Fiscal Policy

Floor Speech

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Mr. THUNE. Madam President, we are hearing a lot of discussion here in Washington and around the country this week about the so-called sequester, which I think bears some explanation. Oftentimes we talk in terms and in such a way that I think ordinary Americans have a hard time understanding the arcane world and arcane lexicon we have here in Washington, DC. Basically we are talking about these spending cuts--across-the-board cuts--that will take effect at the end of this week. It was a process that was put in place many months ago. In fact, if we go back to the Budget Control Act, which passed in August of 2011, we won't find very many people now who will claim paternity of that idea.

In fact, there is a big debate and a lot of finger pointing about whose idea this was and whose fault it was that we are where we are. I would simply point out that I think there are a lot of Republicans and Democrats who voted for the Budget Control Act, so clearly many of us voted in support of that as a last resort. Many of us didn't want that to happen. We wanted to see a deal worked out where we would actually address the major problems facing this country with regard to our spending and debt.

But since that couldn't be negotiated between the President and the leadership of Congress, we ended up with this process where we had some immediate spending cuts taking effect--about $900 billion, with another $1.2 trillion to follow--hopefully achieved through reforms, including tax reform, entitlement reform, by a so-called supercommittee that met and convened for a while. However, when that committee failed to reach a conclusion, it set in process, set in motion, what we know today as sequester.

It was actually built to go until the 1st of January, in which case all of these things would take effect if nothing had happened. Clearly, nothing had happened. So when January rolled around, we ended up with this process we now know as sequester.

I wish to point out that the President has been running away from this; somehow this just imaginarily appeared, this idea of sequester. But if we go back and look at the origin of this, we see it was clearly something the President and his people put forward. Fine points have been laid out by Bob Woodward in his book and subsequent op-ed this last weekend in which he stated very clearly this was an idea that originated with the White House. In fact, Jack Lew, in his confirmation hearing before the Senate Finance Committee, actually mentioned the fact that when they were looking at something they could use--a trigger, if you will--they drew upon the Gramm-Rudman-Hollings agreement that was agreed to back in 1985 by the Congress, and that incorporated this idea of a sequester, which included an across-the-board spending cut. So, basically, it came from the White House. It came from the President and his people. That is where the idea of sequester originated. So to suggest now that somehow they didn't know about this or they didn't have anything to do with it, that it isn't their responsibility, is completely contradictory to the facts, as has been delineated by Bob Woodward in his book and many others who are familiar with those discussions.

The point, very simply, is we have a process that was put in place a long time ago. We can go back to August 2011 when the Budget Control Act was passed to find out why we are where we are today.

The other thing that is interesting to me, which I think has now added to the narrative of trying to reconstruct the history of all this, is the idea that somehow there should have been taxes incorporated in this, that we needed to have a ``balanced approach'' in the sequester. That was never contemplated. This was all on the spending side. If we look at the history of this and we actually listen to, again, the people who are familiar with those discussions--and Bob Woodward, this weekend in his op-ed said: The President is moving the goalpost. The revenues and taxes were not a part of this. But now, all of a sudden, the White House is insisting upon: We want taxes to be a part of this.

What is ironic about that is they got taxes. They got a big fat tax increase on January 1 of this year. That wasn't balanced. There were no spending cuts. That was all taxes: $620 billion. So from our perspective, the tax issue has been dealt with. The President got revenues--revenues that weren't contemplated by the sequester in the first place. Yet, today, he gets up and argues that this needs to be a ``balanced'' plan, which is a euphemism around here for: We want more of your tax dollars. We want more taxpayers' money to come to Washington, DC. We want higher taxes. That is what that message is essentially saying.

When the President and many of his allies on Capitol Hill say: We want a balanced plan, that means they want tax increases--on top of the $620 billion in new taxes the President got on January 1 of this year.

Now, what is interesting to me about this whole process is it was reported this morning that the President has called a meeting on Friday. He now wants to convene a meeting on Friday to talk about these Draconian cuts that are going to go into effect, and he has been traveling all over the country picking the most high-profile, highly visible items he can that would suggest this is going to have this profoundly dramatic impact on people around this country. So now he is coming back to Washington. When? March 1. When is that? It is the day the cuts are designed to go into effect.

Where has the President been for the last year and a half? Where is the leadership in waiting until the very day these cuts are supposed to go into effect to say: Oh, let's have a meeting to talk about what we might be able to do to avoid the impact of these across-the-board spending reductions.

So March 1. OK, here we are, eleventh hour, once again, at the last minute, the President sweeps in and says he wants to do something to try to avert this sequester. But, again, remember: We have known about this for a year and a half. This is not a new revelation. We have known this was coming for a very long time.

The supercommittee failed to produce a result in November 2011. So it is almost a year and a half now we have known the sequester is coming. In fact, last summer we passed legislation in Congress that asked the administration to give us some detail and some specificity about where these cuts were going to take place, and we got some vague outline about that. We didn't get any report from the President that enumerated these because, frankly, I don't think they had gone through the process of trying to figure out what they were going to do with it.

So here we are now 18 months later, at the eleventh hour, and the President all of a sudden says: Let's have a meeting and talk about what we might be able to do to avoid the impact of these across-the-board spending reductions. Where is the leadership in that? Why weren't we doing that 12 months ago, 11 months ago, 10 months ago, 1 month ago, last week? Why weren't we talking about this earlier? Why do we have to wait until the very last day to have a discussion about this?

Well, evidently, the President is better at campaigning than he is at governing because he has been driving all over the country--I shouldn't say driving, flying all over the country, over 5,000 miles--over 5,000 miles--campaigning on this issue to try to scare people into believing that an $85 billion across-the-board spending reduction, which represents 2.4 percent of Federal spending this next year, is somehow going to be disastrous for our economy and for our country.

Frankly, I am not in any way diminishing the impact of spending reductions. Spending reductions will have some impact--there is no question about that--for sure. But to go out and say we are going to have 90-minute lines at airports, and we are not going to have meat inspectors, and all these things they are trying to put out there to scare the American people, to dramatize and, frankly, to traumatize the American people about a 2.4-percent reduction in overall Federal spending?

Now, if a person is a member of an average American family or an American business or anybody in this country, and they know they are going to have 2.4 percent less to work with next year, what do they do? They sit down around their kitchen table and figure out what those things are they spend money on that they can live without. It is a fairly simple exercise. In most cases, people are going to pick the low-priority items. They are going to pick the things they can probably live without. They are not going to pick the things they really need and rely upon and depend upon. But I think most Americans would agree they could find a 2.4-percent reduction in their annual spending if they had to. I think that is something ordinary, average Americans have to deal with all the time: Let's just tighten our belts a little bit; let's figure out how we can get along with 2.4 percent less spending.

Well, we are talking about 2.4 percent less spending on a $3.6 trillion annual Federal budget. What does that represent? So $85 billion is a lot of money. It is a lot of money anywhere. It is a lot of money in my State of South Dakota. In the small town I grew up in, those are dimensions we didn't even contemplate in most cases.

But we think about it this way: $85 billion, the amount of money we are asked to reduce in terms of the overall Federal spending this next year, is the equivalent of how much our country borrows every single month. Every 28 days, we borrow $85 billion. So every single month, we borrow--we put on the backs of our children and grandchildren--as much money as the Federal Government is being asked to live without for an entire year: 2.4 percent of annual Federal spending.

To be fair, people will say: Wait a minute. It is not 2.4 percent because it is just affecting a certain area of the budget, and they are right. It will represent a bigger percentage simply because so much of the budget has been walled off from this, the area where the real Federal spending is; where three-fifths to two-thirds of all Federal spending has essentially, for all intents and purposes, been protected or insulated from this. There is a small 2-percent cut that would occur in some of the mandatory areas of the budget, but for all intents and purposes, what really drives Federal spending year in and year out and what is going to represent, according to the Congressional Budget Office, about 91 percent of all Federal spending 10 years from now--Social Security, Medicare, Medicaid, food stamps; mandatory Federal spending entitlement programs--that is pretty much walled off.

So we are increasingly shrinking the discretionary part of the budget which represents a smaller and smaller portion of Federal spending each and every year. But the reality is it still is 2.4 percent out of a $3.6 trillion annual budget that we are talking about. So it seems to me, at least, that all the hand-wringing that is going on in Washington right now and all the drama the President is trying to create by flying over 5,000 miles across the country, campaigning about the effects of this sequester, really gets lost in what I think every American has to deal with every single day and every single week and every single month and every single year; that is, sometimes they have to make do with a little bit less, and maybe Washington, DC, can figure out how to do that.

But we have to ask the question again: Where is the leadership? The President, on Friday, March 1--the day this happens--decides to have a meeting when we have known about this for 18 months. The Senate, under the leadership of the majority--the Democrats in the Senate--hasn't passed a budget now for 1,400 days. We have gone 1,400 days without a budget. We are going on 4 years without a budget. We spend $3.5 trillion, $3.6 trillion of the American taxpayers' money every single year, and we haven't had a budget that suggests how we are going to spend it now for going on 4 years. Where is the leadership?

The President of the United States submits a budget--which he will do sometime soon. He has missed the deadline already, but we assume it is coming in the next few weeks. But over the last couple of years when he submitted a budget to Congress, when it was voted on in the House and in the Senate, it didn't receive a single vote.

Now, it perhaps is not surprising it didn't receive a Republican vote because it had a lot of tax increases in it, but it didn't get a Democrat vote--zero, zilch--in the House or Senate. There wasn't a Republican or a Democrat who voted for the President's budget. Why? Because it wasn't serious. The President is not doing anything to meaningfully address out-of-control spending and out-of-control debt.

So here we are. The Budget Control Act finally did put in place some spending reductions, and now everybody is hyperventilating about what we can do to avoid them. How can we turn this off? How can we shut off the sequester?

I, frankly, believe we could do this in a much better way, a more responsible way when it comes to the spending reductions. We ought to do it in a way that doesn't put a disproportionate burden on the defense budget. National security represents 20 percent of total Federal spending, but it gets 50 percent of the cuts under the sequester. That is not the way it ought to happen. I am all for--and plans have been offered and twice passed by the House Republicans--to replace this sequester with other--what we believe are more responsible spending reductions. But that passed the House of Representatives; it can't pass in the Senate.

The President has had no interest in looking at some alternative. The only alternative he is interested in is the one that would do the most harm and the most damage to the American economy; that is, more taxes. If he gets taxes on this, if he gets taxes to turn off the sequester like the taxes he got on January 1, it will not be enough because it is never enough.

People who believe in big government and believe the way to solve deficits is to raise taxes are never going to raise enough revenue. If you do not address what is really afflicting our country--and that is out-of-control spending--you have not done anything to solve the problem, which the $620 billion tax increase on January 1 demonstrated. The amount of money, the amount of revenue generated from that tax increase January 1 will fund the government this year for less than a week--less than a single week.

This is not a revenue problem. This is not a tax problem. This is a spending problem. It is time for some leadership. It is time for the President to quit campaigning, to come back here, and to start governing. But here we are--Friday, the day it is all set to take effect--we have a $16 trillion debt. The Congressional Budget Office says at the end of the next 10 years it is going to be $26 trillion. We are adding $1 trillion a year. We are borrowing 40 cents out of every $1 we spend. Revenues coming into the Treasury, according to the Congressional Budget Office, are going up, actually; and by 2015 they are going to be 19.1 percent of our entire economy, which is more than a percentage point higher than the 40-year historical average.

Revenues are going up, and for the next decade, according to the Congressional Budget Office, revenues will exceed, by about a percentage point, the 40-year historical average. So revenues are coming up to above historical averages, and yet we continue to run trillion-dollar deficits as far as the eye can see.

Well, we have to get our spending under control. We have to get the economy going again. The Republican staff on the Joint Economic Committee put out a study that suggested if we had revenue growth like we have had--average revenue growth--for the past 60 years, if we had that in the past 4 years, the deficits today would be half of what they are. That is the impact of economic growth. That is why growing at 1 1/2 to 2 percent is not enough. We have to grow at 3 to 4 percent. But to grow at 3 to 4 percent, we have to have policies that promote growth, that allow the economy to expand. We cannot keep piling on new taxes and new regulations and making it more difficult and more expensive for people who create jobs in this country to create those jobs.

So the economy will continue to grow at a sluggish, anemic rate. We will continue to have these high deficits, particularly if we do not get our spending under control. It is about exercising fiscal discipline and responsibility when it comes to our spending. It is about putting policies in place that promote job creation and growth in this country. That is what it is going to take to get this country back on track. Yet the President is out campaigning around the country. He comes back now at the eleventh hour, and on March 1 he decides to have a meeting at the White House to talk about something we have known was going to happen now for 18 months--18 months.

We have the most predictable crisis, according to the Simpson-Bowles Commission, we have ever seen--the spending and debt crisis that is in front of us. We have known about it for a long time. You can see it. It is like a slow-moving train wreck out there. You are just watching it. You just know it is going to happen, and yet nobody is doing anything to turn off the engines.

It is high time we did that. I hope the President will engage. I hope we will get for the first time now in almost 4 years, 1,400 days, a budget in the Senate that puts a plan in place--a real plan, not a fake plan, not a phony plan, not a plan that has a bunch of tax increases, but a plan that actually addresses what drives Federal spending and debt in a way that will put us on a more sustainable fiscal path and ensure that future generations of Americans have a higher standard of living, a higher quality of life than what previous generations have had, not a lower and a less one. That is the path we are headed on today if we do not change course.

Madam President, I yield the floor.

I suggest the absence of a quorum.

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