The President's 2007 Budget

THE PRESIDENT'S 2007 BUDGET -- (House of Representatives - March 02, 2006)

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Mr. SCOTT of Virginia. Mr. Speaker, I thank my colleague from Virginia for yielding to me.

My colleague from Virginia, you have done an excellent job in outlining what the problem is.

I like to use charts as I describe what the problem is. Our previous speaker indicated, the Truth Squad, as to what the truth is. I would like to point out exactly what he is talking about because this chart shows the deficit back through the Ford, Carter, Reagan, Bush, Clinton administrations, up to a surplus and what has happened in the last 5 years.

When they talk about bragging about fiscal responsibility from the Republican side, this is the line they are talking about, the one they are bragging about right here.

When they ask what the Democratic plan is to get us out of this mess, I would say, Mr. Speaker, the Democratic plan is this blue line right here. That is what we had under President Clinton. My colleague from Virginia will remember in 1993 the first budget passed under the Clinton administration. It passed without a single Republican vote, House or Senate, and we took that budget and took it up to a surplus.

In 1995, when the Republicans came in and took control of Congress, they passed a different kind of budget, and President Clinton vetoed that budget. In fact, they threatened to close down the government if he did not sign those tax cuts, and he vetoed it again and the government was shut down. President Clinton would not sign an irresponsible budget. And as a result, we have almost a straight line up into a surplus.

When President Bush came in, everything collapsed. They stopped paying for tax cuts or paying for spending cuts. Pay-as-you-go dissolved, and here is what you have. And this is the line they are bragging about.

Now, unfortunately, it is going to get worse before it gets better. The President says that he wants to cut the deficit in half in 5 years. That is a fairly, what I would say, modest goal, taking into consideration the fact that you had a huge surplus to begin with to say that you are only going to clean up half of the mess, but the fact is he cannot even do it if we make the tax cuts permanent and do other things that he has suggested. And they are passing.

This is the line we are going to follow for the next 10 years. Deep into deficits. This green line is the promise, which is not much, but the red line is what we are going to probably do.

This little blue line up here is an interesting line because that is the budget from this administration in 2003 before they continued cutting taxes. They showed that by now we would be up into surplus. 2003 is significant because that is after 2001. After the war we still had projected, before we continued to mess up the budget, we were supposed to be in surplus now, but here we are deep in the ditch. In fact, as my colleague from Virginia has indicated, we had, when this administration started, a projected $5.6 trillion surplus for the following decade. We have dropped almost $9 trillion to, the same year, a $3.3 trillion deficit, a turnaround of $8.9 trillion.

Now, let us put that number in perspective because it is a big number. If you add up everybody's individual income tax, what everybody pays on April 15, every individual, what your individual tax is, it averages year by year to be about $800 billion. An average deterioration in the budget, almost $900 billion, deterioration in the budget. And when you talk about the war, the gentleman mentioned less than $500 billion, 0.5.

Talk about Katrina, $200 billion, we might want to pay for the Katrina aftermath, 0.2. An $8.9 trillion deterioration; you cannot blame it on 0.5 and 0.2. And since that happened, it looks like you would have changed course somehow to accommodate it. No, you kept going straight. But you cannot blame 0.5 and 0.2 on a $9 trillion deterioration.

Now, the Truth Squad indicated a blank slate of the Democrats who voted for the spending cuts in 1991. That is true. But they did not tell you what the spending cuts were. Food stamps and health care for the working poor, and I say ``working poor'' because when you cut, you cut from the top. The ones that are struggling, the ones that are just barely making it, you whack them. The very poor are untouched; it is just the working, struggling poor that get whacked with food stamps and health care.

They also cut child care, child support enforcement, foster care. We had a group come into my office the other day talking about the effects on foster care. Many at-risk children who are in foster care now will not have resources to help them. These are the ones at most risk of getting into trouble, getting into other problems that we are going to have to deal with. Those are the ones that got whacked by that budget, as well as, as the gentleman indicated, student loans. That is what we did not vote for.

But he also did not say what that was a total package of. They had spending cuts and they had tax cuts. The spending cuts were less than $40 billion. The tax cuts were $70 billion. Had we passed the plan, we were going to be $30 billion worse off, further in the ditch than we started off. These are some of the problems with the budget.

And let me get these other charts which point out that when you run up that kind of deficit, that is kind of esoteric, but at some point not only do you have to pay it back, but in the meanwhile, interest on the national debt. By 2010, compared to where we were on the line on interest in the national debt, we are going to be spending over $200 billion more in interest on the national debt, $227 billion more in interest on the national debt than we had projected.

At $22,000 a year for a job, how many people can you hire with $227 billion? Answer: 10 million. There are only 8 or 9 million people looking for work, drawing unemployment today. You could hire each and every one of them with a $22,000 job and have money left over with the additional interest in the national debt that we are going to have to pay.

Now, as you have indicated, we are running up debt. This chart shows the Social Security cash flow. What we are spending now, the little blue line, shows that we are bringing in more than we are paying out. In 2017, we are going to start paying out more than we are bringing in. Right at the time we are deepest in the debt, paying the most in interest on the debt, we are going to need to come up with cash to pay for Social Security.

Now, there is an old adage that goes, ``If you don't change directions, you might end up where you're headed.'' Let us look at what where we are headed with this budget. This black line shows the taxes if we continue making these tax cuts permanent, as the Republicans have continued to pass. Where are we headed? By 2040, this line goes across and shows that we could be able to pay for the blue, interest on the national debt; the yellow, Social Security, and we would have to borrow a lot of money to pay for that because you are not even covering Social Security; but we would also have to borrow for the red, which is Medicare and Medicaid; and green, which is government spending like defense, education, FBI, and everything else we do, all with borrowed money.

Obviously, this is not a sustainable direction. We have to change directions, and we need to start now. It is not getting any better.

I thank you for leading this Special Order. We have a lot of work to do. Again, if people want to know what the Democratic plan is, the democratic plan is the blue. We dug ourselves deeply out of debt and ran up a surplus sufficient to have an over-$5 trillion surplus.

Mentioning Social Security, to pay for Social Security for the next 75 years, we would need today $4 trillion more in the trust fund, $4 trillion more. We had over a $5 trillion surplus squandered away, turned into a deficit. We had the Social Security problem licked because we had gone into surplus. We could have paid Social Security for the next 75 years. But, no, we went in a different direction.

We need to get back to the Democratic plan and certainly reject more of what we have been doing for the last 5 years.

Mr. MORAN of Virginia. I thank my good friend from Virginia. Let me just clarify a couple of points. In the Democratic plan, it was basically based upon the pay-as-you-go concept of 1990 with the first President Bush, a bipartisan plan to pay for any subsequent tax cuts, to have sufficient revenue to pay for whatever spending occurred, but to balance the budget each year. By those efforts to balance the budget, it actually created a surplus.

Now, I know that the gentleman voted after 9/11 to go to war in Afghanistan, to go after the people that attacked us, Osama bin Laden, as I did; but that is a small fraction of the money that we are spending on the Iraq war.

The gentleman knows a lot of people, men and women, who have been financially successful. Does he feel that if they had been asked to sacrifice to pay for the war to go after those people who attacked us on 9/11, that they would have readily foregone tax cuts so that we could keep the budget balanced and avoid deficits being passed on to future generations?

Mr. SCOTT of Virginia. If the gentleman would yield further, not only that, and the way the question is framed, it is significant, because the overwhelming portion of the tax cuts are going to people that make more than $200,000.

There is one tax cut that goes into effect this year, colloquially known as PEP and Pease, dealing with standard deductions and other kinds of deductions that can be made. To make a long story short, it only affects the wealthy. If you are making more than $1 million, you get out of this tax cut, when it is fully phased in, about $19,000. If you are down between $75,000 and $100,000, on average you will get $1. If you are under $75,000, you get zero. This shows how we are going to spend $20 billion a year when this thing is fully phased in.

It would seem to me this is how we get into deficit, with those kinds of cuts. $20 billion a year, let's put that into perspective. All the BRAC base closings that you suffered in Northern Virginia and I suffered in Hampton Roads, Virginia, all of the BRAC closings, we will be lucky to save $20 billion over 20 years. $20 billion a year, when people under $75,000 don't get a dime; people over $100,000 might get $1; $100,000 to $200,000 might get $25, over $1 million, $19,000. That is how we are spending $20 billion a year in that tax cut.

It seems to me before we pass tax cuts like that, we ought to get the budget straight. Let's not be down here in the dumps talking about more tax cuts, particularly when they are weighted overwhelmingly toward the wealthy.

Mr. MORAN of Virginia. I thank the gentleman for illuminating those misplaced priorities, and I thank him very much for his extraordinarily illuminating set of charts and numbers.

Mr. Scott, do you have one further thing you wanted to share with the American people? I yield to the gentleman.

Mr. SCOTT of Virginia. I would say that if we had actually improved the economy with all those tax cuts, it might have been worth it. But this chart shows that the economic improvement, the number of jobs created since Herbert Hoover, it shows that after we have run the budget into the ditch, we still have ended up with the worst job performance since Herbert Hoover.

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