Sens. Conrad, Durbin, Sarbanes and Corzine Hold News Conference on Tax Cuts
CONRAD:
Welcome. Good to be with you this morning.
As you know, the president is in Philadelphia today talking about the child credit. And while I think all of us support the expansion of the child credit, there's another part of the president's message that is missing. The president has been telling the American people that it's the people's money and we ought to give it back to them. What the president is leaving out is that it's also the people's debt and that he is running it up in a reckless way that is unprecedented in our history.
We have now calculated how much is being added from the debt that existed in 2001 during the budget period for which the president has made proposals that will have an effect long into the future. And what we see is that the president, during his period, during this budget period, is adding over $21,000 of debt for every man, woman and child in the country.
The most recent tax cut is a good example. It's very much like going to somebody and saying, "Look, I've got a plan to strengthen the economy, and here's my plan: I want to put $1,200 on your credit card, I want to give you $200 in order to encourage you to go along with this scheme, and then I'm going to go to 90 of your neighbors and do the same thing, and with that difference between the $1,200 I put on your credit card and the $200 I give you, I'm going to take that difference from you and 90 of your neighbors and go give it to the wealthiest person in town in the hopes that that will stimulate the economy."
That is really what the president has just done with the most recent round of tax cuts.
But I think the most important thing that is being left out that the American people should know, that while it's true, it's absolutely true that it's the people's money, it is also absolutely true that it's the people's debt.
And the president is borrowing every dime of the money to be returned in these tax cuts. And he's putting it on the charge card of the American people to the tune of over $20,000 for every man, woman and child in the country.
Let me turn now to Senator Durbin. We're going to call on Senator Durbin next because he has a markup going on. We'll go to him and then Senator Sarbanes and Senator Corzine will bat cleanup.
DURBIN:
Thanks, Senator Conrad.
Much has been made in the recent days about 16 words in an important presidential speech, 16 words in the State of the Union Address that may have been misleading.
Sadly, it appears the State of the Union speech in January of this year was not the first time that 16 words spoken by the president have been misleading to the American people.
On March 27, 2001, while promoting his massive tax cut at a plan in Kalamazoo, Michigan, President Bush stated, "We can proceed with tax relief without fear of budget deficits, even if the economy softens" -- 16 words that cost 326 million Americans $21,480 each.
In May 2003, the Republican Congress passed the latest of Bush tax cuts, the third largest tax cut in history. Around the time of the May tax cut, the nonpartisan CBO estimate and said this year's deficit would be upwards to $300 billion. Now the Bush administration itself, in the OMB mid-session review, is re-estimating that deficit at $455 billion.
But that doesn't tell the whole story.
When Social Security revenue is excluded, the deficit total is $610 billion, or 5.7 percent of our Gross Domestic Product, a deficit level that has been reached only one time before since the end of World War II.
Even more disturbing, the actual deficit figures are likely to be far worse. In its estimates, the Bush administration has not included the cost of Iraq and Afghanistan.
The $334 billion surplus projected for 2003, when President Bush took office, has turned into at least a $455 billion deficit -- over $700 billion turnaround under this administration.
Now let's get to the bottom line.
This is a failed economic policy. This president has been unable to invigorate this economy. The employment figures are still staggering. We still find businesses failing.
There is a lack of confidence in our future, because this president's tax cut policy has done nothing more than add debt to this economy -- a debt which will be shouldered by our children and grandchildren, a debt which will in fact restrain us from meeting our obligations under Social Security, Medicare and our other obligations to this country.
These 16 words were as misleading in March of 2001 as the 16 words in the president's State of the Union Address last January.
CONRAD:
Senator Sarbanes.
SARBANES:
I want to thank Senator Conrad for focusing our attention on an extremely important issue. Well, the fact of the matter is that we're now running unprecedented deficits. After the president had assured us back when he -- shortly after he took office they could do the tax relief without running large deficits, even if the economy softened.
Well, the economy softened, of course, but what the president did is he piled on these huge tax breaks, primarily to benefit wealthy people, and as a consequence, we're loading debt on everybody in our society.
So the ordinary person is assuming a huge debt burden in order to fund these large tax cuts for very wealthy people.
The OMB is now projecting we're going to be close to $500 billion deficit next year. That's a third larger than the administration projected only a few months ago.
The fact of the matter is, is that the president, through his spending and tax policies -- and his spending has increased enormously, because primarily because of the demands of Iraq.
The president talks about spending increases. The large spending increases are coming out the administration. And the tax cuts are coming out of the administration. And the combination of those two things have now put us on a path where even if we were at full employment, even if the economy were doing very well, we would be running very large deficits. Those are called structural deficits. Those are deficits that have been built into the system, not related to the economic circumstance. So even if you had a very, very good economy, running at full employment, we'd be running very, very large deficits.
We asked Alan Greenspan before the committee the other day about the advisability of running large structural deficits at times of full employment. And Greenspan's answer was short and simple. He said, "I would be against it."
And this president now has put us deep into this box.
SARBANES:
And the consequence of putting the country deep into this box, as Senator Conrad has pointed out, is to load heavy debt on all of our citizens.
Finally, this policy is not working in terms of putting people back to work. The president runs around the country talking about jobs, but he's not producing jobs. This is the worst administration with respect to jobs since Herbert Hoover. The unemployment rate now is at a -- the last time it was at this level was nine years ago. The long-term unemployed are at a 20-year high. People have exhausted their unemployment insurance, they're hurting out there all across the country, and the president fails to come to grips with what the nation confronts.
CONRAD:
Thank you.
Senator Corzine?
CORZINE:
Thank you, Senator Dorgan, for pulling this commentary together. People's money -- but the people's money is going to go out the window.
That $21,000, by the way, translated at a 5 percent interest rate, is going to cost every man, woman and child $1,000 a year -- more than $1,000 actually, at 5 percent, against $21,000.
For a family of four, that's $4,000 a year. The average tax cut, what is it, $35 for 50 percent or less of the population.
This doesn't add up. People's money translated into people's debt is going to take money out of the people's pockets.
And if you look at what's going on at the state and local level, where we have a $100 billion budget deficit in our states, combined, you're seeing rises in property taxes that are more than offsetting.
This is not the win, this is not the contributing element to the success of our economy that my colleagues have pointed out. We're not seeing growth in employment, we're not seeing growth in business investment, we're not seeing a turnaround in the economy.
And the reason is, we're laying on a debt burden and a tax burden, debt burden for each individual and for the country, and a tax burden at the state and local level that is offsetting anything that we're doing here at the federal government.
And I'll just finally say, there's another fact that's very real. I just ask any of you to go and check what has happened to interest rates in our financial markets in the last three weeks, since we started realizing that there's a $455 billion budget deficit: 1 percent rise in long-term interest rates. While the Federal Reserve is cutting short-term interest rates, long-term rates have gone up 1 percent.
And that's just a forewarning of what's going to happen over the next 10 years as this $21,000 debt burden lies on each individual. We've got a real problem here. We're working against ourselves. As opposed to promoting the economy, we're undermining it.
I think Senator Conrad's point with regard to this debt burden that we're laying on every individual is absolutely essential for the American people to understand in the context of this talk about tax cuts and the three tax cuts that the president has used as the centerpiece of his economic policy.
CONRAD:
Senator Dorgan?
U.S. SENATOR BYRON DORGAN (D-ND):
Thank you.
I know the president has taken a trip now to Philadelphia to watch the printing of the tax refund checks that will be sent to the American people.
I really recommend two additional stops on this trip today. One would be to the printing office that is associated with the Treasury Department so he could watch the printing of the bonds, that is the debt instruments that'll have to be floated in order to pay for the tax cuts.
And second, I think a stop near the debt clock, that clock that is now whirring nearly out of control, ratcheting up the federal debt, just to take a look at what this means to the future of this country's economy.
It is undeniable that this administration has turned a record surplus into a record deficit in record time. The fact is, we understand, I think the American people understand this doesn't add up. We have a fiscal policy that says, "Let's have much higher defense spending, much higher spending on homeland security, let us also reduce our tax obligation by cutting revenue substantially and then let's see if we can tell the American people we'll grow out of this problem."
The fact is, even if we achieve the growth that is projected by this administration, we will have the largest deficits in the history of this country. That is not a legacy this administration or this Congress should aspire to leave to its children.
And my hope is that the president would sit down with the members of Congress in a summit to talk through this problem, understanding the current situation, the current fiscal policy doesn't work and we must, all of us must fix it for the good of this country.
CONRAD:
We'd be happy to take questions that you might have.
QUESTION:
There's a new poll out today by Democracy Corps showing that Bush is actually losing some ground on issues like the economy and foreign policy. But it also shows that Democrats aren't picking up any credit for that. Do you know why that is (OFF-MIKE)
CORZINE:
Well, I can say that losing ground means that the American public is recognizing the kinds of things that we're talking about here today. It is hard when we have not been able to have the very positive agenda both with regard to budget, with regard to support for states, talking about tax cuts that would have actually gone into people's pockets that would have turned around and spend it and done it on a fiscally responsible short-term basis -- all of those things I think we need to make sure that people know there's an alternative. We tried to make that happen when we were debating the tax cuts.
But I think people are realizing increasingly that this program that the president laid down has not the right formulation for stimulating and getting jobs and growth in our economy. And it's very clear. And I think the real reason is that we're laying an unbelievable burden of debt on the current generation, and even worse on future generations as you go forward.
CONRAD:
Now one thing I think we should also say is that this is very typical in the presidential election cycle. That is, before there is a defined alternative, it's very hard for a party to have a common voice, and as a result, a reaction from the American people.
I think what you know in polling is, what's most important is how the incumbent is viewed. And more and more people are coming to the conclusion that the president has taken us down a fiscal course that does not add up. It is very dramatic what the polling shows.
We've just seen polls that show there's 20-point advantage to those who believe we should move in a dramatically different direction on economic and fiscal policy from the president's course. Fifty- eight percent of the American people believe that. That is a very dramatic change and very significant just in the last 30 days.
QUESTION:
Most economists are predicting a pickup in the economy in the second half of the year. Once that happens, do you think there will be even less concern about deficits?
CONRAD:
I don't think so. I think concern about deficits and debt is growing.
Most economists, you are quite correct, are predicting a pickup. They were predicting that before the latest round of tax cuts because of getting past the concern about the war, that that was creating a significant burden on the economy.
But the thing that is clear and undeniable is this debt burden that is being laid on the country. And people are beginning to understand the implications of that and the magnitude of it.
The stories that showed the deficit at a record level -- the biggest deficit that we've had in our country's history in dollar terms, and the second biggest in GDP terms in over 57 years -- caught the attention of the American people.
And so when the president was saying over and over, "It's the people's money, let's give it back to them," that had one resonance when the country supposedly was in surplus. It has a much different ring to people when they know that all the money is being borrowed. And where is he borrowing it from? He's borrowing it in the name of the American people.
So, it's like you go down the street -- somebody goes down the street and hands out $10 bills to people, and in order to float the boat, puts $100 on their credit card. That's no deal. That's no bargain. That's not a positive development, and people more and more are coming to that conclusion.
SARBANES:
Proof positive that the deficit issue will matter is the fact that there's a group of Republican House members who are now running around saying that they want to pass a balanced budget amendment to the United States Constitution, having voted, of course, for all of these fiscal measures that the president wants that have given us these very large deficits.
So now ostensibly they're going to try to fool the American people into thinking that they care about the deficit problem, because not having done the responsible thing on the policies that actually matter, now they're going to float this old chestnut about an amendment to the Constitution to require a balanced budget. Where were they when we were fighting these important issues about tax cuts and spending increases?
CONRAD:
Thank you. Thank you all.