Increasing The Statutory Limit On The Public Debt

Floor Speech

INCREASING THE STATUTORY LIMIT ON THE PUBLIC DEBT -- (Senate - January 21, 2010)

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AMENDMENT NO. 3301

Mr. THUNE. Mr. President, today the Senate will have an opportunity to indicate to the American people whether they are listening to the American people because we are going to have an opportunity to vote on a debt limit bill later, but earlier, before that, on a series of amendments. The first amendment is an amendment I am offering along with Senator Vitter from Louisiana and Senator Bennett from Utah. They have worked extensively on this. They have already been down here and they spoke on this this morning, as have a number of my colleagues.

What is important about this amendment is it will give an indication to the
American people about whether their voices are being heard here in Washington as expressed by the voters of Massachusetts. I think what they were saying in that vote a couple of days ago was: We are frustrated. We are concerned about the level at which Washington is spending and taxing and borrowing. We want the brakes put on that.

I have an amendment that I offer to the debt limit today that will end TARP. It is a very straightforward way in which we can signal to the American people that we are serious about fiscal responsibility.

Just by way of context, if you look at what is being proposed here with this debt limit increase, it is to add $1.9 trillion to the debt limit of our country--$1.9 trillion. Remember, we already raised the debt limit before we left for the Christmas holiday by $290 billion, so if you add that to the $1.9 trillion, you are talking about well over $2 trillion that we will have added to the debt limit in the last 30 days. Bear in mind that the entire Federal budget a decade ago did not exceed that amount of money. We are going to add more to the debt limit in this vote, coupled with the vote we made about 30 days ago, than was spent in the entire Federal budget a decade ago. That is remarkable. It speaks to the whole issue of the amount of spending and the growth of government here in Washington, DC, which I believe has the American taxpayer very concerned--and with good reason.

If you look at what has happened in the last several years, starting in 2008 and up through 2010, this year--if you take the end of 2008, the amount of money spent in the appropriations bills here in Washington, and then go to the 2009 appropriations bills and the 2010 appropriations bills, over that time period the entire government grew by 16.8 percent, over a 2-year period. That is excluding the defense and veterans funding, so that is other nondefense discretionary spending. All these increases outpace both inflation and the growth in our economy.

To put it in perspective, inflation during that same period, 2008 to 2010, was 3.5 percent. We grew government spending by 16.8 percent. That is stunning. How does any American taxpayer out there in this recession, trying to figure out how to make their budget, how to pay their bills, and having to go about the process of tightening their belts, understand how a Federal Government can grow its size here in Washington, DC, by 16.8 percent when inflation in the country over that same time period was 3.5 percent? These are some remarkable and stunning numbers. That is why we are seeing all this angst at the grassroots level around this country about the direction the country is heading and the peril it is putting future generations in if we continue on this path unabated and we don't do something about spending and we don't do something about the massive amount of borrowing and expansion of government.

I also think people are reacting to the process by which Congress conducts its business. The idea that you would have to pass legislation by including special provisions for individual Senators--the so-called cornhusker kickback, the Louisiana purchase, all these other things where individual deals were made in back rooms to get the support of individual Senators to vote in this case for the big health care bill--is something the American people find very objectionable. I think they are reacting to that too. I think what they are voicing is their disgust with the way Washington operates.

One of the reasons we are here today asking for a $1.9 trillion increase in the debt limit and the reason we have a debt that next year will exceed 60 percent of our gross domestic product--which, by the way, would keep us from getting into the European Union--is because we continue to spend and spend and borrow and borrow and frankly use a lot of accounting gimmicks here in Washington, DC, to disguise and shield the amount of borrowing and spending that is going on here.

A good example of that was the health care bill which we have been debating now for the last several months. It passed the House of Representatives, it passed the Senate, and it is now in discussions. Negotiations are going on between the leaders in the House and Senate. I am not sure--we have not been privy to those, either--what the state of play is with regard to the health care bill.

I think it is important to know that there were a lot of things in that bill designed to understate its true cost. They said it would only cost $1 trillion over the first 10 years, but if you look at the fully implemented cost, because it front-end-loaded some of the increases and back-loaded some of the spending, because it used various accounting gimmicks to understate the true cost of it, if you look at the fully implemented cost over 10 years, it was in fact $2.5 trillion. I think those numbers are starting to sink in with the American people.

One of the things that was done in the health care bill--and I think this is an example of some of the things that happen, processes, procedures that happen here in Washington, DC, that defy logic and are very difficult to explain to the American people--one example of that is the way the Medicare issue was debated and handled with regard to the health care debate. About $ 1/2 trillion in Medicare cuts was proposed, along with a Medicare tax increase of .9 percent, all used to finance this new health care entitlement program, to pay for the new $2.5 trillion in spending. The argument was made by the other side that this, in fact, extended the lifespan of Medicare because it was--the cuts to Medicare and the revenue increases were somehow going to expand the lifespan of Medicare.

What I thought was interesting about that was the Senator from Alabama asked a question of the Congressional Budget Office toward the end of that debate about, how can you count this as paying for the new entitlement program, the new health care program, and still say you are extending the lifespan of Medicare because obviously you can't use the money twice. In response to that question, the Congressional Budget Office issued a statement and said that the key point is that the savings to the HI trust fund, the Medicare trust fund, under the health care bill would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and at the same time pay for current spending on other parts of the legislation or on other programs.

They went on to say:

The unified budget accounting showed that the majority of the HI savings [the trust fund savings] would be used to pay for other spending under the health care bill and would not enhance the ability of the government to redeem the bonds credited to the trust fund, the Medicare trust fund, to pay for future Medicare benefits. To describe the full amount of HI trust fund savings as both improving the government's ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the government's fiscal position.

That is just an example of one of the unique accounting mechanisms used by the Federal Government in Washington, DC.

Mr. BAUCUS. Will the Senator yield for a question at that point?

Mr. THUNE. I would say to the chairman, I will yield in a moment after I make some remarks, but I want to speak to the TARP amendment before I do that. I will be happy to yield at the conclusion of my remarks.

I want to say that I know what the chairman is going to say. He is going to say the CBO came back and said it would extend the lifespan of Medicare, and they did, and it would under the mechanisms used in the unified budget when it comes to trust fund accounting.

Mr. BAUCUS. Would the Senator yield on that point since he is raising the subject?

Mr. THUNE. As long as we are not on any time limitation, all right, I will.

Mr. BAUCUS. Didn't that same CBO letter also say the health care bill that passed the Senate would reduce the budget deficit? The Senator is throwing out these huge figures--it is going to cost $2 trillion and so on and so forth. I don't know where the Senator got that figure because the Congressional Budget Office, in that same letter or a similar letter--either that letter, in an earlier letter, or in a subsequent letter--reaffirmed that the bill passed in the Senate cuts the budget deficit by $132 billion the first 10 years and cuts the budget deficit by between $650 billion and $1.3 trillion in the next 10 years. That is what the letter says. The Actuary said the bill extends the life of the Medicare trust fund I think 5 or 6 more years--maybe more than that.

Isn't it true that CBO letter said that the Senate bill reduces the budget deficit by $132 billion in the first 10 years and reduces it in the second 10 years by between $650 billion and $1.3 trillion? Isn't that true?

Mr. THUNE. The CBO number, as the Senator from Montana knows, has been a moving target because at the end of that debate, they adjusted by about $ 1/2 trillion the amount they considered the deficit would be reduced. But I point out to the Senator from Montana that, yes, the CBO came out and said that because they are using the trust fund accounting conventions we use here in Washington DC, and that is my whole point. I am not disputing what the CBO has said because legally they are correct because of the way we do it under a unified budget accounting in the trust funds.

But as a practical matter, as an economic matter, what the CBO is saying in the statement they issued is, you cannot double-count the money. It is spending the same money twice. You are creating a new entitlement program, which is, under the CBO's estimate, $1 trillion over 10 years but when it is fully implemented, $2.5 trillion.

Mr. BAUCUS. Will the Senator yield? This double-counting, frankly, is a bogus issue. It kind of sounds good on its face, but it is meant to confuse people.

But even subsequent to that statement about the double-counting, even subsequent to that, is it not true that CBO came out with a subsequent letter that said still the budget deficit is reduced by $132 billion in the first 10 years and $650 billion to $1.3 trillion in the next 10 years?

Mr. THUNE. The CBO came out and said that the budget deficit would be reduced by $132 billion over the first 10 years. But the point I made earlier is that included, of course, a lot of gimmicks that were used, including taxes began immediately, spending that does not occur until 4 years later, counting revenue from--for example, not taking care of the physician fee increase, which we know is a $250 billion to $350 billion cost which at some point the government is going to have to deal with, as well as creating a new entitlement program called the CLASS Act, under which the CBO assumed about $72 billion of savings in the first 10 years, which they also said would generate deficits in the outyears.

So the Senator from Montana may be correct legally under the conventions that are used in trust funds under a unified budget, but as a practical matter, and this is what I think the American people understand and what as an economic matter I understand, you cannot use the same revenue twice. And if you have revenues coming in from Medicare cuts and Medicare payroll tax increases, and you are saying we are going to use those to finance this expansion, this new health care entitlement, and at the same time we are going to use those to preserve and extend the lifespan of Medicare, most people would say you cannot do that.

What the CBO said in this statement is, it is double-counting. It is spending the same revenue twice. That is the practical implication of this, notwithstanding the weird gimmicks and the way Washington, DC, goes about accounting for revenues in a unified budget that go into trust funds because essentially what is happening is, you are issuing an IOU to the Medicare trust fund and also taking those revenues and saying we are going to spend them to finance the new health care entitlement. You cannot spend the same money twice.

People in South Dakota know that. I think people in Montana know that. But that is why they are so frustrated about this process. They see this dragging on and all of this debate going on and all of these different numbers being thrown out. But the fact is, we are creating a massive new government entitlement program under health care with all kinds of new spending financed with tax increases and Medicare cuts that are supposed to be used to finance the new health care entitlement but are also being credited to the Medicare trust fund, and thereby being used for two purposes. You cannot do that.

But I think that point is one of the reasons that most persons become so cynical about Washington, DC. They get very frustrated with what they see as all of this Washington, DC, talk and accounting gimmicks and budgetary techniques that are used to disguise this amount of spending, which has led us to where we are having to raise the debt limit by $1.9 trillion.

Face it. That is the reality we are going to face today. We are going to have a vote, if not this week then next week, on this legislation which would increase the amount of the debt limit in this country by $1.9 trillion.

My amendment to this legislation, as I said before, is fairly straightforward. It would end TARP, the Troubled Asset Relief Program, which was created toward the end of 2008 that was designed specifically to bring financial stability to the country at a time when we were worried about imminent financial collapse. There was a concern at the time that there was great systemic risk to our financial system.

As a consequence of that, action was taken, authority was given to the Treasury to acquire the distressed nonperforming assets on the balance sheets of many of our banks. What has happened since that time, it has morphed into something entirely different. It has been used now to take equity positions, to take ownership stakes in more and more companies in this country, whether they are financial service companies, insurance companies, auto manufacturers. We have gotten very far afield from what the purpose of the TARP was in the first place.

As to where we are today, we have, out of that $700 billion in authority--I have a pie chart that shows what has been spent and what is left.

The blue represents the amount of the program, $700 billion, that has been committed or spent already. That is about $545 billion. That is what the blue represents. The other side of the chart, the line part and the orange part, represent the amount that has not been spent or has been paid back. The amount that has not been spent is about $155 billion. The amount that has been paid back is about $165 billion. So you have roughly $320 billion that to date is unobligated balances in the TARP account.

What my amendment would do is say that amount, that $320 billion, cannot be spent. It ends. The reason for that is because we are concerned this fund is going to be used for all types of purposes for which it was not intended.

Most recently, the House of Representatives passed the stimulus 2 bill, the second stimulus bill, which is going to use as an offset this authority right here. What we are simply saying is, this is $320 billion that we can save the taxpayers of this country, that we can keep from piling on debt to future generations, and keep from adding to the total amount of borrowing we are doing.

So let's stop. Let's end this program today and not allow this $320 billion to be spent and further stipulate that anything here in the blue, the $545 billion that is currently spent or committed, if paid back, would go to reduce the Federal debt rather than be recycled and respent and reused again.

It is a very straightforward, very simple amendment, but I think it is very important in terms of the message that it sends to the American people about whether we are serious about what this TARP was created for in the first place, its specific statutory purpose, and whether we are going to deviate from that and use it for all other types of spending and ideas that people in Washington, DC, might come up with.

So I hope my colleagues today will support this amendment. I happen to believe the TARP has served its purpose. The Treasury had an opportunity to extend it at the end of last year, the end of December of last year. They chose not to let it expire. They chose to extend it. So now this program runs until October of this year. My fear is that this amount of money, this $320 billion, is going to get spent, but it is not going to get spent for the purpose it was intended to be spent for under the TARP authority but, rather, for all kinds of other things that people, politicians in Washington, might come up with.

Also, this blue amount here, those funds that are already committed, are
spent, when they are paid back, and we hope they will be, although there are some questions now about whether we are going to see a lot of that money being paid back, but assuming it is, that money not be recycled or respent but it be used to retire the Federal debt. That would reduce the total amount by which we would have to raise the debt limit.

We are serious about getting this debt under control. We are serious about getting spending under control. This is a very straightforward way to do that. So we are going to have this vote, hopefully, later today, sometime this afternoon. We can save the American taxpayers $320 billion by not spending this amount of money here. We can, hopefully, as these are paid back, save a whole lot more for the American taxpayers.

I would urge my colleagues in the Senate to support this amendment and to restore some sense of fiscal discipline to the way we do business in Washington.

I yield the floor.

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