The Budget

Floor Speech

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Mr. THUNE. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

The PRESIDING OFFICER. Without objection, it is so ordered.

Mr. THUNE. Mr. President, as we all know, in the next few weeks we are going to have to be faced with a decision about what to do with the debt limit, and of course there has been a lot of discussion around here as well as between the White House and the congressional leadership about how best to resolve this issue.

I believe what it really comes down to is a question about what is the best way to resolve a debt crisis. I think it creates a great debate, a philosophical debate about do we need to grow government or do we need to shrink government. I would argue that is kind of the defining line in this debate, whether you believe the best way out of a debt crisis is to expand and grow government or whether you think, as I do, that we ought to make government smaller, not larger, if we are trying to figure out how to get out of this particular circumstance we find ourselves in right now.

We have a $14 trillion debt. We are going to have to increase the borrowing authority to get to the 2012 election by $2.4 trillion. That is the rate at which our debt is growing. I have said on the floor before that if you look at just the daily borrowing our Federal Government does, it exceeds the entire budget of my State of South Dakota for a whole year. So we will borrow more in the next 24 hours here in Washington, DC--about $4 billion--than the State of South Dakota spends in an entire year. That is the dimension of the problem we are facing.

Many of us believe the best thing we could do in order to get ourselves on a better fiscal track is to pass a balanced budget amendment to the Constitution. Frankly, I hope we will have an opportunity to vote on just that sometime in this next week or the following week. Most States around the country, including my State of South Dakota, have a balanced budget amendment in their constitution. It requires them year-in and year-out to get their books balanced. They cannot continue to spend as if there is no tomorrow. They cannot spend money they do not have. They live within their means. That is what most Americans have to do, that is what American businesses and families have to do, and it certainly makes sense that we ought to be doing that at the Federal level.

I would urge my colleagues, as we look at the short-term issue, which is the debt limit vote, we have to figure out how we are going to get the best deal we can get in the near term, but what are we going to do in the long term to put our country on a more sustainable fiscal footing? I would argue that putting an imposed discipline on Congress, such as an amendment to the Constitution that would require us year-in and year-out to balance our budget, just makes sense. It is practical, it makes economic sense, and it certainly is discipline that has been lacking here in Washington, DC, for some time.

If you look at the States that have made hard decisions--mine is a good example of that--they had to cut spending this year significantly to balance their budgets, but at least they are doing that. They are making these hard choices and hard decisions, and that is something we have been putting off here for way too long.

I would point out to my colleagues here that as we talk about how to get the country back on the right fiscal track, we do have to start setting priorities.

Well, we are not doing that. We haven't had a budget here now for 806 days. It has been 806 days since the Democratic majority in the Senate has allowed us to have a vote on a budget.

Many of us believe that in order to determine how you are going to spend $3.7 trillion of America's hard-earned money, you ought to have some priorities. You ought to at least put a pathway out there about how you are going to go about spending those dollars and setting priorities for the country.

Well, we are not doing that because we have not passed a budget in 806 days. That is the fundamental responsibility we have as leaders. The people of this country elected us to do that. We are not doing that. I think that is creating uncertainty. It is creating instability out there around the country.

I met with some business owners this morning who say that in their particular industry, there are people who want to invest, they want to create jobs, and they want to make capital investments. But these are long-term investments, and they don't know what is happening, they don't know what the policies coming out of Washington are going to be with regard to taxes, spending, regulations, all of those sorts of things. There is an enormous amount of uncertainty.

There was a survey done just recently by the U.S. Chamber of Commerce in which they asked small businesses about their future hiring plans, and 64 percent of the small businesses that responded to that survey said they were not going to add to their payroll this year, they were not going to hire this year. Another 12 percent said they were actually going to cut jobs. Why? Half of the people who responded to the survey said: Economic uncertainty. They just flat do not know what Washington is going to do next. And you can't have that kind of uncertainty. What the markets want, what businesses want, what investors want is they want to know what the rules are going to be, and they want some certainty about what is going to happen next.

The kind of uncertainty we are creating reaches beyond our shores because I think that if you look at what is happening in Europe today, they are facing a debt crisis in many of those countries. What are the economic impacts of that? Well, if you look at the interest rates in the Euro zone, the 3-year government interest rates are 19.4 percent for Portugal, 28.9 percent for Greece, and 12.9 percent for Ireland. That is our future if we don't get our fiscal house in order.

What does that mean? That means that not just does the Federal Government have to pay more to borrow money, pay more in higher interest costs, it also means that those interest costs--all interest rates in this country, whether it is for an auto loan or a home loan or a student's college loan, they all track with the Treasury borrowing rates. If those rates go up, that has profound implications for our economy. That means people across this country are going to pay much higher interest rates. Small businesses are going to pay higher interest rates to borrow money.

These are real-world impacts if we do not make the right kinds of decisions here to get this spending and this borrowing under control. So if you want to see our future, look at some of the European countries. Look at what impact this is having on interest rates and on their economies. That is something our economy could not withstand.

We are already facing 9.2 percent unemployment. We have a need to get people back to work. And what we need now is not more expanded government and more uncertainty about what Washington, DC, is going to do; we need stability, we need certainty, and we need decisions here which have a favorable impact on the private marketplace and create an inducement to hire people as opposed to discouraging it, which is what we are seeing today.

I have argued down here on many occasions that this debt is really strangling our economy because it is crowding out private investment. Anytime the government is out there borrowing money, it means there is less capital out there for private businesses to have access to. I think the more fundamental issue in this whole debate, however--and I mentioned this yesterday in some remarks on the floor--is really the size and scope of government and whether we want to see an expanded, bigger, larger government or whether we ought to try to work our way out of this debt crisis by actually reducing the size of our government.

I pointed out that in the past couple of years alone, we have seen government expand dramatically. In fact, nondefense discretionary spending in the last 2 years has grown by 24 percent. The debt has grown by 35 percent in just the time this President has been in office. The amount we spend on our Federal Government as a percentage of our entire economy has grown dramatically as well. The 40-year historical average is 20.6 percent. That is what we historically, for the past 40 years, have spent on the Federal Government as a percentage of our entire economic output. If you go back to the year 1800--hard to believe--it was 2 percent. That is what we spent on the Federal Government as a percentage of our entire economy. Of course, it has grown since that time, but it has really taken off here in just the last few years.

I pointed out yesterday as well that of the five times the budget has actually been balanced in this country since 1969, in every circumstance it has been when government has spent less as a percentage of our entire economy than the average. So if the average is 20.6 for the past 40 years, the times when we have actually balanced the budget, we have averaged spending 18.7 percent of our GDP.

The point simply is this: If you want to solve this problem, it gets solved on the spending side of the equation. The problem we have in this country is not that we tax too little or have too little revenue, it is that we spend too much because this year we will spend, as a percentage of our entire economy, 24.3 percent. There is almost a quarter of the entire economy of this country now being spent by the Federal Government, and that will only go up over time as we see these new entitlement programs, the new health care program that was created last year, continue to consume more and more of our resources in this country. That means there is less and less out there for the private economy where the real jobs are created.

If you look at just what we pay in interest costs alone and how we would be influenced by a slight uptick in interest rates--there was a great op-ed written in the Wall Street Journal a couple of weeks back by Larry Lindsey, who is a former economic adviser to President Bush and also a member of the Federal Reserve Board of Governors. He pointed out that if interest rates return to their 20-year average, it would add $4.9 trillion in additional borrowing costs over the next decade. So everything we are talking about here in this debate about the debt limit in terms of reducing spending really pales in comparison to just a normalization of interest rates.

If we saw interest rates go back to what is a 20-year average, we would see an additional $4.9 trillion that we would have to spend to finance our debt. That is a staggering statistic. Again, I think it speaks to the need for us to get our spending under control because the amount we borrow, as it continues to ratchet up, and we continue to get further in debt, the likelihood is that our interest rates are going to go up in a corresponding manner, and we will end up spending more and more on higher interest.

I think the real issue is whether we as a nation are going to make a conscious decision that the way we resolve this debt crisis is either on the spending side or on the revenue side. We heard our colleagues on the other side--and we heard the President--say we need more revenue. In fact, I have not been in on the discussions occurring at the White House, but it is my understanding that one of the latest proposals on the table was a $1.6 trillion increase in taxes. In other words, they want to add $1.6 trillion in additional tax revenues in order to get some amount of spending reduction.

We have seen this picture before. We can go back to the 1990 budget deal that President Bush made with the Congress at the time which was supposed to have 2-to-1 spending cuts to tax increases. The tax increases occurred; the spending cuts didn't. That is our history. That is why making a deal that involves massive increases in taxes on our economy, on our small businesses, when we have 9.2 percent unemployment is a bad idea when the problem we are trying to fix is fundamentally a spending problem. It would be one thing if we were spending at a historical rate. If we were spending at a rate that is 20 percent of our total economy, the 40-year average, that would be different. We are spending more than 24 percent. This is fundamentally a spending problem that cannot be solved on the revenue side.

The only thing that increasing taxes would do is make it harder, more expensive, and more difficult for small businesses to create jobs. That is precisely what we want small businesses to think about doing. Instead, 64 percent of them are saying that this next year they are not going to add to the payroll, create jobs. Why? Because of economic uncertainty. We need to create some certainty out there. We need them to know that tax rates will stay at a low level--taxes on investments and income. We need them to know we are committed to cutting spending and getting the Federal debt under control. We need them to know we are not going to add massively to the cost of doing business in this country by dramatically increasing the number of Federal regulations with which they have to comply.

I hear that everywhere I go, whether it is a farmer, rancher, or small business owner--everywhere. In a meeting I had with some small business owners, they said the regulations are making it increasingly costly and more difficult for them to create jobs. So if we get into the final days of this debate and these decisions have to be made, I would say that the President needs to recognize that this is not a revenue issue; this is a spending issue, and he needs to step up and provide leadership and a pathway for how we get our fiscal house in order--not by increasing taxes on the job creators in our economy, our small businesses but, rather, by getting Federal spending under control.

I think we would have an incredibly warm and favorable reception from both the House and the Senate, who are prepared to do business when it comes to reducing spending and making government smaller, not bigger, dealing with this long-term structural problem that we have of a runaway debt that is growing literally by the year at the tune of about $1 trillion annually.

If we don't do this, as I said before, we are looking at a future that will resemble many countries in Europe. We don't want to be a country that defaults on our debt. We obviously need to address this issue of the debt limit. We need to do it in a responsible way that holds us accountable to the American people who spoke loudly and clearly in the last election indicating that they believe government has gotten too big and is growing too fast. They want the government reined in.

The way we do that is to rein in Federal spending. That involves not just the discretionary spending I mentioned earlier, which has grown at 24 percent in the last 2 years, but the long-term structural challenges that we face in entitlement programs--Medicare and Social Security.

Republicans in the Congress are willing to lead on those issues and are willing to step forward and put forward a plan. The only plan put forward so far has come from the House Republicans, and it has been criticized by a lot of Democrats in the House and Senate and also by the White House. We have yet to see a plan from the other side. It has been 806 days, and we haven't had a budget presented by the Democratic majority in the Senate, nor has the President come forward with a plan that actually does something to reduce spending and debt.

The President did submit a budget proposal earlier this year which dramatically would have increased spending and doubled the debt over the next decade and dramatically increased taxes. That is the wrong message to have received.

The message the people of this country are sending is that we want Washington to focus on the spending side. We want a smaller Federal Government, not a larger Federal Government. We want the Federal Government to do what we have to do--American families and small businesses--and that is to live within its means.

I hope this debt debate, as it comes to a conclusion, will come to a good outcome and result for the people of this country. We don't want to have this country in a situation where we are not making payments, where we are defaulting on our debt. But we cannot just continue this pattern of raising the borrowing authority of this country, adding to the Federal debt, without doing something to get that debt under control, without doing something to reduce the amount this Federal Government spends every single year. Spending at 24 to 25 percent of our entire economy is a trend that cannot be continued and cannot be sustained. We need to get back to more of a historical average, where the American people want us to be.

The reason the American people reacted the way they did in the last election is they saw this government growing at a rate that made them very uncomfortable and frightened. That continues to this day because there is uncertainty about the country's future and an instability that exists today.

I heard from some business owners this morning. They want stability, some certainty about what the rules are going to be. More importantly, it starts by having a Federal Government that lives within its means and doesn't spend money that it doesn't have and that focuses intently on getting spending and debt under control and creating favorable conditions for economic growth and job creation.

That doesn't happen by raising government revenues, raising taxes; that happens by the Federal Government exercising fiscal responsibility, reducing spending, reducing debt, and keeping taxes low on our job creators so that we can get people in this country back to work. That is the correct prescription for this country. It is a prescription I hope the President will embrace.

I can say that the Republicans in the Senate--and I daresay the Republicans in the House of Representatives as well--are prepared to meet him in working together on that challenge of reducing spending and debt and creating conditions favorable to economic growth and job creation and getting American people back to work.

I yield the floor and suggest the absence of a quorum.

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