Cut, Cap, and Balance

Floor Speech

BREAK IN TRANSCRIPT

Mr. THUNE. Mr. President, I appreciate the good words of my colleague from Kansas. He comes from a State where they understand that the role of the government should be limited. They understand the importance of living within your means, of not spending money you do not have. The Senator from Kansas has had a long and distinguished career in public life, but before coming to Washington, DC, to serve in Congress I suspect he also was a State legislator and my guess is that when he was a member of the State legislature in Kansas they had to balance their budget every year.

I ask my colleague if he could perhaps shed some light on what his State of Kansas does, year in and year out, in order to get their budget balanced, to make sure they are not spending more than they take in. I think, as he pointed out, that is something for most families in Kansas--I would say for most families in my State of South Dakota--those are decisions they have to grapple with all the time and we don't always have the luxury of being able to borrow. Most States don't allow it. My State of South Dakota doesn't allow that. Certainly rules in our States probably are not very conducive to saying we are going to raise taxes on people and on small businesses, which requires then we have to make our decisions on spending.

I would, through the Chair, ask my colleague from Kansas, perhaps that might have been the way in which they went about dealing with their fiscal crisis in the past?

Mr. MORAN. Mr. President, I thank the Senator from South Dakota and would indicate that, yes, Kansas is one of those 49 States in our Constitution in which we are prohibited in almost all ways of living beyond our means. It has been something that the Kansas legislature and Governor have lived with throughout the history of our State, including in today's environment where an economic downturn creates the circumstance in which there are less revenues. So the solution to the problem in Kansas is not a try for more revenue, it is a recognition that spending in difficult times has to be reduced. It is the restraint that we desperately need in Washington, DC, that is so common in State capitals and families and businesses across the country. While I have always indicated to Kansans, while we have this debate every year how to balance the revenues with the expenditures--and it is not an enjoyable debate--we are fortunate in Kansas we have to reach that conclusion and it is something we need in Washington, DC.

For a long time the political talk of Washington is that we are too likely to spend and tax. There is also a problem of spending and borrowing. We are now suffering the consequence. We are not immune from what we see in Greece and Italy and Portugal and Ireland. If we do not solve this problem that we face today in a responsible way, it will be solved for us by the markets, by those from whom we borrow money, determining we are no longer creditworthy. We don't have to worry much about that in Kansas because we have a constitutional provision that requires our legislature and Governor to reach the right conclusion, and it is why I thought this debate on the debt ceiling was the opportunity for us to force ourselves to do the things that politicians do not always like to do.

Mr. THUNE. To the point the Senator from Kansas was making, he talks about higher interest rates and the impact of not dealing with the fiscal circumstances in which the country finds itself. Look at what is happening in Europe. Three-year government bond interest rates are about 19.4 for Portugal, 28.9 for Greece, and 12.9 for Ireland.

Think about the impact in this country if we had interest rates go back to what is even a 20-year average. We would see an additional $5 trillion, about $5 trillion in additional borrowing costs in the next decade alone. That is if we went back to the 20-year historical average for this country, not to mention going to what they are looking at in countries in Europe, with these 19, 20-percent rates. Think about auto loans, think about home loans, think about student loans, think about business loans--all those things we rely on in our economy and that families across this country rely on, in order to carry on with their daily lives if we were looking at those types of interest rates. That is the type of interest rate sensitivity we have. If we do not get our fiscal house in order, we could very well end up like many of these countries, and that would be devastating for our economy.

The most important work we could be doing right now--and the Senator from Kansas pointed this out--is to put policies in place that actually grow the economy and support jobs. I also will support the cut, cap, and balance proposal that is before the Senate today because I think it does important work. It cuts spending today, immediately, it caps spending in the near term, and puts in place a process by which we balance the budget in a long term, a balanced budget amendment

It is interesting to note, if we go back historically, something President Ronald Reagan said 29 years ago this week. He led a rally of thousands of people on the Capitol steps calling for a balanced budget amendment. This is what he said: ``Crisis is a much-abused word today but can we deny we face a crisis?''

That is 29 years ago at a time when the Federal debt was $1 trillion. We face a debt 14 times as high, $14 trillion. Under the President's budget it would literally double in the next decade. We have to get our fiscal house and our spending in order.

The Senator from Kansas also mentioned the size of government as a percentage of our entire economy. If you go back to 1800, the formation, in the early years of our country, 2 percent is what we spent on the Federal Government, 2 percent of our total economy. This year we are over 24 percent, in that 24 to 25-percent range. If you look at the 40-year historical average, about 20.6 percent is what we have spent as a percent of our entire economy. What does that mean? It means we are spending more at the Federal level and that the private economy is shrinking relative to our total economy.

What we want to see is an expansion of the private economy where we put policies in place that enable our job creators to create jobs and that we get the Federal Government smaller, not larger. My view is, when you are looking at a debt crisis the way we are, you don't grow and expand the size of government, you make government smaller. You get the private economy growing and expanding and creating jobs, and that is how you ultimately get out of this situation.

We have policies in place right now that are making it more difficult, and more expensive I would argue, for our small businesses to create jobs. Anywhere you go--in my State of South Dakota and elsewhere--you talk to small business owners, you talk to farmers and ranchers, and what they will tell you is the policies, the regulations, and the taxes that are coming out of Washington, DC, make it more expensive and more difficult for our job creators to create jobs.

If you look, the data on that it is pretty clear. Since this President took office, we have higher unemployment by 18 percent, we have 2.1 million more people unemployed than we did when he took office, and we have a 35-percent higher debt. We saw spending go up in the last 2 years alone, nondefense discretionary spending, by 24 percent. The number of people who are receiving food stamps in this country is up by 40 percent.

All the data, all the tools by which we can measure economic progress and growth demonstrate that the policies that have been put in place by this administration have been a complete failure. So what we need is a change in policies, and it starts by cutting Federal spending, capping it in the near term, and putting in place a long-term solution--a balanced budget amendment like so many States have in place, like the Senator from Kansas mentioned they have in his State of Kansas, like we have in my State of South Dakota, where our State governments have to live within their means. They cannot spend money they do not have. That is the problem we have in Washington, DC, today.

In terms of our small businesses, there was a survey done by the chamber of commerce a couple of weeks ago in which they found that 64 percent of the small businesses that responded to the survey said they are not going to hire this year. Another 12 percent actually said they are going to cut jobs. Why? Half of the small businesses listed economic uncertainty as the major reason. They are concerned about what is going to come out of Washington, DC. They don't know what policies and regulations are going to be imposed on them and what it is going to do to them and their cost of doing business, and as a consequence they are just hunkering down and trying to survive.

We need to change that. We change that by getting Federal spending under control. Cut, cap, and balance is an important step in that process, and I am pleased the House of Representatives last night passed it and sent it over here to the Senate. We will have an opportunity to vote on that in the next few days, and I would argue to my colleagues that this is fundamentally the best we can be doing to not only get our fiscal house in order and get it on a more sustainable path going forward but also to help get our economy growing again and get jobs created out there. You can't do it by making government larger. If that was the case, the trillion-dollar stimulus bill that was passed last year would have brought unemployment down. But, as we all know, we are facing 9.2 percent unemployment today.

We continue to see an economy that is struggling, that is growing at a very slow rate. We need to unleash that economy, and the way we do that is by capping or cutting spending in Washington, DC, making the Federal Government smaller, not larger, getting that amount of spending as a percentage of our entire economy back into a more historical norm, and working to ensure that taxes and regulations stay low on our job creators in this country.

That is why I fundamentally object to what the President and many of his allies in Congress want to do with regard to the debt crisis; that is, increase revenues. You cannot create jobs, you cannot grow the economy by increasing taxes on our job creators. I can't think of a single tax that you could put on our economy that actually would help create jobs. It will have the opposite effect--it will make it more difficult for small businesses to create jobs, more difficult for us to get out of this economic downturn.

I hope my colleagues will support cut, cap, and balance and that it will get a big vote here in the Senate and get this country on a more sound fiscal footing and on a path where we can create jobs and get this economy growing.

I yield the floor.

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