Statements on Introduced Bills and Joint Resolutions

Floor Speech

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Mr. BENNETT. Mr. President, as I move around the State of Utah to talk to my constituents, I find, with all of the other specifics they are concerned about, the one thing just about everybody is concerned about is our long-term fiscal situation. They are worried about debt. They are worried about the deficit in this year that is adding to the debt. They say to me: What can we do about it? They listen to the pundits who talk on the air about this particular project or that particular project that sounds outrageous. Many times the projects are, in fact, legitimate, but they make good copy.

I say, if you add up all of these projects together--the good ones and the bad ones--and eliminated them all, you would reduce the Federal deficit by less than 1 percent. Let's talk about where the money lies. Let's talk about where the challenge is. So I present to my constituents a series of charts that I will present here that outline where the challenge is.

One of the things that becomes clear, as we go into this debate, is it is not just our financial situation that is in trouble. The pressures created by our debt are crossing over into the area of national security. We cannot maintain our military or our diplomatic initiatives with the kinds of pressures continually increasing.

So a little bit of history, which I share with my constituents and that I share here as the background for the bill I am introducing today.

This is a very simple pie chart that shows the components of Federal spending back in 1966. I ask my constituents: Why do I pick 1966 as the year to start? Some of them know the answer; some of them do not. But in 1966, mandatory spending constituted 26 percent of the budget, and interest on the national debt another 7 percent. You have to pay the interest on the bonds, so that is mandatory spending as well. So the government is committed for a third of the budget before the Congress ever gets around to appropriating any money.

In 1966, the biggest portion of mandatory spending was Social Security. The combination of Social Security and other mandatory programs, and the interest cost, was one-third of the budget. The other two-thirds was available to the Congress. Of that spending, defense spending was 44 percent of the total. Defense spending, obviously, dominated nondefense discretionary spending.

Where are we today? What has happened in the years since 1966 and today? Here are the components of Federal spending in fiscal 2008. I picked that year, before the tsunami hit us--the financial tsunami that caused the meltdown and all of the problems--as perhaps a demonstration of what is happening structurally within the budget, not affected by any particular emergency.

Mandatory spending has now grown to 54 percent. Interest costs are from 7 to 8 percent. So the two of them constitute roughly two-thirds of the budget. From 1966 to 2008, mandatory spending now is twice as big in its proportion of the budget than it used to be. Defense spending has shrunk to a half of what it was back in the 1960s, and nondefense discretionary spending is about the same.

All right. Now back to the question: Why did I pick 1966 as the year to start with? Because that is the year the Federal Government got into the medical business and enacted Medicare. Since then, we have added Medicaid. So today, when you talk about mandatory spending, Social Security is no longer the dominant factor. It is a combination of Social Security, Medicare, and Medicaid.

I will leave aside the issue of the value of those programs. I am just talking about the money we are spending here. Today, as we argue over congressional spending, we only have a third of the budget to talk about, and half of that, roughly, is defense spending.

Let's go to fiscal year 2009. Mandatory spending has grown to 59 percent. The interest cost is 5 percent. Defense will have shrunk, nondefense will have shrunk. The reason the interest costs are shrinking is because we are borrowing money at a lower rate by virtue of the things that have happened with the financial tsunami.

But now let's go out 10 years to 2020 and see where we will be. In 10 years, mandatory spending will have grown to 58 percent. The interest costs will have grown to 13 percent, and defense and nondefense together will constitute only 30 percent. If defense is shrunk to 15 percent of the budget, it begins to bite very seriously into America's role in national security around the world.

One author I have looked at who has talked about America's role in the world in a very thoughtful way looks ahead to this, and he says the greatest threat to America's position in the world is not China, it is not India, it is not North Korea. It is Medicare. The greatest threat to America's ability to sustain itself and its national security is coming from the growth of mandatory spending.

If we spend all of our time arguing over those tiny things that make good copy in newspapers and on television and do not address this inexorable growth, we will discover that the Congress has become irrelevant. Three-fourths of the budget of Congress will already be spent before the Congress even meets, and only one-fourth will be left for us to talk about, and that one-fourth will have to include our spending for national security, and you will see how everything else will get squeezed out.

I had that hit me directly as we had the debate last year on the budget resolution for fiscal year 2010. Standing at this very place, I looked down at the bill that was presented and sitting here on a podium, and it projected Federal revenues for fiscal year 2010 at $2.2 trillion--down because of the challenges we had with the economic meltdown. Then on the next page it said: mandatory spending, $2.2 trillion. That meant everything we do in government in fiscal year 2010, other than mandatory spending--the Defense Department, the war in Afghanistan, the FAA which controls the airplanes, the national parks, our embassies overseas, the FBI, all of our law enforcement, the border security--everything, every single dime we spend in government, other than mandatory spending, in fiscal year 2010 had to be borrowed. We did not have a single dime of tax revenue available to pay for anything in government because it was all taken up in mandatory spending.

All right. What does this do to us long term as a nation?

People keep talking about the national debt and how it is growing and growing and growing. Actually, the national debt has not been growing and growing and growing over the years. Here is a chart that shows the national debt measured in the way it should be measured, as a percentage of the gross domestic product, the size of the national debt with respect to the size of the economy.

To illustrate why this is the way to do it--I have often used this example on the Senate floor--I ran a company before I came here. When I became the CEO of that company it was very small. It had a debt of $75,000. When I stepped down to retire prior to running for the Senate, the debt was $7.5 million. One might say: Well, Bob Bennett, you are not a very good manager if you ran the debt up from $75,000 to $7.5 million. Then you look at the debt the way you should look at it.

At the time I became the CEO of that company, they were doing under $300,000 a year in total revenue. They had no margin at all. Every dime they took in, in revenue, was eaten up with costs, and they could not make the payments on the $75,000 debt. The $75,000 debt threatened the survival of the company. When we had a $7.5 million debt, the company was doing over $80 million in business, and we had a 15-percent margin on sales. We were earning more per year than the whole debt we had, and the only reason we didn't pay it off is because we had some prepayment penalties built into the mortgages we had established. So I wasn't such a bad steward after all, if you make the measure totally on the basis of the size of the debt. I was a good steward if you make it on the measure of the debt in relationship to the size of the enterprise.

That is what this chart shows: the national debt as a percentage of the size of the enterprise, to use business terms; in this case, the size of the economy.

We see that just after the Second World War our national debt was well over 100 percent of GDP, and in the two decades after the Second World War, we come from 1945 to 1965, the debt had shrunk from over 100 percent of GDP to close to 30 percent of GDP. Even though it was going up in nominal dollars, it was coming down as a percentage because the economy was growing so rapidly. Then, once again, we add to our entitlement spending, we add Medicare, and we see this is the trough. It begins to grow and it begins to grow.

When we get to the end of the Cold War, it turns down again because of two things: No. 1, our defense spending goes down and the economy booms. We get tremendous growth as a result of the end of the Cold War. It was at 46.9 percent when Medicare and Medicaid got started, and not much different in 1989 by the end of the Cold War, 53.1 percent. This shows the historic level it has been.

OK. Now, this is the history, and the blue line shows the projections that the Obama administration has given us as to what will happen under their spending plan. One thing we know about projections is that they are always wrong. We don't know whether they are wrong on the high side or the low side, but we know they are always wrong. What usually happens is that the projections are always optimistic and circumstances come in with a result that is less than we had hoped for.

So if we take this as an optimistic projection, we are saying when we get to 2020, which is only a decade away--only 10 years away--the national debt will be back up very close to what it was at the end of the Second World War. That is unacceptable. Everyone in this Chamber knows that entitlement spending is the driving force behind all of this. Everyone in this Chamber knows shaving back a little on this program or cutting out a particular grant on another program will have no real impact on this if we don't have the courage to deal with entitlement spending.

So today I am introducing a bill to deal with entitlement spending. I have no illusions that it is going to pass in this Congress, but I wish to lay it down so we at least have a marker from which to begin. I have already done that with Social Security.

Several years ago, when I was chairman of the Joint Economic Committee, I held a series of hearings on Social Security and discovered that we can indeed solve the Social Security problem. We can move numbers around a little and say to everyone who is currently drawing Social Security: You will continue to draw Social Security throughout your lifetime, adjusted for inflation. Nothing will happen to it. Furthermore, your children can draw the same level of Social Security benefits that you draw adjusted for inflation through their lifetimes without any danger to it, and their children can draw Social Security throughout their lifetimes at exactly the same level adjusted for inflation, without a tax increase.

How is that possible? The way it is possible is to say we are only going to allow Social Security benefits to grow as rapidly as inflation grows. We already have built into the program that we are going to pay Social Security plus inflation, plus a nice little kicker along the way. That nice little kicker along the way over 10 years, and then 20 years, then 30 years pretty soon gets us into the kind of trouble I have described. If we say, no, we will allow it to grow with respect to inflation, but we will not allow it to grow any more rapidly than that, then the kind of thing that happened here can happen again. As the economy grows more rapidly than the inflation rate, we will see the national debt begin to come down, we will see the pressure on national security begin to ease, and we will see the great concern that Americans have about the financial situation begin to be addressed in the way it was addressed in the years after the Second World War.

I am not saying we abolish entitlement programs. There are some of my constituents who say that is the thing to do: just abolish Medicare; abolish Social Security. I say, yes, we want to abolish these things but keep the taxes because that is what we would have to do if we are going to get the financial circumstance we like. No, over time, we can do this without abolishing these programs, but we have to see to it they do not grow.

So here is what my bill will do. It will control the growth of entitlement spending by reinstating spending limits and saying entitlement programs cannot grow at a rate faster than the inflation rate. That will mean to the future Congresses, if they adopt this bill: OK, we can still spend for Medicare, we can still spend for Medicaid, we can still do Social Security, but we can't add things to it in such a way that will cause it to grow more rapidly than inflation, No. 1. No. 2, do the same thing with all nondefense discretionary spending. We will allow it to grow each year in accordance with the inflation rate, but we will not allow increases in nondefense discretionary spending more rapidly than the inflation rate. Then, No. 3, enforce the spending caps with automatic spending reductions and budget points of order, the details of the kind of thing we get into around here all the time.

The bill is very simple, very straightforward, but it gives the kind of direction that many of the solutions that have been proposed around here don't do. Many of the solutions we have around here sound great, and they are very complicated--this point of order lies here, and that situation there--but, overall, we are turning our backs on two-thirds of the Federal spending. We say we would not address them because these programs are popular, and we don't want to offend the voters by saying something has to be done with the most popular programs in America.

I find the voters are saying we have to deal with this. We have to have the courage to deal with it, which means we have to have the courage to deal with entitlement spending and not just focus on nondefense discretionary spending.

The final thing my bill will do is to prohibit the creation of any new mandatory spending programs, which is, again, part of the problem we have had.

I close by repeating a question I ask my constituents as I am making this presentation to them. I say: How many of you know who Willie Sutton was? Most of my audience is young enough not to know the answer to that question, but there are a few who say Willie Sutton was a bank robber, and that is true. He wasn't a very good bank robber because he kept getting caught. Each time he would serve his sentence and then he would go out after he had been released from prison and he would rob another bank.

Finally, somebody said to him--and this is why we remember Willie Sutton, not for being a bad bank robber but for the comment he made. Somebody said: Willie, why do you keep robbing banks?

He said: Because that is where the money is.

We look at the national debt, we look at the problems we face, and we ask the question: Where is the money? We have to rein in the entitlement spending because that is where the money is. It is two-thirds of the budget now, three-fourths of the budget within 10 years. If we continue to ignore the growth of entitlement spending and focus entirely on the rest of it, that makes good press but not good policy. We will find our financial situation is up here, our national debt will be as high as it was with the percentage of GDP as it was after the Second World War, and our national security will be threatened to the point that our entire posture around the world will be changed, simply because we would not be able to afford it.

It is for that reason that I send to the desk an act that may be cited as the Economic Disaster Prevention Act of 2010 that deals with spending limits on entitlement programs as well as spending limits on discretionary spending, and the prohibition of any new mandatory spending programs.

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