Democratic Alternative to Cutting the Budget

DEMOCRATIC ALTERNATIVE TO CUTTING THE BUDGET -- (House of Representatives - October 19, 2005)

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Mr. SCOTT of Virginia. Madam Speaker, I would like to thank the gentleman from South Carolina for his comments. I want to get back to the chart where he has debt service in 10 years of $458 billion. When you use big numbers like that, sometimes I like to put them into perspective. At $45,000 each with that money which is just going down the drain, you could hire over 10 million Americans for $458 billion, at $45,000 each, 10 million. There are less than 9 million unemployed today, drawing unemployment. So that is just money right down the drain.

You can hire everybody that is on unemployment, have money left over, and a $45,000 a year job for the money that we are going to waste on debt service because we have let this deficit get out of control.

In the deficit for 2015, the gentleman has listed $640 billion. We need to put that number in perspective. The entire revenue from the individual income tax, what everybody pays in individual income tax, is approximately $800 billion. They have overspent, gone in the hole $640 billion. You just wonder how bad it would have to get before they realized that this just is unsustainable.

Mr. SPRATT. Let me make two points before I yield again.

First of all, we all believe that disaster relief should be a program of shared sacrifice. We should all want to pitch in and help the people of New Orleans and Bay St. Louis and the gulf coast. No question about it. But when you spread that burden across our whole country, and that is the way we should do it, it should be spread equitably and evenly and fairly.

The second problem we have with what is being proposed and pushed right now, is that the costs would not come down evenly and equitably, but they would come down heavily on, in many cases, those least able to bear the burden. We do not think that is the way it should be done. We are not saying it should not be paid for in some respect or stretched out over time. We are simply saying, when and if it is paid for it ought to be equitably distributed.

Let me make one other final point by saying that if you look at our charts here you will see that in the year 2015, way down here in the corner of this particular chart, the deficit will be $640 billion. That does not assume anything for Hurricane Katrina because it had not happened when these numbers were run.

If you factor Hurricane Katrina in at today's level expenditure in that year the deficit will be about $645 billion. So the problem in the outyears here is not Hurricane Katrina. It is budget and fiscal decisions that were made in 2001, 2002, 2003, 2004 and are still being made today through 2010 with the insistence that all the tax cuts passed then have to be renewed. That is what is yielding you these outyear deficits. This budget that gets worse and worse by the year.

Mr. KIND. Madam Speaker, what is equally troubling and if not more so is that the gentleman is talking about the prime retirement years of the baby boom generation. We all know we have an aging population in this country and that is when that demographic time bomb is about to go off. Unless or until this Congress, working with the administration, can turn this fiscal scenario around, it will be virtually impossible for our children and grandchildren to meet the burdens that are piling up on them today because of the demographics in this country. That is why it is important that we have this discussion tonight so hopefully we can bring some fiscal sanity back into the economic decision of this body before it is too late.

Mr. SCOTT of Virginia. I would ask the gentleman from South Carolina (Mr. Spratt) to explain this.

Mr. SPRATT. That is essentially on a linear graph, what we have here in a simple table. It shows a blip for Katrina but basically it adds very little to the outyear deficit.

Mr. SCOTT of Virginia. So the outyear deficit is essentially the same whether you pay for Katrina or not.

That it is really a blip on the screen. So whatever our fiscal problems are, Katrina is absolutely irrelevant because that is only a blip on the screen.

This is the size of the deficit, the solid line without Katrina, the dotted line with Katrina. And after a couple years, you do not notice the distance.

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Mr. SCOTT of Virginia. Madam Speaker, I thank the gentleman for yielding to me, and the gentleman from North Carolina (Mr. Price) mentioned the question of whether the wealthy would be sacrificing in this budget. I just want to point out as we consider how to pay for the $200 billion potential cost of Katrina that there are two particular tax cuts that have not gone into effect yet, but will go into effect January 1. They are nicknamed PEP and Pease, the Personal Exemption Phaseout and the standard deduction phaseout. And as the gentleman has inferred, they only help the wealthy.

Now, we have to show a chart, because no one will believe it unless you show a chart. This shows how that cost of PEP and Pease will be distributed. If you make under $75,000 a year, you will get zero from this tax cut. If you make $75,000 to $100,000, you might get a dollar. If you make $100,000 to $200,000, you might get $25. You can hardly see the bar. Take my word for it, there is a little bar there to show the $25 you might get. At $200,000 to $500,000, you get $558, on average; and at $.5 million to $1 million, you get over $4,000. But if you make over $1 million, this tax cut that has not even started yet but will start next year, you will get about a $19,000 benefit from that.

To implement this tax cut, the 5-year cost is $200 billion. We wonder how to pay for Katrina? How about not letting this tax cut go into effect. That would cover the entire potential cost of a Katrina right there. But instead we are going to ask Medicare and Medicaid, possibly veterans health care, certainly student loans and school lunches, food stamps, and those who are most in need, those programs that the Katrina victims would actually be using, those are the programs that will be cut and not a tax cut for millionaires.

I think our priorities are wrong, and I appreciate the gentleman giving us the opportunity to bring this kind of chart to show what kind of tax cuts have not even gone into effect yet, but will go into effect beginning next year. And when we say it is a tax cut skewed to the wealthy, this chart shows exactly how that takes place.

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