The Federal Budget

Floor Speech

THE FEDERAL BUDGET -- (Senate - March 07, 2008)

Mr. CORNYN. I thank the majority leader.

Mr. President, I wish to now transition to talk about the issue that will be in front of the Senate next week, and this has to do with the Federal budget.

This is so important across so many areas because not only does this budget talk about what the tax burden of hard-working Americans will be in the coming year, it also has an impact on energy costs, on health insurance costs, on the ability of Americans to buy homes. How do we create better schools for better jobs? How do we deal with the issue of runaway lawsuits that threaten the business environment and have a dampening effect on job creation? How do we revive capital markets, rebuild our roads, bridges, railroads and airports? How do we provide a simpler, fairer tax system than we have now? And How do we make sure Americans retain the right to work in the job of their choosing without having to become part of a union when they don't want to?

The part of this budget that concerns me the most is not the proposed $1.2 trillion tax hike that is contemplated under this budget that passed strictly along party lines in the Budget Committee yesterday afternoon, although that is bad enough. It will hit family budgets hard. Mr. President, 43 million families will owe an average of $2,300 more in 2009 in taxes as a result of this budget if it is adopted on the Senate floor. I am also concerned about the spending increase under this budget, some $211 billion in additional spending that is part of this budget proposed from the Budget Committee that will be before the Senate this next week. That means, in fiscal year 2009, if adopted, a 9-percent increase over what the Federal Government spent in fiscal year 2008.

Now, as bad as the higher taxes and higher spending is, I wish I could say that was the end of the story, but it goes on from there and it doesn't get any better.

As a result of the increased spending and the increased taxes contemplated under this budget, America will find itself $2 trillion deeper in debt by the year 2013 if this budget is adopted. That is more than $6,000 in extra debt for every American.

And I would say this budget also fails in another important respect. It fails to deal with the impending crisis in entitlement spending and the future insolvency of both Medicare and Social Security, two important safety net programs, and ones we have made a promise to fund and to make sure is there for not only present beneficiaries of these programs but for our children and grandchildren as well. We know that unless something dramatic happens, we will not be able to keep that commitment.

As a matter of fact, unless this Congress acts, there is $66 trillion in unfunded responsibilities under the current entitlement programs we need to fix; that we need to take into account.

Now, there is an important piece of legislation I think we ought to take up and that is the Conrad-Gregg task force to deal with this gathering storm of an entitlement crisis. It is a bipartisan bill by the chairman and the ranking member of the Budget Committee. But we are not taking that up, as we should, as part of dealing with the Federal budget. Because we know that if we don't do anything, there is going to be a terrible financial catastrophe, and the people who will ultimately suffer as a result of our failure to act will be future beneficiaries under Social Security and Medicare--our children, our grandchildren, and future generations.

The last thing I wish to mention with regard to the budget is what the Wall Street Journal has called the pay-go farce. You will recall that pay-go was the name given to pay-as-you-go requirements under the budget. Sounds good. That is what the family budget has to do. If there is no money coming in the front door, then you are not going to be able to spend yourself into debt. You pay as you go. That is the way most businesses operate but not the Federal Government. The Federal Government can continue to print money and spend money it doesn't have and pass the debt down to our children and grandchildren.

If you take into account this unfunded liability of $66 trillion because of the entitlement crisis--the gathering storm I mentioned a moment ago--that boils down to about $175,000 per person--every man, woman, and child--that we owe now for those unfunded liabilities unless we take action now. But the pay-go farce the Wall Street Journal article mentions--and the date of this article is December 10, 2007--quotes Speaker Nancy Pelosi in remarks she made on December 12, 2006. She said:

Democrats are committed to ending years of irresponsible budget policies that have produced historic deficits. Instead of compiling trillions of dollars of debt onto our children and grandchildren, we will restore pay-as-you-go budget discipline.

Now, I have to tell you, just taken at face value, that sounds pretty good. We do need to take responsibility. We do need to do that on a bipartisan basis. But the pay-go promise made by this Congress looks like Swiss cheese. There are so many holes in it that you could drive--not to mix my metaphors--but you could drive a truck through it. And let me explain why.

First of all, these pay-go rules that promise financial discipline do not apply to discretionary spending. That is about $1 trillion a year. And it doesn't restrain spending increases under current law in entitlements,
such as Medicare or Medicaid, the programs I mentioned a moment ago. The main goal, and this is a problem, is that it is designed to make tax relief for working families and small businesses almost impossible.

Now, we ran into this pay-go requirement when it came to relieving middle-class taxpayers from the alternative minimum tax this last December. And I agree in that instance it was important to waive the pay-go requirement. Because, frankly, if you will recall, the alternative minimum tax was never designed to hit the middle class. But because it was not indexed for inflation this last year, it covered 6 million taxpayers. If we hadn't acted, it would have hit 23 million middle-class taxpayers. So I agree it was appropriate not to require pay-as-you-go principles for that alternative minimum tax that Congress never intended the middle class to have to pay.

As a matter of fact, back in the 1960s, the alternative minimum tax was adopted, as a result of a report issued by the Department of Treasury that said that 155 high-income taxpayers did not pay Federal income tax because of other deductions. But as is typical in schemes designed to ``tax the rich,''--we have heard that before--eventually it grows and grows and grows to cover the middle class. So be wary when Congress says: We are only going to tax the rich. That means we all need to put our hand on our wallet because it eventually grows into a middle-class tax.

Another time Congress used the pay-go gimmick, which gives rise to the title of this article called ``The Pay-go Farce,'' was on SCHIP. Now, you will recall that is the State Children's Health Insurance Plan, something we all support on a bipartisan basis. But the way it was proposed by the leadership last year, to fund the 140-percent increase in this program, was a joke. The SCHIP bill included a spending cliff that disguised its actual cost. It assumed spending would rise to $14 billion by 2012, but then pretended the costs would fall to less than half in 2013, which just so happens to fall outside the 5-year budget scoring window. Some $60 billion in spending over the next 10 years were hidden through this ploy of creating a cliff in spending, suggesting that somehow Congress would cut this program in half and deny children access to health insurance, something we all know would not happen.

So that is why the pay-go requirement has been called a farce and why I likened it to Swiss cheese. It has so many holes in it, it doesn't do what it has promised to do, which is to restore budget discipline; and it unfairly impacts the ability to provide tax relief to working families in a way that can grow the economy and allow people to keep more of what they earn--money they can use to pay for things like education, health care, and transportation.

As a matter of fact, as a result of the 2001-2003 tax relief that this Congress voted on and passed in the wake of 9/11, in the wake of the stock market scandals, and with the recession at the beginning of that decade, we saw more than 50 months of uninterrupted job growth in the country, with 9 million new jobs being created. It should not be surprising that tax relief ends up being one of the best stimulae we could possibly give the economy. We saw Federal revenues at historic highs and that is because more people working means more people paying taxes and more revenue to the Federal Government; and thus the budget deficit reduced from roughly 1.9 percent of the gross domestic product to about 1.2 last year.

So, in closing, I would say this debate we are going to have next week is vitally important, and the question is: Are we going to wreck the Federal budget or will we find ways to help families balance their budget, especially with the economic challenges that they face? It is all about taxing, it is all about spending, it is all about whether we are going to increase the Federal debt, it is all about whether we are going to meet our responsibilities as elected officials to deal with the impending entitlement crisis which threatens to act similar to a tsunami and engulf us in a huge wave of red ink.

Mr. President, I appreciate the courtesy of the majority leader, and I yield the floor.

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