May 9, 2001 Mr. CONRAD. Mr. President, I rise to speak to the budget resolution that is now before us and the conference report on the budget resolution. First, let me say I have profound respect for the chairman of the Senate Budget Committee. I have worked with him for the 15 years that I have been in the Senate. He is a man of integrity. He is an honest man. He is well motivated. He does what he believes is the right thing for the country, and certainly for New Mexico. I don't question any of that in the slightest degree. He also has an outstanding staff that benefits the entire Senate. So I want to stipulate right at the beginning that I have respect for him and affection for the Senator from New Mexico as well. He is Italian. My wife is Italian. Italians have a lot of spirit. We saw some of that spirit from the Senator from New Mexico this afternoon. I am Scandinavian, and we Scandinavians don't show a lot of emotion, although from time to time it erupts. We also have strong feelings and strong beliefs. I believe this budget is a very poor product for the conference committee. One of the reasons I believe it is a poor product is because the fact is that Democrats were locked out completely from the process of writing this budget. There was one meeting at the conference committee, the initial meeting, in which we were allowed to give opening remarks. After that, we were locked out completely. We weren't invited. In fact, we were told by the chairman we would not be invited back. That was true on the House side as well. The Democrats were simply excluded. So make no mistake; this is not a bipartisan budget. This is a budget that has been written by one side and one side alone. They bear full responsibility for what flows from this budget. I agree with much of what the Senator described in this resolution. What he is not talking about is what is not in this budget. What he is not talking about is what has been left out. What he is not talking about is what is left hidden from view and how profound an effect it will have on every decision we make in this Congress, not only for this year but for 10 years, and for years beyond. These are consequential decisions that are going to have an effect that is going to last a very long time. Let no one make any mistake about it. The Washington Post, on Monday, had as their lead editorial this work, entitled ``An Unreal Budget.'' That is a pretty good description of this budget because it, I would say, borders on bizarre. It is not a budget. It is not a budget. Much of what we know is going to be spent is not revealed in this document. The conclusion of the Washington Post was: The theme of this budget is tax cuts first, sweep up afterward. It's the wrong way around. Budget resolutions are supposed to foster fiscal responsibility. This one will have the opposite effect. Unfortunately, in my judgment, that is true. This budget abandons fiscal responsibility. The chairman of the committee referred back to 1993 and suggested, well, it was really done the same way then as it is being done now. That is not true. In 1993, we had a full markup in the Senate Budget Committee. This year there was no markup in the Budget Committee. In 1993, we had full debate, full discussion. What we did in 1993 was to reduce deficits. Let's go back to 1993. We had a $290 billion budget deficit the year before. We put in place a package that reduced deficits each and every year for the 5 years of that budget resolution. We then followed it with a bipartisan plan in 1997. That one we did in a bipartisan way. We finished the job of balancing the budget and moving us from deficits to surpluses. This is an unreal budget because there are whole chunks of spending that have been left out, conveniently forgotten, like the two pages that were lost in the House that hung up consideration of this package. The two pages that were lost, interestingly enough, just happened to be the critical two pages. You know what. They did not just lose two pages; they lost dozens more because this budget does not contain all the spending that is going to be done, and all of us know it. It is not in this budget because it is the only way they could make this budget add up. If they put in what we all know is going to happen, it does not add up, and they take us back to the bad old days of deficits and expanding debt. That is the harsh reality about this budget. First of all, we ought to deal with the uncertainty of the projections that surround this budget. All of this is based on a 10-year projection that we will enjoy a surplus of $5.6 trillion over the next 10 years--$5.6 trillion. That is not money in the bank; that is a forecast, that is a projection, and the people who made the forecast themselves have warned us of its uncertainty. What did they tell us? They said there is only a 10-percent chance that number is going to come true, $5.6 trillion. There is a 45-percent chance there will be more money. There is a 45-percent chance there will be less money. That forecast was done more than 8 weeks ago. With what has happened in the economy during this interval, between the time the forecast was made and today, do you think it is safe to assume there is going to be less money or more money? Just one statistic. Yesterday, the productivity numbers were released for the first quarter of this year. They were estimating that productivity would be up 1 full percentage point. Instead, it went down by one-tenth of 1 point. That difference makes a profound change over time. That would wipe out hundreds of billions of dollars of this forecasted surplus over time. The people who made the forecast provided us this chart. It shows in the fifth year alone, we could expect a range of anywhere from a $50 billion deficit to more than a $1 trillion surplus. How did they come up with that forecast? How did they come up with that projection? They looked at their previous forecasts. They looked at what they said in the past and they looked at the difference between what they predicted and what actually occurred. Then they applied it to this forecast. As I say, in the fifth year alone, they said it could be anywhere from a $50 billion deficit to more than a $1 trillion deficit. That is how uncertain this forecast is. What does that tell us? I believe it says we ought to be cautious. We ought to be conservative. We ought to be careful. This budget throws caution to the winds. This budget reminds me very much of what happened in 1981: A new President, big tax cut proposal, big defense buildup proposal, rosy economic forecast, and what happened. The deficits and the debt of this country multiplied geometrically, and they put this country in a deep hole which has taken 15 years to dig out. And these same folks with the same view and the same philosophy are getting ready to do it all over again. Unfortunately, this time there is not time to recover. In the 1980s, we had two decades to recover. This time the baby boomers start to retire in 11 years, and then it all changes. We will go from massive surpluses to substantial deficits because all of a sudden the number of people eligible for Medicare and Social Security increases dramatically. That is the first thing we need to keep in mind about this budget: the uncertainty of the forecast that underlines all of the assumptions. I do not think there is a family in America who would bet the farm or bet their household on the basis of a 10-year forecast. I think most people would say it would be nice if it came true, but we are not going to count on it; we are going to be careful in what we do. I put up the Washington Post editorial that called it an unreal budget. Boy, they have it right. It is unreal. Huge chunks of Federal spending are not included. Let's start with defense. We all know what is going to happen with defense. Here is a story from USA Today, Friday, April 27: ``Billions Sought for Arms.'' The Secretary is going to propose a boost in defense spending of $200 billion to $300 billion over the next 6 years. That is just USA Today. This is in headline after headline all across the country. The Secretary of Defense is going to ask for very major increases in defense expenditures, $200 billion to $300 billion in additional spending in just the next 6 years. Not a dime of it is in this budget. It is not here. They did not include it. Why not? Let's go to the Secretary of Defense and see what he said. The Secretary of Defense was interviewed on ``Meet the Press'' on May 6, this past weekend. The host of the show: Will you get the $10 billion more in defense money this year that you need? The Secretary of Defense: I don't know. I have not gone to the President as yet. He wanted to wait until after some of the studies had been completed and until the tax bill was behind us and we're going to be discussing that over the coming weeks. The host of the show: But you need more money. The Secretary of Defense: We do. And indeed they do, but the money is not in this budget. This is supposed to be a budget document that tells us the revenue and the spending of the Federal Government over the next 10 years, but it is not that. This is a document that excludes as much as it reveals. It leaves out this major defense expenditure. Oh, not completely. It provides for a reserve fund so if there is a determination by the chairman of the Budget Committee that more money should be added, and the authorization committee believes it, they can put it in with no vote in this Chamber, no opportunity to review their decision. They make the decision alone. It does not resemble representative democracy to me. It resembles a handful of people in a back room making a decision that has a profound impact on the budget of the United States without ever being considered by the full Senate or the full House of Representatives. That is what is in this budget: the authority to do precisely that. That is the wrong way to do business. The President has said education is the top priority. Those have been the President's remarks during the campaign and during his first weeks in office: Education is the top priority. We have speech after speech in the Senate by our colleagues saying education is the top priority, but it has not been given priority in this budget because there is no new money for education in this budget. In the Senate, when the budget resolution was considered, we adopted a Harkin amendment. It reduced the tax cut by $450 billion. It gave $225 billion to education. It gave $225 billion to a further paydown of our national debt. We got back from conference committee zero--not a dollar. In the Senate, a bipartisan Breaux-Jeffords amendment was adopted by the Senate providing $70 billion for IDEA. That is the disabilities act. That is the promise the Federal Government made to local school districts, that we were going to fund a certain percentage of the cost, a promise we have not kept. When we moved to keep the promise, we adopted an amendment when the budget resolution was considered by the Senate. We added $70 billion to keep the promise. Every dollar was taken out. There is not a single new dollar for education in this budget. They have increased it by inflation, but there is no new money for education. The same is true of Social Security. The President had a big meeting at the White House. He said in that meeting: We have to strengthen Social Security. The baby boomers are going to start to retire, and Social Security will be under enormous pressure. He is right. That is going to happen. Here are contradictory goals of the administration, an editorial from the Columbus Dispatch of December 24, 2000: "... the tax-cut proposal works against this plan to begin privatizing Social Security. Experts differ on how much this 'transition cost' will be, but it won't be cheap. Thus, Bush's 10-year $1.3 trillion tax cut would deprive the government of the cash it would need to pay the $1 trillion transition cost for the first 10 years of Bush's Social Security privatization plan. The goals are contradictory." They couldn't be more right. In the Democratic plan, we provided $750 billion to strengthen Social Security in the long term. Not one penny of that is in this budget. If we review the situation, we have the administration proposing a major defense buildup, but none of the money is in this budget. We have the President saying education is the top priority, but there is no new money in the budget. We have the President saying Social Security should be strengthened, but there is no money in the budget. Excuse those who are somewhat skeptical about this process. The Democrats are locked out. The budget is written in secret in a back room in the dead of night, presented to us late at night. And when we look at the details, if they put in the things they say they are for, if they put in money for education, if they put in money for defense, if they put in money to strengthen Social Security, the budget doesn't add up. That is their problem. That is the little secret about this budget. If it is a compendium of the expenditures of the Federal Government, what we are really going to do in terms of additional resources for education, a buildup for national defense, strengthening Social Security, if you put all those numbers on a page and add them up, you will find we are raiding the Social Security trust fund and the Medicare trust fund. That is why they don't have a full budget. That is why they don't add it all up. That is why they have excluded the money to strengthen Social Security, the money to build up national defense, the money to improve education. They know what we know: When you couple it with the President's massive tax cut, it doesn't add up. They will be into the Medicare trust fund for $200 billion and more. They will be into the Social Security trust fund by hundreds of billions of dollars. That is the reason we have what the Washington Post called ``an unreal budget'' because they don't dare come with all of the details. They don't dare come up with all of the numbers. They don't dare come up with what they really intend to do because it doesn't add up. Let's talk a little about the tax cut in this bill. They say this tax cut is $1.35 trillion. It is a lot of money. It is a stunning amount of money--$1.35 trillion. Indeed, the amount reconciled over 10 years is $1.25 trillion. The economic stimulus is another $100 billion. There are other elements they do not talk about, including expanded health insurance coverage, designed in the Senate to be additional spending that is now written as a tax cut, another $28 billion. A special reserve fund has been set up that blocks points of order against the use of that money. They have refundable tax credits--I call those tax cuts--for health, childcare, for earned-income tax credit, another $37 billion. Those they call ``spending.'' They don't call them tax cuts. In common parlance, any person would recognize them as tax cuts because that is what they do. We have a reduction in SEC matters and other minor matters, another $19 billion. The total revenue reduction is $1.434 trillion. That is one of the reasons they don't have the defense buildup. That is one of the reasons they have taken out the additional money for education. That is a reason they don't have the money to strengthen Social Security for the long term. The tax cut has become so large, the package doesn't add up if you put in all of the things we know are going to happen. We have a calculation on how the final conference agreement threatens Social Security and Medicare. This calculation will not be found in the budget. They don't want to put these numbers on a page. They don't want to add them up. They don't want to have any one place to look to, to put the whole puzzle together. When we put the puzzle together, it does not fit; it does not add up. If we adjust the defense number for what the new Secretary of Defense is talking about, if we adjust the tax cost by what is needed to fix the alternative minimum tax, which now affects 2 million taxpayers, if we pass the tax cut plan before us, the Joint Tax Committee says it will affect over 30 million taxpayers. There is no provision to deal with that problem in the President's tax proposal--none. It costs $292 billion just to pay for fixing the alternative minimum tax problem created by the Bush tax cut. Make no mistake; that amount of money isn't enough to fix the alternative minimum tax in total. That is just the amount of money necessary to fix the costs created by the Bush tax cut itself. The alternative minimum tax is growing every year with the effects of inflation. We have gone from 2 million people being affected. If the Bush tax cut passes, the Joint Tax Committee says 35 million people are going to be affected. Boy, are they in for a big surprise. They think they are getting a tax cut. What will happen is they will get pushed into the alternative minimum tax--one in every four taxpayers. But there is not a dime in this budget to fix it. As I indicated, there is no new education money. Even though this week on the floor of the Senate, or last week, we passed an amendment to put in $150 billion for education, there is not a dime of it in this budget. Emergencies. Over the next 11 years, we can anticipate $55 billion of emergency costs--tornadoes, hurricanes, earthquakes, floods. Every year it averages $5 billion. They don't have it in here. We know it will happen. When you apply the interest costs to all of the above, you are deep into the Medicare trust fund and you are deep into Social Security: into the Medicare trust fund by over $300 billion; into the Social Security trust fund by over $200 billion. What is it going to be? We are not going to have the defense buildup? We will not have any new money for education? We will not fix the alternative minimum tax? We are not going to have emergencies? I don't think so. I think we have a budget document that simply is not telling the whole story. It is telling just a piece of the story, just part of the story because if you tell the whole story, it does not add up. This is an especially important time because we know that in this 10-year period we are forecasted to have surpluses. We also know from testimony before the Budget Committee that we are headed for a circumstance very soon, in the next decade when the baby boomers start to retire, that the Social Security and Medicare trust funds face huge cash deficits. Those deficits start in the year 2016, and you can see what happens after that. There is a cascade of red ink. The deficits explode. There is no provision in this budget for strengthening Social Security for the long term. In our proposal, we had $750 billion. It is just another one of the missing pieces of this budget. Some have said there are all these increases in spending in this budget. The chairman talked about a 4-percent increase. The only 4-percent increase that is in this budget is for 1 year in one part of the budget. It is not the whole budget. The whole budget over the 10 years goes up by 3.5 percent a year. Domestic discretionary spending goes up by 2.9 percent a year on average over the 10 years of this budget. This is not big spending. In fact, what we see, as I have indicated, is that total spending goes up on average per year for the 10 years of this budget by 3.5 percent a year. Discretionary spending goes up on average by 2.9 percent a year. When we look at spending as a percentage of our gross domestic product, which the economists tell us is the best way to measure changes in spending over time, what we see is the total spending in this budget resolution is going to the lowest level since 1951--the lowest level since 1951. The size of Federal Government, that has already come down rather dramatically over the last 9 years from 22 percent of the gross domestic product to 18 percent of the gross domestic product today, will continue to decline to 16.3 percent of the domestic product in the year 2011, the lowest percentage since 1951. Discretionary spending is military spending. Discretionary spending is the other part of domestic spending that is not controlled by the mandatory spending. Discretionary spending is law enforcement, education, parks. Discretionary spending as a percentage of GDP is going to its lowest level ever, 5.1 percent. So much for the claims of big spending. In fact, the appropriated spending levels shortchange education and other critical priorities. Here is what the Senate passed: $181 billion over 10 years. The conference committee has actually produced a cut of $56 billion. This is going to mean dramatic changes--in law enforcement funding, funding for parks, funding for education, funding for health care--because the money simply will not be there. The fundamental difference in our budget approach and the budget approach of the other side has been, yes, we have had a difference on the tax cut. We believe the tax cut should be about half as big and that we should do twice as much on debt reduction, both short term and long term. That is the fundamental difference between us on budget matters. But, in addition to that, we also have different priorities on education. We believe that is a place where a significant investment should be made. But in this budget there is no new money for education. As I indicated, this budget threatens to put us back into deficit, back into debt, and to see the gross debt of the United States actually larger at the end of this period rather than smaller. The chairman of the Budget Committee has talked about the reduction in the so-called publicly held debt. That is what the red line on this chart shows. He is exactly correct: Debt held by the public is going down. Debt held by the public is going to be paid down to about $800 billion. But at the very same time that debt held by the public is going down, debt held by the trust funds of the country is going up. In fact, the gross debt of the United States at the end of this period is going to be substantially more than it is as we meet here today. The gross debt of the United States today is $5.6 trillion. At the end of this 10-year period, the gross debt of the United States will be $7.1 trillion. The gross debt is increasing by just about the same amount as the tax cuts contained in this budget resolution. Here is a comparison of what President Bush proposed, what the Democratic alternative was, what the Senate passed, and with what the conference has come back. There are two differences that really jump out at you. They are dramatic differences. The first one is in education, where the President proposed $13 billion of new money over the 10 years, Democrats proposed $139 billion, the Senate passed $308 billion, and the conference committee has come back with nothing--zero. That is a pretty dramatic difference. The second dramatic difference is in strengthening Social Security. The President had reserved $600 billion of the trust fund to strengthen Social Security for the long term. We proposed $750 billion, but not out of the trust fund because we believe that is double counting. We took it out of the general fund to strengthen Social Security because that is what we believe it will take to do the job. Just taking money out of the trust fund does not solve the problem. This problem is bigger than saving every penny of the trust fund. What came back out of the conference committee? Nothing, zero. The same on defense--defense--where they have left out the massive defense buildup that we all know is about to be proposed by the Secretary of Defense. I want to conclude by saying I believe there are six key reasons to oppose the budget resolution conference report that is before us. No. 1, there is no new money for education. No. 2, the magnitude of this tax cut crowds out other important priorities, including national defense, including education, and including expanding health care coverage in America. No. 3, this budget hides the defense spending increases by providing a blank check to the Bush administration. I have never seen this before, a reserve fund created where one person is able to determine what the defense spending of the United States is going to be. That is a rather extraordinary grant of power to one individual. No. 4, it sets up a raid on the Social Security and Medicare trust funds just as certainly as night follows day. Because of all they have left out, because of all they have left aside, because of all that we know is to come, this budget sets us up for major raids on the Social Security and Medicare trust fund. No. 5, it cuts spending for high priority domestic needs by $56 billion over the next 10 years. That, by the way, was something that just changed in the final hours of the conference committee. No. 6, it fails to set aside funds for strengthening Social Security for the long term. I submit to our colleagues that those are the reasons this budget conference report should fail. I urge my colleagues to oppose it so that we can have a bipartisan budget agreement, one that is in line with the values of the American people. I thank the Chair and yield the floor.