Congressional Budget for the United States Government for the Fiscal Year 2006
CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR THE FISCAL YEAR 2006
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Mr. DURBIN. I thank my colleague from the State of Washington who has spelled out with some detail what is included in this budget document. It is hard to believe the Senate budget resolution for the budget of the United States of America has been summarized for our consideration on the floor into 65 pages: 65 pages for a budget in excess of $2 trillion. This, of course, is a budget resolution which just describes things in the most general terms. You have to really dig into this and you have to understand some of the subtleties of this resolution to understand its importance. This really will chart the path for spending by our Federal Government for the next fiscal year, beginning in October. It is a critically important document because this budget defines our priorities and tells us what we can expect in terms of our Nation's spending.
Like the President's budget, this budget from the Republican-controlled Senate Budget Committee will make deficits and the debt worse and not better. Like the President's budget, this budget is dealing in fantasy not in fact. It does not include a penny, not 1 cent to implement President Bush's privatization of Social Security. I do not believe that is a concession by the Republicans that this unpopular idea is dead. But it is an admission by the Republicans, who put this together, that they cannot pay for the President's privatization plan on Social Security. The President cannot explain how he will pay for it. When the Senate Republicans were given that responsibility, they could not either.
So here we have a plan that the President says is his acceptance of responsibility of leadership to privatize Social Security, and yet neither the President nor the Senate Republicans on the Budget Committee can tell us how they will pay for taking trillions of dollars out of the Social Security trust fund and gambling them in the stock market in the hope that those who invest would make more money than they would lose.
It is a big gap in this budget. There is not a penny in here to pay for privatization of Social Security.
Let me tell you that it also fails to pay for the full cost of the war in Iraq after 2006. I have not heard any person in this administration even suggest the possibility that all of the American troops will be home by October 1 of this year. I don't believe that will happen. I don't think Iraq is safe enough for our troops to come home.
Recently, we were told by Secretary Rumsfeld that we had 157,000 soldiers in Iraq. It is likely we will have that number, or perhaps slightly less, in Iraq next year. We are spending billions of dollars to support our troops. As far as I am concerned, I will spend and vote for every penny those soldiers need to be safe, to perform their mission, to come home proud with their mission accomplished, but it is going to cost money. We should be honest about it.
How can this President as Commander in Chief offer his budget and how can the Senate Republicans in the Budget Committee offer us a budget for the United States of America for the next fiscal year and not include one penny for the cost of the war in Iraq after 2006? This isn't going to be done for nothing; it will cost us billions of dollars. Their failure to include the full cost of that war after 2006 in the budget resolution tells us they are not prepared to accept the reality and responsibility of leadership.
The President will not tell us how to pay for privatization of Social Security and doesn't include it in his budget. He doesn't tell us how he will pay for the war in Iraq and doesn't include it in his budget. When it comes to this Senate Budget Committee, again we find that it doesn't include the full cost of the war in Iraq after 2006.
There are other things that challenge us, too.
The Tax Code needs to be reformed. I have said half in jest but more seriously as I think about it that the most important thing we can do to simplify the Tax Code is to require that every Member of Congress, every Member of the House and every Member of the Senate, fill out and complete their own Federal income tax returns. We will simplify the Tax Code in a hurry if we can't send that material to the bookkeepers and accountants.
But one of the things that haunts us is the alternative minimum tax. This was the tax that really came out of the revelation 20 or 30 years ago that there were certain Americans who were very successful, making a lot of money, and not paying a penny in taxes. So we created something called the alternative minimum tax which says that even if your bookkeeper has found every way for you to escape paying Federal taxes, in the end you are still going to pay a minimum tax. You can't get off the hook. You are lucky, buddy. You live in America, you made a bundle, and be prepared to pay a little back to this country to defend us, to defend our freedom, and give us a chance to live another year successfully. That was the alternative minimum tax. I believe it is pretty sound principle.
What has happened over the years when we didn't change the formula is that inflation started moving the dollar amount of people who were going to be bound to pay this tax to higher levels, and then we find that some middle-income families are now going to be trapped with the alternative minimum tax. Everyone I have spoken to on both sides of the aisle says this is an outrage, this is unjust, and we need to make sure working middle-income families don't pay the alternative minimum tax. This budget offered by the Senate Republican Budget Committee does not fix the alternative minimum tax, which will affect more and more middle-class Americans next year.
It doesn't include the pay-go rule. For those who follow the arcane language of budget debates in Washington, the pay-go rule is basically this: If you want to cut taxes or increase spending on certain programs, you have to pay for them. It is simple. You can't borrow the money; you can't anticipate debt; you have to pay for it. You want to cut a tax today, what other tax will you increase? What spending will you decrease? That is the pay-as-you-go formula. This approach given to us by many people who described themselves as fiscal conservatives doesn't have pay-go rules that require that new tax cuts be paid for. In a moment, I will tell you what it does say about tax cuts. It is a harrowing possibility for future generations: more debt, debt that, unfortunately, will burden them and their children for years to come. It contains the wrong priorities.
The budget we have before us calls for big cuts in domestic spending on Medicaid, education, veterans, and transportation, even as it provides new tax cuts financed by more borrowing from foreign countries. The deficit under this approach is at record levels already. This budget would increase by an additional $130 billion over the next 5 years.
Despite that, we have been told by the President and others to cut the Federal deficit in half. When you look at all the elements they leave out of here--the cost of the tax cuts, the cost of the war after 2006, the cost of privatizing Social Security--it is clear that this a fantasy budget. This is a phony budget. It doesn't deal with the real costs of government which the President knows if his policies go forward are going to be faced by many others in the future. If you factor in the things the budget leaves out, this budget will create a record deficit of $570 billion in 2010.
I wanted to start this debate by showing this chart, which is nothing short of amazing.
I was elected to Congress in the Reagan administration when we were experiencing the largest deficits to that point in the history of the Federal Government. We didn't think we would ever find a day when we would escape those deficits, but yet it happened. At the close of the Clinton administration, we generated, for the first time in 30 years, if I am not mistaken, some $236 billion in surplus. We had cut spending, we had increased revenue, and we had the economy moving forward at a pace people just couldn't imagine. We generated a surplus.
What does a surplus in the Federal budget mean? It means we are being fiscally responsible, which happened under the Clinton administration, but it also means less money was being taken out of the Social Security trust fund to fund the Nation's debt.
Look what happens. Just as the Clinton administration ends and the Bush years begin, this sea of red ink hits our Nation--the Bush administration deficits. Then take a look at what the real deficits will be if the President continues on his path--a path calling for more tax cuts, a path calling for more costs when it comes to Social Security, the deficit we have talked about, a path that drives us to the point where we would be some $621 billion in debt by the year 2015. What a dramatic change in a short period of time--from the departure of President Clinton until 2015--brought on by President Bush's budget policies, policies endorsed by the Republican side of the aisle.
The biggest cost, of course, left out of the President's budget is Social Security reform. It will cost $754 billion over 10 years for the President's plan to privatize Social Security, growing to $4.9 trillion over 20 years. With this program left out, the budget does not accurately reflect our true fiscal situation. Including the $754 billion cost, the President's Social Security reform makes a bad deficit situation even worse with absolutely no end in sight.
Despite the exploding deficit, this budget goes along with the President and calls for $70 billion in new tax cuts. It does this even as it cuts spending on education, health care, and other areas of great American need, cuts them to the bone. The President's tax cuts, which have given much larger benefits to the wealthy than to the middle class, have been the single largest factor in creating the deficits that I have indicated to you today, according to the Center on Budget and Policy Priorities.
This budget brought to us by the Senate Republicans gives us more of the same. Among the new tax cuts are dividend and capital gains cuts that go overwhelmingly to wealthy taxpayers.
My next chart illustrates that fact. Take a look at dividends and capital gains tax cuts being suggested and proposed in the Senate budget resolution. Who benefits from these massive tax cuts? It turns out if you make less than $50,000 a year, on average you will benefit to the tune of $6. If you earn between $50,000 and $200,000, your tax cut is worth $112; $200,000 to $1 million income a year, your tax cut is $1,480. But if you are in the big leagues, making more than $1 million a year, President Bush's proposed tax cut, to make it permanent, that is endorsed by the Senate budget resolution, means for those making over $1 million a year, you will get an additional tax cut of $35,491 on average. The source of this is the Brookings Tax Policy Center.
Think about that for a moment. Do we believe it is in the best interests of America to drive us deep into deficit, deep into debt, in order to give tax cuts of this magnitude to the wealthiest people in America to the tune of $35,000? Someone making $1 million a year will not even notice this, but $35,000 to someone in middle-income categories would be dramatic.
Yet this Senate budget resolution proposed by the Republicans suggests we go deep into debt to give a $35,000 tax cut to someone making over $1 million a year.
The budgets will give more of the same. The average millionaire's tax cuts will be that dramatic and middle-income Americans will get very little. To put things in perspective, millionaires will receive $32 billion in tax cuts under the President's budget.
Let me compare that $32 billion figure with another figure. The tax cuts for people making over $1 million a year in income, coming to us from the President, coming to us from the Senate Republicans, will cost $32 billion. That is in 2006 alone, $32 billion out of our Treasury to give tax cuts.
What would it take for the President to restore spending on 48 education programs that were eliminated this year? The amount is $4.8 billion. How in the world can we live in a country where the leadership believes that funding education is less important than giving tax cuts to people making over $1 million a year?
Some people hear a Democrat talk about tax cuts for millionaires, and they say, There they go again. That is what I expect to hear from Democrats. This is not a change. But the numbers I have given today are facts in this 65-page document: $32 billion in tax cuts while the President eliminates $4.8 billion in education programs.
Could we maybe say to the millionaires, we will only give you half as much as you expect, maybe only give you $18,000 a year in tax breaks, capital gains, and dividends, and take the $16 billion and move it over here to fund our education programs? Is that an outrageous idea? Is that something hard for America to understand or accept? I don't think so. Restoring the cuts in 48 education programs, including vocational education, would take $4.8 billion.
These huge deficits, of course, are also going to lead to a record level of debt. We will be spending more and more money to pay interest on that debt. In 2006, we asked America's taxpayers to give us $270 billion of their hard-earned money to pay interest on our national debt. We pay more each year in interest on our debt than we spend on veterans, on education, or on the environment. Yet these programs face deep cuts under this budget and the debt grows and grows.
Our huge deficit also makes us dependent on borrowing from foreign countries. The vast majority of America's debt is being bought overseas, primarily by Japan and China. We ought to think about this and we ought to think about it long and hard.
Let me show an example of that. This chart shows the top 10 countries holding our national debt in the world. No. 1 is Japan. No. 2 is China. No. 3 is the United Kingdom. Next is Caribbean banking centers, South Korea, OPEC, Taiwan, Germany, Hong Kong, and Switzerland. To try to explain this in the simplest terms, if we are going to overspend in America, we have to borrow money to do it. When we ask the American people to buy our debts--U.S. Treasuries, for example--they come up with a certain amount of money. But then we find out it is not enough. We are so deeply in debt, we need to borrow so much money, we have to go out of America and see if other countries will buy our debt. So these countries become America's mortgageholders. These countries are holding our Nation's mortgage. No. 1 on the list, Japan; No. 2, China.
Why do they buy American debt? Because they believe it is profitable and sound. Profitable because we pay interest on that debt, naturally. Sound, because the American economy is the strongest in the world and has been for a long period of time. From their point of view, from Japan's and China's point of view, it makes sense to hold America's debt. It pays good interest and it is from a sound debtor.
But we started noticing some changes recently. Two or 3 weeks ago, South Korea--you may remember them as one of our close allies that we went to war to protect in the 1950s from the encroachment of communism--South Korea, a $69 billion creditor of the United States, a couple weeks ago said, maybe the American economy is not as sound as we thought it was. If they continue to go deeply in debt, if they continue in America to produce budget documents that are a fantasy and do not tell the real story, then maybe this American economy is not as reliable and sound as we once thought it was. That mere suggestion by the South Koreans sent this ripple of anxiety and fear around the world. We saw it automatically in the money markets and in trading around the world.
My fear and the fear of many is the time will come when some of these countries will decide that America's currency is not as safe and strong as they would like to see it so they may say, instead of holding dollars, we trust Euros. We think the European economies are more fiscally responsible. If that decision is made, the only way we can keep our mortgageholders happy is to raise interest rates--the profitability of their holding our debt. As we raise interest rates to keep them interested in financing our debt, the pressure is on to raise interest rates for the American economy. And as we do, the cost of owning a home, a car, making any major purchase, or financing a business goes up, as well.
It is not a coincidence--in fact, it is closely parallel--that many of these countries that are our major creditors and mortgageholders are also causing great damage to America's economy. We know what China is doing to America today. Our balance of trade with China says it all. We find ourselves importing more and more Chinese goods into the United States. We find American factories and manufacturing jobs disappearing, particularly over the last 4 years where we have seen this exodus of good-paying manufacturing jobs from the United States to many other countries, but largely to China. We find ourselves more and more dependent on China for cheap imports to sustain our way of life.
What company in America is the largest importer of Chinese goods in our country? Wal-Mart. So if you go to Wal-Mart and you think, boy, they are trimming those prices down, take a look where the products are made. They are made in China instead of the United States. Fewer people in the United States have good-paying jobs. We are getting the cheap goods in from China, but we are paying for it in terms of the strength of our economy.
So not only are these countries--Japan and China in particular, and South Korea and Taiwan and others--in the Asian rim finding themselves as our mortgageholders, but they are also finding themselves taking away jobs from America, taking away jobs we desperately need.
So this administration, the Bush administration, with the cooperation and enthusiastic support of the Republican side of the aisle, believes that more and more debt in America should not be feared, that we should go more deeply in debt than ever in our history, we should pile on that debt with tax cuts for the wealthiest people in America, we should drive this debt to meteoric levels by privatizing Social Security, and not paying for it, and we should do a little sleight of hand in accounting where we do not even include the full cost of the Iraq war after 2006 in our budget.
How can this be coming from an administration that prides itself on being fiscally conservative? This is fiscally irresponsible. We are mortgaging America's future and the future of our children to these countries that hold our national debt. We are giving them more power over our future and our economy than we should. And we are paying dearly for it.
Our huge debt makes us dependent on these countries. We should be cautious about a budget that relies on borrowing more and more and more from foreign countries and assumes they are always going to be willing to continue to buy large amounts of our debts.
In 2001, as I mentioned earlier, before President Bush came to office, we had budget surpluses. We were on track to pay off almost all of the national debt by 2008. Now it is forecast that we will have a $5.9 trillion debt by 2008. Pay-go, as I mentioned earlier, is a rule that requires new tax cuts be paid for. There will be an amendment on the budget resolution offered. I don't think it is out of the question to say that if you want to increase mandatory spending programs, or if you want to cut taxes, find a source to pay for them, either another tax or spending cuts. That used to be a basic conservative credo on Capitol Hill. Now it has been ignored. The question is whether, given that chance by Senator Feingold and his amendment, Democrats and Republicans will vote for fiscal sanity and fiscal responsibility.
Let me talk about the priorities in this budget that are simply wrong. This budget cuts many programs to the bone even as it is giving these massive tax cuts to wealthy Americans. The budget cuts Medicaid by about $14 or $15 billion.
Now, the budget is interesting because I looked to see--I used to sit on the House and Senate Budget Committees--how they did it. Well, they did it with an interesting approach. They called for the cuts in Medicaid at the same time as they added these caveats, these warnings, that any cuts in Medicaid should not ``undermine the role the Medicaid program plays as a critical component of the health care system of the United States; cap Federal Medicaid spending, or otherwise shift Medicaid cost burdens to State or local governments ..... ; or undermine the Federal guarantee of health insurance coverage Medicaid provides. .....''
How can you do both? How can you dramatically cut Medicaid spending and still do these things? I think this is a figleaf. I think members of the Senate Budget Committee know better.
Let me tell you a word or two about Medicaid. It is the largest insurer in my home State of Illinois, covering more than 2 million people out of the 12.5 million whom I represent. The program covers 40 percent of all children born in Illinois and provides health insurance to 30 percent of the kids as they are growing up in my State. It pays for 65 percent of nursing home residents in Illinois. Nationally I think the average is 70 percent.
As more and more people lost their health insurance and struggled with our economy over the last few years, losing good-paying jobs, losing health insurance coverage on the job, we saw the number of people covered by Medicaid increase. Illinois expanded Medicaid coverage in the last 2 years to 130,000 children and 135,000 parents. That expanded coverage is at risk due to the cuts in this budget.
Senator Bingaman and Senator Smith will offer a bipartisan amendment to remove these cuts from the budget, and I hope we will support that amendment. How can we be in a position where we are absolutely derelict in our duty and responsibility to do something about the cost and accessibility and affordability of health care in America and then turn around and say we are going to absolutely gut the safety net? Medicaid is the safety net. Medicaid says if you are working a job and not receiving health insurance, and you reach a point in desperation where you need health care, if your income is low enough, Medicaid will pay for your medical bills.
It is not going to be luxurious care. There is not much of that left in this country under Medicaid, even though some of the critics say there might be. I have not seen evidence of that. Most of the Medicaid providers I talk to, the doctors and hospitals, argue we do not pay them enough. So if we are not going to create a real safety net of health care for America, how can we chop up the existing safety net of Medicaid, as this budget proposes to do?
And let me make one aside here, my own personal point of view. This President is out doing 60 cities in 60 days to talk about the threat of Social Security being out of balance in 40 or 50 years. He looks down the track and sees, 50 years from now, that tiny light of a train coming and says: We better do something today to deal with the challenge of Social Security 50 years from now.
I am not opposed to that. But the President is now barnstorming the United States talking about that problem 40 or 50 years away, and while he is talking about that problem down the tracks, a locomotive is coming right behind us called the cost of health care in America. It has on that locomotive Medicaid, Medicare, and the cost of health insurance, and the President is not saying a word. The Republican leadership in Congress is not saying a word, save for this budget resolution which says we are going to reduce the protection and coverage of Medicaid, protection and coverage essential to people in the last years of their lives in a nursing home, people in the first moments of their lives who are covered as children and infants.
Let me talk about education. What a time in the history of America to cut education. That is what the Senate Republican Budget Committee does, cutting it by $34 billion. Mr. President, 3.2 million children in Illinois are in primary education and depend on Federal funding. And 5,200 children would be unable to attend Head Start. Have you ever been to a Head Start program? Have you seen what they do there? Children come in from some of the poorest families in the neighborhood, kids whose parents probably did not have a good experience in school, and they bring these kids in to learn how to get along well with other kids and to give them a running start at being successful when they enter kindergarten.
Is there a better concept than that, preschool education for kids so they have a chance to succeed? Well, this budget obviously decides we cannot spend as much as we should on Head Start.
Illinois will lose $500 million for elementary and secondary education under this bill. Mr. President, 5,200 children in my State would be unable to attend Head Start programs due to the cuts.
The State would also lose $335 million for special education and $160 million for school improvement programs. This budget also cuts funding for vocational and technical education. Illinois receives $50 million a year for that. It serves 350,000 students who are not college bound, but students who want to be trained with vocational training and similar technical education training so they can make a living and contribute to this country. This budget cuts it.
Three out of every five high school students in Illinois are enrolled in these programs. Senator Bingaman has offered an amendment to restore $4.8 million. It is my understanding it was already voted on and failed, which is a sad commentary that we have decided we cannot afford to put money into vocational and technical education. There are billions of dollars for tax cuts for people making over $1 million a year, but we cannot find $4.8 billion in Senator Bingaman's amendment for education. What a priority, that the wealthiest among us will receive about $3,000 more in tax cuts every month while we tell the kids in vocational schools and getting technical education we cannot afford their teachers and their classrooms.
Law enforcement also faces terrible cuts, cuts of $2 billion, including a $500 million cut in the COPS Program. I know President Bush and the Republicans in Congress loathe President Clinton's COPS Program. They hate it that a Democratic President would come up with a program to make America's communities safer that was so wildly popular. They have been determined since they arrived in town to kill this program. Well, my congratulations to the Senate Republican Budget Committee. You almost have the job done with this budget.
Cutting this money for the COPS Program is sadly going to jeopardize the men and women in uniform who put the badges on every morning and risk their lives so our communities are safer. They are out there fighting crime, violence, drugs, gangs, and this budget says we don't need them; we don't need to continue this program.
I think they are wrong. Since 1994, Illinois has received more than $400 million for the COPS Program. We have added 6,000 new police officers in our State, in 680 different local law enforcement agencies. Illinois is safer and America is safer because of the COPS Program. But because it has Bill Clinton's name associated with it, the Republican Budget Committee has to do away with it. So tax cuts for the wealthiest in America, averaging $3,000 a month for those making over $1 million a year, but we cannot afford the cops on the street to make it safe for our kids to walk home from school or our parents to go out for a stroll in the park in the evening. Is that an upside down priority?
Let me talk for a moment about transportation and Amtrak. The budget cuts transportation by $16 billion, and it eliminates funding for Amtrak. I cannot think of a worse idea at this time. To eliminate national passenger rail service means the following: more cars on the road and highways, causing congestion; more pollution for our air, making it even worse for those suffering from pulmonary disease and asthma and other problems; and with more gas being burned in these cars, more dependence upon foreign oil. This is absolute lunacy that we are walking away from national passenger rail service when we know it means more traffic congestion, more pollution, and more dependence on foreign oil.
That is a priority the Bush administration echoed in the Republican budget. There will be an amendment offered to restore the cuts in Amtrak. I hope it succeeds. We can do better than this budget. It doesn't reflect the real state of our deficit and it doesn't reflect the real values of America. It has the wrong priorities. It cuts things that are essential, such as health care and education and transportation. For what? To give more new tax cuts to the wealthiest people in this country.
I am not sure President Bush thinks that was his Ohio mandate to go forward with these tax cuts. But I wish he could have been at Walter Reed Hospital today. I went to see soldiers who were injured overseas and going through recuperation. I went to one of their physical therapy rooms to watch them be fitted for their new legs and new arms, trying to make their lives again a reality. They are proud of this country and I am, too.
I would be prouder if we were more honest in our budget. But we are not. We don't even include the full cost of the war they fought in this budget. We act as though it doesn't exist after 2006. Well, it does exist. The soldiers who served our country exist. We need to make certain that when it comes to veterans health care, to the basics they need to start their families and get good jobs and restore their lives, we will stand behind them. This budget walks away from them. I hope the Senate will think twice about passing this document. I think we need a new set of priorities, reflecting the real values of America.
I yield the floor.
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