The Budget

Floor Speech

THE BUDGET -- (Senate - March 23, 2009)

Mr. THUNE. Madam President, this next week we will be taking up the budget for fiscal year 2010. Anyone who previously had not been concerned about that debate and what it means for the country and its future probably should be concerned, based upon the most recent CBO report that came out on Friday of last week. It was sobering. It reinforces the point that we have been making about the outline we have seen of the President's budget; that is, this budget spends too much, taxes too much, and borrows too much.

We have spoken extensively about the new spending in the budget. We have talked at great length as well about some of the new taxes in the budget and how it will drive up taxes on small businesses, the largest job creator in the economy, the economic engine that creates two-thirds of the jobs in our economy.

We also want to talk about the fact that it borrows too much. The CBO report punctuates that point. I couldn't have put it more clearly than what they came out with last week, which suggests the initial estimates about the President's budget outline, which we received earlier, were dramatically understated and, in fact, it is going to add significantly more to the deficit than what we initially anticipated. In fact, in fiscal year 2009, which is the year in which we find ourselves right now, the CBO has revised its deficit estimate to where it is going to go over $1.8 trillion for fiscal year 2009, which represents 13.1 percent--13.1 percent--of our gross domestic product, which dwarfs anything we have seen at any time in history.

So as we enter this debate next week, I think it really is important for all of us in this Chamber to take a good look at this analysis and to try to digest it and, hopefully, for the American people to be able to take a good look at what these numbers mean as well. It is sometimes difficult to even put it into terms people can understand. When I think about $1 trillion, it is a staggering amount of money. We are throwing around numbers in trillions and trillions and trillions today in the abstract. When you try to put it in terms that everyday Americans can understand, it is almost daunting to try to accomplish that.

So when this new report came out, I think many of us found it even more sobering than what we already knew was going to be a very difficult economic and fiscal climate for the next several years. In fact, the President's budget outline that had been analyzed up to this point suggested the debt was going to double in 5 years and triple in 10 years. That is still the case.

If you can believe this, the publicly held debt, in 2019, is going to be $17.3 trillion under the CBO's new estimate. It is about $5.8 trillion today. It literally does, in a 5-year period, double the debt and in a 10-year period triples the debt. It takes the publicly held debt, as a percentage of gross domestic product, from where it is today--a historical average of about, if you look back, 20, 30, 40 percent, but let's say today we are looking at 40 percent, and that is a very high number relative to anything we have seen in history--it takes it up to over 80 percent by the end of that period. So you are looking at public debt and public deficits that are unparalleled and are unprecedented in American history. I think that is the whole point behind the argument we have made throughout the last several weeks in the lead-up to this budget discussion we are going to have next week: This budget spends too much, taxes too much, and borrows too much.

The taxing component is something many of my colleagues have spoken to already. But if you look at, again, the overall tax increases--which many are imposed. And they talk about that it just applies to high-income taxpayers. But you are talking about small businesses, many of which file or organize as subchapter S's or LLCs. So the income they get from their small business flows to their individual income tax statement, which means when these rates go up--and they are going to go up--the effective rates, to 40 and 42 percent, when today those same businesses would be paying 33 or 35 percent, they will be significant increases in the tax burden we are imposing. That is not to mention the new climate change initiative which is also contemplated in the President's budget, which imposes an entirely new energy tax on the American people, on the American consumers, creating all kinds of new costs for energy, whether it is electricity or fuels. There have been studies that have been done, very credible studies by researchers at MIT, that have suggested it is going to cost the average family in this country over 3,000 additional dollars per year in energy costs by the year 2015.

These are some pretty daunting numbers. But they come on the heels of a stimulus bill that was passed a few weeks back that was about $800 billion. When you add interest in it, it was about $1.2 trillion. That was a huge amount of money. When we try to put that in perspective relative to anytime in our Nation's history, it eclipsed anything we had seen previously. Then we had the Omnibus appropriations bill, which increased spending over the previous year by twice the rate of inflation--about 8.3 percent. Then you add the continuing resolution that was passed last year, which funded Government programs last year through March 6 of this year because that was a stopgap appropriations measure that was put in place because the appropriations bills had not been passed last year. Then we had the stimulus bill, which was, as I said, with interest, $1 trillion. Then we had the Omnibus appropriations bill, and with that a twice-the-rate-of-inflation increase. You add all those numbers together, and we have increased the size of Government this year by 49 percent--49 percent--from fiscal year 2008. I think that points to the fact, again, as to the amount of spending we are doing. It adds up because a lot of that, as I said before, is borrowed money, and it is contributing to these deficit numbers the CBO had just released.

So it would be my hope--and I know others are on the floor who are going to speak to this issue a little bit more in detail. I know the Budget Committee has analyzed the new CBO report. We are awaiting the markup of the budget this week in the Senate. We suspect it is probably going to follow somewhat closely the President's outline, his proposal, although my guess is there will be some differences. But if you take the overall trajectory it creates, it creates a trajectory over the next 10 years that calls for an average deficit--this is the average over the 10-year period--of almost $1 trillion. It is $929 billion, according to the Congressional Budget Office. That is the average.

This year, it is $1.8 trillion. Next year, it is $1.4 trillion. It drops down to $670 or $650 billion, I think, for 1 year. But then it starts spiking and trending back up again, to where, over the course of the 10-year window--the budget analysis and planning that is done here is done in a 10-year window. If you look at that 10-year window, the average deficit is $929 billion a year.

As I said, these are numbers that are staggering and unlike anything we have ever seen. It is hard to put into perspective what we are talking about relative to anytime in American history.

The other thing I will mention with regard to the stimulus bill as well--because I think there was an assumption that all this borrowing and all this spending would somehow lead to job creation and hopefully getting the economy expanding and growing again--what the CBO found in their analysis, again, was that in the long term the impact would be negligible or negative from the spending that was created in the stimulus bill. So not only were we getting no additive benefit in terms of job creation from the stimulus spending--or in the long term, at least--we are going to see negative, they think, or at least negligible, zero, economic growth as a result of it. We are adding $1 trillion to the amount we have borrowed from future generations, and we are asking our children and grandchildren to have to pay it back, not to mention what I am sure are going to be other types of economic consequences associated with that: higher interest rates, higher inflation. There is already a lot of discussion about that as we continue to borrow more and more money, whether there will be people out there who will want to buy our debt.

I believe those are all legitimate concerns and questions we need to raise in this debate, coupled with the fact that there is nothing done in this budget that would in any way significantly reduce the long-term costs associated with the entitlement programs and what is really driving, in the outyears, these deficits: Social Security, Medicare, and Medicaid. There has been a lot of discussion in the new administration about a willingness to sit down and talk about how to reform and make these programs strong and better and more efficient for the future, but there is nothing in this budget that does that.

In fact, the only serious savings we can point to in the President's budget that they try to achieve come out of defense, come out of the military, come out of our national security, which I would argue: If we do not get national security right, the rest is conversation. But they are assuming savings as a result of drawing down troops in Iraq and places such as that, which I think they are overstating what they are going to be able to achieve in savings.

I would argue some of the other assumptions in the President's outline are optimistic with regard to revenues--and I think the CBO study bears that out--to the point now that even the Washington Post, yesterday, came out with an editorial that I think illustrates exactly how serious this fiscal situation is for our country, and drawing into question the fact that there is very little done in this budget that addresses those long-term fiscal problems I just mentioned in the entitlement programs.

There is nothing to reduce the cost of Government in the outyears, only things that are going to pile on additional costs and add and multiply over a long period of time. The incredible amount of borrowing we are already doing is going to be multiplied many times over into the future.

Madam President, I ask unanimous consent that the editorial from the Washington Post be printed in the Record.

There being no objection, the material was ordered to be printed in the Record, as follows:

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Mr. THUNE. As to the stimulus bill, in and of itself, we are told, if the spending that is included there is not terminated at the end of the 2-year period--when we assume the short-term stimulus spending would terminate--if those programs are continued, the estimate of what they would cost goes from about $1 trillion to over $3 trillion over that 10-year period.

So there will be mountains and mountains and mountains of debt as far as the eye can see, complicated by an unwillingness by the new administration to take on any of the serious decisions that have to be made with regard to entitlement programs and mandatory spending in this budget, with lots of new programs created, as I said, new energy taxes under the guise of climate change, a new health care program that is estimated to cost around $600 billion but which many independent analysts are now saying is going to cost up to $1.5 trillion.

These are all costs that are adding up and continuing to lead to more and more borrowing, higher and higher deficits, to the point that this year 13.1 percent of GDP is the percentage and over $1.8 trillion is the actual number of the deficit. And that goes on now for years and years, and an average of $1 trillion a year just in deficits, to where the public debt, at the end of that 10-year period, will be $17.3 trillion. That is an incredible problem for our country and for future generations.

So it is high time we got it under control. It is why this budget is so wrong for America and for our future.

Madam President, I yield the remainder of my time.

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