $900 billion more in debt reduction than the President proposed. That is the biggest set of differences between the President and the Democrats. He has a tax cut that is about $800 billion more than ours. We have about $900 billion more in debt reduction than the President. There is the fundamental difference between the two sides.
In addition to that, there are also differences in high-riority areas. Let's review them. In education, we propose far more in new resources for education than does the President. The Senate agreed with us. In fact, it went well beyond our proposal.
On prescription drugs, we proposed twice as much as the President. And the Senate adopted a number very close to what we proposed. There is no magic to this. There is no secret in it. What the President proposed is totally inadequate. Only 25 percent of people who are Medicare eligible get any help under the President's plan; 25 percent of the people would be helped and 75 percent would not be helped. It is no wonder the Senate adopted a number very close to what the Democrats proposed. Most objective observers say that is what is necessary to provide a meaningful prescription drug benefit.
On defense, we proposed more than the President and more than what passed the Senate.
On agriculture, the final result was somewhere in between. The President proposed a cut--a cut when we are in the midst of an agricultural crisis. It is the worst we have seen in 50 years. The President is proposing less resources. He is proposing the Congress not be able to respond as we have in each of the last 3 years to pass an economic disaster bill for our Nation's farmers. It makes no sense. We propose to be able to fund what we have been doing the last 3 years, and the Senate came somewhere in between.
On health coverage, another major difference, the President proposed no new resources. We proposed $80 billion. The Senate, again, was somewhere in between.
As I see it, those are major differences. Those are the issues that will have to be resolved in a conference committee. The House plan is close to what the President proposed.
I say to the conferees, you will have to come pretty close to what the Senate passed or the conference report simply will not pass in this body. That tells me we will have to make adjustments. The President's tax cut plan will have to be reduced. There will have to be more resources for education, prescription drug benefits, our Nation's defense, and agriculture than what the President has proposed and what the House has adopted.
Also, I hope we come out with a result that is better than what passed the Senate or the House with respect to strengthening Social Security for the long term. Nothing has been done--nothing in the House or Senate versions--to strengthen Social Security for the long term. It has gotten almost no attention. It is going to receive attention. It will receive attention at the end of this 10-year period when the baby boomers start to retire and the surpluses today turn into massive deficits. That is why we ought to take this opportunity with our surpluses to strengthen Social Security for the future. That is our responsibility. That is our obligation. We ought to take it seriously. I hope the conferees will.
With that, I yield the floor.
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Mr. CONRAD. Mr. President, there is clearly an area of major agreement between the two sides. That is the need for fiscal stimulus now. We had in our budget resolution $60 billion in budget stimulus this year, in the year 2001. Maybe it will be helpful for people to understand the differences between what I was talking about and the budget for the years 2002 through 2011.
But we are in the year 2001 right now. So when we compare the tax cut under the Bush budget and our proposal and what passed the Senate, we are talking about the 10 years from 2002 through 2011. The President proposed $1.6 trillion. For that period we proposed $745 billion. The Senate passed something roughly in between. But this does not cover the year 2001, the
year we are in right now.
Both Senator DOMENICI in his budget proposal, and me in ours, proposed $60 billion of budget stimulus this year, financial stimulus this year, fiscal stimulus now to give a lift to this economy. What actually passed the Senate was even more generous, $85 billion of fiscal stimulus for the year 2001.
What Senator DOMENICI is saying is perhaps we cannot do quite that much in conference, and perhaps we cannot. But we do have $96 billion available outside of the trust funds of Medicare and Social Security, so we know we have budgeted already enough money to accommodate a fiscal stimulus of up to $85 billion without invading the trust funds of Medicare and Social Security, and we are obviously in very close agreement on this question. I think the American people should take heart from that, that we are going to be working together, fighting together, trying to put together a fiscal stimulus package for this year, the year we are in right now, 2001, to get out to the American people to give some lift to this economy.
And that would be a good thing to do.
The chairman made mention of a number of other issues that we have talked about in the past--how much debt reduction can you do? We have a disagreement on this question. We believe we can do more debt reduction than they have proposed, certainly than the President has proposed.
I note that the Senate agreed with our position. The Senate provided a good deal more debt reduction than the President has said that he believes is possible. That was a good outcome. I hope we do not shrink from that.
But the place we really did not do as well is in strengthening Social Security for the long term above and beyond the trust funds themselves. All of us know just saving the trust fund money for the purposes intended is important, but it is not enough.
That is why on our side we believe not only should we reserve all of the trust fund money for the Social Security and Medicare trust funds, but then, in addition to that, we ought to take some of the general fund money and use that to strengthen Social Security for the long term because that is what it is going to take to do the job and to prevent a massive buildup of debt from occurring.
I think one thing that often gets lost in the debate is the current indebtedness of our country. The gross debt is $5.6 trillion. Under the President's plan, the gross debt of the United States is going to grow to $7.1 trillion. The gross debt, under his plan, is not going to be reduced; it is going to grow. Under our plan, we are able to keep it about where it is because we are putting
more money into debt reduction--both short-term and long-term--than is in the President's plan. We believe that is a wiser course.
We are reserving about 70 percent of this projected surplus for debt reduction. He reserves about 35 percent of the projected surplus for debt reduction. So that is the major difference. That is where we really have a difference of opinion.
We think we ought to put more emphasis on debt reduction because, frankly, given the uncertainty of the forecast--and that is another area where we have a disagreement. Senator DOMENICI says $5.6 trillion is the number. Well, he is right in the sense that is the number that has been given to us by the Congressional Budget Office and the Office of Management and
Budget. That is a very professional forecast. I will not argue with that for a minute. It is well done. But it is a 10-year projection--10 years. The people who made the forecast said there is only a 10-percent chance that number is going to come true.
Let's not cast that in concrete. Goodness, that should inform us; it should not lock us into decisions to use every penny of that money. I think what it should tell us is that we should be cautious. That is why we put a greater emphasis on debt reduction because, then, if the forecast does not come true, the worst that has happened is you have reduced the debt less than you
anticipated. That is the worst that happens.
Under their plan--because they are using all the money, between their tax cut and other priorities--what happens if that isn't true? It risks putting us back into deficit. It risks us raiding the trust funds of Social Security and Medicare all over again. Goodness knows, we have been down that road. Do we have to repeat the 1980s all over again? I hope not. Can't we learn
from the 1980s--the time we had a rosy forecast like this one, had a big tax cut, big defense
buildup, and wondered why the deficits and debts of the country multiplied geometrically? I do not want to repeat that exercise. That put our country in a deep hole. It took us 15 years to dig out. I do not want to be digging out for the next 15 years.
The difference between the 1980s and now is that in the 1980s you had time to dig out. If we make a mistake now, there is no time to dig out because in 11 years the baby boom generation starts to retire, and then these surpluses turn into big deficits as the number of people eligible for Medicare and Social Security double. That is what is going to happen. We know it. It is not a projection. The people are alive. They have been born. They are living today. They are going to retire, and they are going to be eligible. And it is going to cost the Government a lot of money, much more than we are currently having to pay out.
So let's be cautious. Yes, let's be conservative. The conservative thing to do is emphasize more debt reduction and to curtail our appetite to spend and curtail our appetite to have tax cuts, which are both living for the moment. It is fun to live for the moment; especially if you are a politician, there is nothing better than to have tax cuts and spending. That is the best of all worlds. The problem with that is that we have a need to be responsible to future generations. Our generation ran up this debt. We have the obligation to pay it down and to do it before we start to retire. Goodness, the last thing we ought to be doing is shoving this debt on to our kids. We ran it up. We ought to retire it.
Mr. President, with that, I yield the floor.
The PRESIDING OFFICER (Mr. NELSON of Florida) appointed Mr. DOMENICI, Mr. GRASSLEY, Mr. NICKLES, Mr. GRAMM, Mr. BOND, Mr. CONRAD, Mr. HOLLINGS, Mr. SARBANES, and Mrs. MURRAY conferees on the part of the Senate.