Congressional Black Caucus

Floor Speech

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Mr. SCOTT of Virginia. I thank the gentlelady for yielding. If we are going to talk about how bad the budget situation is now, I think it makes sense to explain how we got here.

First, in the early 1990s, the budget had gone totally out of whack. The first President Bush got together with the Democratic leadership of the House and Senate. Unfortunately, we had to break his pledge on "read my lips, no new taxes,'' and they came to an agreement and did a little bit to fix the budget.

In 1993 after President Clinton came in, we did some serious work about the budget. We raised some taxes and got the budget under control in the 1993 budget. When you vote on budgets, they are tough budgets. President Bush to a large extent can credit his decision to address the budget with new taxes as part of the reason for his defeat.

And when the Democrats, without a single Republican vote in the House, and not a single Republican vote in the Senate, passed the 1993 budget, 50 Democrats lost their seats. It was a tough vote. You lose your seats when you have very serious deficit reduction. But as a result of that 1993 budget, we not only balanced the budget in just a few short years, but we went into significant surplus and created a record number of jobs.

The Dow Jones Industrial Average almost quadrupled.

In 1995, when the Republicans got in control by demagoguing the votes that we cast fixing the budget, they came in and tried to undermine everything in the entire budget. President Clinton let the government get shut down rather than sign those irresponsible budgets that the Republicans passed.

As a result of his tenacity and holding on to his original plan, the budget was balanced in a few short years. Now, there are some in Congress who talk about the historic balanced budget amendment in the mid-90s. Well, if they hadn't come to such agreement, the balance would have balanced itself. We didn't know when we voted on that, as a matter of fact, whether the budget had already gone into surplus. They hadn't finished counting the money. It went from a 290 deficit, we got down to $10 billion, and the agreement slowed down the progress a little bit. But we still went into surplus.

In 2001, Chairman Greenspan was answering questions like, what's going to happen when we pay off the entire national debt held by the public? What's going to happen to interest rates? What's going to happen to the bond market when there are no government bonds? How do you calculate investment strategy when you don't have government bonds setting the no-risk limit, and you have increased rate of return after that, how do you calculate investment strategies if there are no government bonds because you have paid them all off?

By 2008, it was projected we would owe no money to China, Japan, and Saudi Arabia. We would have paid off our entire national debt. So people are thinking this is hard. We had done it. In 2001, by August of 2001, after the first round of tax cuts, we had already gone broke. Instead of the surplus, Social Security surplus, they were talking about the lock box, put that away for Social Security, Medicare surplus, put that in the lock box for Medicare. We had a surplus over that.

By August of President Bush's first year, we had gone through all of the surplus, and we were into Social Security and Medicare by August. You cannot blame September 11 for the fact that we had already gone broke a month before. And so after two tax cuts, not paid for, after prescription drug benefit not paid for, a couple of wars not paid for, we are in the ditch.

Now, during the Clinton administration, we had PAYGO. You wanted to spend some more money, you had to come up with the money to pay for it. You wanted to cut taxes, you had to cut some programs, you had to pay for it. Everything you did, you had to pay for it. When President Bush came in, they did away with PAYGO and put us in the ditch.

Now we're so far in the ditch that most experts suggest we need $4 trillion in deficit reduction to get back to a point where we are fiscally responsible. About $4 trillion. The Simpson-Bowles committee came up with one plan with a lot of this and a little of that--$4 trillion. But there is one interesting thing that you could do to come up with almost $4 trillion: let all of the Bush tax cuts expire. Done. That is all you have to do.

As a matter of fact, in the Congressional Black Caucus budget this year, we started off with that premise. Let them all expire. But we wanted to extend some, and so we paid for them. We cut the oil loopholes and extended some, and we cut some other loopholes, and added this tax and cut this. We got to a point where we could extend a lot of the tax cuts because we paid for them.

If you want to know what deficit reduction looks like without revenue, you can look at the continuing resolution earlier this year. It started out at $66 billion, which annualized, was about a hundred billion. And 10 years, that would be about a trillion. If you look at what was in that first trillion dollars that they wanted to cut, it was so bad that they couldn't get it passed. They ended up having to compromise. We had cuts in the safety net like community health centers, cuts in energy assistance for low-income seniors, cuts in community action agencies, and we had cuts in investments in the future. Head Start, Pell Grants got cut. Scientific research and NASA all got cut.

And then just perfunctory parts of government. FBI agents got cut. We're sitting up in the Judiciary Committee trying to figure out how to deal with many of the problems we've got, and half of it is we don't need new criminal laws. We need new FBI agents to investigate the cases. FBI agents were cut; 4,000 fewer. Clean Water Grants, Environmental Protection, all cut. Air traffic controllers. There are so few. They're working so hard that they're falling asleep on the job. They were cut.

The next round of cuts would be, obviously, Medicare and housing and other programs were next on the chopping block. We could not get--they could not get that passed. As a matter of fact, by the time they finished, now they're going to a program suggesting that we need to cut not $1 trillion but $2 trillion or $3 trillion. If you couldn't get the first trillion passed because you're so deep into the things that people believe in, things that--Clean Water Grants, food inspectors. There are so few food inspectors in that budget that some meatpacking plants would have to close because they are obligated to have a Federal meat inspector on site. And if you can't be on site, you can't operate. They had so few meat inspectors that they anticipated many of the companies would have to close down or at least close temporarily because there were so few.

Now they're trying to figure out how you can do $2 trillion or $3 trillion worth of cuts. They came up with this idea of the debt ceiling. The debt ceiling is something that recognizes the fact that we've already spent the money. So you raise the debt ceiling not because you're spending any money but because you have already spent the money. It's a perfunctory kind of thing. Dozens of times, almost once a year over the last 50 years, we've had to increase the debt ceiling. Democrats and Republicans all have had to vote for the debt ceiling.

The charade about the thing is usually the majority party has to cast the tough votes and the minority party gets to talk about fiscal irresponsibility and grandstand a little bit, but it's never in the context that there's any question about whether the debt ceiling is going to be increased. Speeches are made, but it's in the context it's going to pass. And you can make a speech about it.

Now they're saying, Maybe we won't increase the debt ceiling. Nobody knows what would happen if the debt ceiling were not increased, if we defaulted on our bonds, if we didn't send out Social Security checks. Nobody knows what would happen--what would happen to the investments, what would happen to the interest rates. We had a temporary technical glitch a few years ago where checks were a day or two--couple of days late going out and they calculate that as a result of that little glitch we paid about half a percent higher interest rate for many years.

Now, a 1 percent interest rate on the national debt now is about in the range of $100 billion. So if you're looking at what would happen if you defaulted on the debt and people charged more interest, well, that's the order of magnitude that we would be talking about. We shouldn't have to even discuss what would happen "if,'' because it could be anything. And who would want to find out? We ought to just go ahead and increase the debt ceiling and not use it as a threat that unless you do this, we'll blow up the economy. I would hope that our leadership would not capitulate to those kind of threats because if you capitulate this time, in October they can shut down October by not passing appropriations bills. Don't get "my way or the highway'' to close down the government. In a year or so you would have to do the debt ceiling again. Same thing.

So if you capitulate to these kinds of childish threats, there will be no end to it and you will certainly invite them back. As a matter of fact, what is going on now is they're kind of slow-walking us through some cuts that never could have been made in the normal legislative process. Last year, in December, we extended the Bush tax cuts. That cost $400 billion a year. Now we're broke, and we need to come up with about $400 billion a year, as if we had forgotten what we did last December.

Now, when we extended those tax cuts, there's no

mention of how it would be paid for. It would have been nice to know what the plan was, whether we're going to have to cut Social Security or Medicare in order to afford the tax cuts that were extended in December. Now they're going to try to get some cuts that they couldn't otherwise get if you're making rational choices. And legislative process is about choices. If you want a program, you ought to pay for it. If you're willing to pay the taxes, then you can have your program. Not willing to pay the taxes, can't have your program.

Last year we passed health care reform. It cost a trillion dollars. We raised more than a trillion dollars in taxes. That's a balanced approach. If we didn't want to pay the taxes, we couldn't have the program. And so that's the balanced approach that we're not making as we go along now because the next step in this process will be not cuts but caps.

No program will be cut if any deal comes on. These $2 trillion or $3 trillion deals come back. Not a single program will be cut. There will just be caps. Three months from now, when you try to appropriate under those caps, you'll wonder why you can't afford Head Start, why you can't afford any food inspectors, why you can't afford any FBI agents, because the caps are so low.

If you put them all together, if you had made your choices, if you had known you were going to have to cut Head Start and FBI agents and Clean Water Grants when you cut taxes, maybe you wouldn't have cut the taxes. You should have made the choices all at once.

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Mr. SCOTT of Virginia. In terms of jobs, much has been said about the reason why you would not want to increase taxes in an economic downturn. Because you would adversely effect the economy. That's true. But if you have spending cuts, the effect on the economy is not only larger but more direct and more immediate. Increases in taxes don't hit until the following year. As soon as you cut spending, somebody is getting fired. Jobs get lost immediately when you have spending cuts.

So for the same reason that they say you can't increase taxes during an economic downturn, the stronger argument could be made that you should not have any spending cuts. The estimates on some of the Republican plans are that hundreds of thousands of jobs would be lost if those plans had been enacted.

Now, one of the real tragedies about all this discussion is sometimes--talk about rhetoric in politics--some people are talking about this so-called balanced budget amendment as a condition of moving forward. Well, one of the things about the legislation that we'll consider called the balanced budget amendment is a bill that has a misleading title. It says: Proposing a balanced budget amendment to the Constitution. Guess what that legislation does not require?

Mrs. CHRISTENSEN. Will the gentleman yield?

Mr. SCOTT of Virginia. I yield to the gentlelady from the Virgin Islands.

Mrs. CHRISTENSEN. Does it require a balanced budget?

Mr. SCOTT of Virginia. It does not require a balanced budget. What it does is require a three-fifths vote to pass a budget that is not unbalanced. Every budget we consider this year was not in balance the first year. So the Ryan budget that passed would have required a three-fifths vote. The Republican Study Committee plan that was not balanced the first year that in the fullness of time would cut discretionary spending 50, 60, or 70 percent was not in balance the first year. It would require a three-fifths vote.

Now, as I said, when you cast those tough votes, the first President Bush lost his Presidency trying to balance the budget. Fifty Democrats lost their seats in 1993 trying to balance the budget.

I will guarantee you that there will be Republicans who will lose their seats for voting for the Ryan plan because it included, essentially, a repeal of Medicare and replacing it with an inadequate voucher, and they're going to lose their seats over it. We already picked up one seat in upstate New York where that Ryan plan was an issue, but when you vote on real deficit reduction, people will lose their seats.

If you were to move the threshold up to three-fifths and if you were the chief sponsor of a severe deficit reduction plan, common sense will let you know that it will be harder to pass if you move that thing up to three-fifths. So the enactment will make it harder to pass deficit reduction. Once you need three-fifths, there is no limit to how irresponsible you can get. The tax cut extensions of $400 billion in December, that got three-fifths. You could have more tax cuts and more additional spending totally out of control, and all you'd need is three-fifths.

Mrs. CHRISTENSEN. But the caps would be in place.

Mr. SCOTT of Virginia. The caps are another part.

Mrs. CHRISTENSEN. They would be in place as part of the bill, but you couldn't raise any revenue.

Mr. SCOTT of Virginia. There are four provisions.

The first is you need three-fifths to pass a budget. That's going to make it harder to pass a budget. The second provision is a two-thirds vote to raise taxes. So, if you're trying to balance a budget, having a two-thirds vote to raise taxes will obviously make it harder to balance the budget. This thing is called a "balanced budget amendment.'' The first two provisions obviously make it harder to balance the budget.

The third provision is you need a two-thirds vote to pass a budget that spends more than 18 percent of the gross national product, a two-thirds vote to pass if it's more than 18 percent of GDP. We haven't been that low since we passed Medicare, so that's going to put a lot of pressure on the Medicare program. Guess what? If you put all these things together with the pressure on Medicare, we know we can cut the benefits with a simple majority, but to save the program with new taxes: two-thirds in the House and two-thirds in the Senate.

There is another little insulting provision at the end. It's a three-fifths vote to raise the debt ceiling, and raising the debt ceiling this year has been enough of a spectacle that they want it to be an annual, everyday occurrence.

You have this thing called the "balanced budget amendment,'' which will make it harder to balance the budget, and it would certainly put pressure on Social Security and Medicare by allowing those programs to be cut with a simple majority. Yet to save them with new revenues like increasing the amount right now with Social Security a little over $100,000--no more Social Security tax--and if we were to extend that like Medicare to all of your income, we could pretty much solve the problem, but you couldn't do that without a two-thirds vote. You couldn't close an oil loophole to save Social Security without a two-thirds vote--but to cut the benefits, a simple majority. They want to inflict the balanced budget amendment in there to preserve their oil company millionaire loopholes and jeopardize Social Security and Medicare and put us in a budget situation where it will be virtually impossible to ever balance the budget.

People should read the bill past the title. Most people, when they hear the title, they start debating whether it's a good idea or a bad idea to have a balanced budget or whether it's a good idea or a bad idea to balance the budget every year without exception, which would not allow countercyclical spending in times of downturn.

Now, interestingly enough, the gentlelady from Texas and I serve on the Judiciary Committee, and we heard one of the Representatives from Arizona talk about the Arizona balanced budget amendment and how that works on the State level. Then we did a little research to find out: How did Arizona balance its budget?

We found out, first of all, they got billions of dollars of stimulus money to help them balance the budget, but that wasn't enough. Do you know, in the last couple of years, the Arizona State government has sold--sold--their State capitol and sold their Supreme Court building and leased it back? They got hundreds of millions of dollars in the kitty that helped them balance the budget by selling the State capitol and by selling the Supreme Court. That's what a balanced budget amendment does for you, I guess.

We need to make sure that we don't get lost in the rhetoric about the misleading titles of legislation, and we need to actually read past the title in the balanced budget amendment.

Mrs. CHRISTENSEN. That happened so often with some of these bills.

I thank you for taking us through the history of how we got to where we are, because there is a lot of rhetoric that tries to hide how we got here: the fact that hard votes were taken in '93, that President Clinton did leave a large surplus and that, by the end of President Bush's term, we were in a deep deficit and then in a recession--a recession that was not created by this President but inherited by this President. When they talk about, yes, President Obama has increased the deficit, what should he do--allow us to fall deeper into a recession?

Mr. SCOTT of Virginia. What would he do? What would the Republicans have supported him doing to reduce the deficit? Would they have supported increased taxes? What spending are they talking about with specificity?

Mrs. CHRISTENSEN. They have never accepted increased taxes, not in any crisis.

Mr. SCOTT of Virginia. Legislation is about choices. I mean, if you want a Head Start program, you've got to pay for it. If you want clean water grants, you've got to pay for them. We need to be making these choices, not in the context of threats about blowing up the economy, but by making the rational choices about what kind of vision and what kind of future we think we want. Some of us think that education is important. You have to pay taxes to get a good education. Some people think that clean water grants are important. Some people think that scientific research, food inspectors, FBI agents, air traffic controllers are important. There are a lot of things we like in government, and you've got to pay for them.

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