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The Budget

Sen. Mike Johanns

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Mr. President, we rise today to talk about the budget that was submitted by the President of the United States, actually within the last 24 hours. Despite a 2009 promise to literally cut the deficit in half by the end of his first term, President Obama released a budget that, for the fourth year in a row, calls for a deficit in excess of $1 trillion. Unfortunately, this proposal is one more year of the same old story: more taxes, more spending, more borrowing, and yet another punt on the tough issues we as a Nation must face.

As a former Governor, I understand what it takes to balance a budget. Difficult choices do have to be made, even with programs that are popular. In 2001, when I was Governor of Nebraska, I closed a $220 million budget shortfall and didn't raise taxes. But $220 million is merely a drop in the bucket for the Federal budget that amounted to more than 7 percent in Nebraska. By comparison, if the President had submitted a budget that cut spending by 7 percent, he would be cutting more than $260 billion this year. That wasn't the last thing we had to do. With the post-9/11 economy, we called special session after special session to cut spending.

But instead of that, the President is projected to increase spending. Leadership is necessary and, sadly, this budget does not display it. Instead, America's balance sheet continues to drown in a sea of red ink for yet another year, driving our 2012 deficit to nearly $1.4 trillion. Instead of making tough choices about priorities, the President appears to be doubling down on more stimulus spending.

Let me give a few examples, and then I will invite my colleagues to join me: $2 billion in new tax credits for the production of advanced technology vehicles; $4 billion to extend and modify ``certain energy incentives which could include clean renewable energy bonds;'' $3 billion to encourage investments in advanced energy manufacturing projects; $4.7 billion for new spending to strengthen the teaching profession despite GAO finding 82 duplicative and wasteful teacher quality programs. When we add it all, we are presented with yet another budget that contains the largest tax increase in U.S. history. It raises taxes by more than $1.8 trillion. I could go on and on. This is simply a situation where we have seen this budget before, and it doesn't improve.

I will turn to my colleague Senator Blunt, from the State of Missouri, who has worked on these budgets before, and I will ask him to offer some insights of what he sees in this budget and where it is leading our country, in his opinion.

Sen. Roy Blunt

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I thank my friend for putting this discussion together this morning. I think it is a serious discussion, unlike this budget, which is clearly not a serious budget. The President doesn't expect it to be voted on. The majority leader in the Senate said it wouldn't be voted on. When the White House spokesman was asked if they had a position on the fact that the Senate wasn't going to produce a budget--this budget could be voted on but it won't be debated and there won't be a companion Senate budget apparently that goes along with it--the White House spokesman said no, they didn't have a position on the fact that the majority leader said there would be no Senate budget this year. Remember, this is the budget that is required by law to be passed by April 15 of every year, and I guess this will be the fourth straight time that April 15 will be missed without having passed a budget.

What we have here, unlike a budget document that does what the Senator from Nebraska did as Governor or what my son Matt did as Governor of Missouri--he had a $1 billion deficit, and they had to make up for that, and they did. The Senator from Nebraska made up for the deficit in his State. Governor and now Senator Risch was responsible to see that the numbers added up. These numbers don't add up. This is a budget that spends too much and taxes too much and it borrows too much. Spending goes up in this budget. In this budget year we are spending $3.8 trillion, fiscal year 2013, the budget year we are talking about now. Seven years from now, fiscal year 2022--9 years from now--we are spending almost $6 trillion, from $3.8 trillion to $5.8 trillion.

Clearly, the spending problem isn't solved by this budget. This budget makes the spending problem worse. This budget adds almost $2 trillion in new taxes. So it spends too much, it taxes too much, and then it borrows too much. We are going to increase the debt again. We have a deficit of almost $1 trillion in each of the Obama years of responsibility during this first term. It cannot be allowed to continue. But when we look at this budget document--the 10-year projections--there is no indication that we change any of these trends.

We all understand these trends are unacceptable. The Federal Government's total debt has now surpassed the size of the economy. The potential of our economy to produce goods and services, the so-called GDP number, is now exceeded by our debt. We know what happened in Greece when their debt exceeded the capacity of their economy to produce goods and services. We know what happened in Italy. We know what happened in Ireland. We know what happened in Portugal. Why don't we think that is going to happen to us? Because it will, and we have to make these numbers add up.

The Senator from Nebraska as a Governor had to produce a budget. Governor Risch produced a budget. I will turn to him in a second to talk about the responsibility of the Executive to lead and then, frankly, the responsibility of the Senate to do its job.

I am continually surprised that we can miss this absolute deadline in the law year after year after year and there is not a press outcry. There is more of a public outcry than a press outcry. My sense is that if when I was in the House of Representatives we had missed this deadline once as opposed to over and over and over, there would have been a marshaling of people around the country to come and stand on the steps of the Capitol to say, Why isn't the majority in the House doing its job? This is something the current majority in the Senate has walked away from in ways I can't understand.

When we talk to Americans, getting people back to work and getting control of Federal spending are the No. 1 and No. 2 domestic priorities, but I don't see those priorities in this budget.

I turn to my friend from Idaho to see what he has thought of, as we have now had a few hours to look at the specifics of the President's budget.

Sen. Jim Risch

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Mr. President, I thank the Senator from Missouri. Like everyone, I have been perusing the numbers to try to figure out whether this gets us somewhere and whether it will actually come to fruition.

A quick look at history. As the Senator points out, this will be the fourth year, if we don't adopt a budget, where we haven't had one. There isn't an entity in the world that operates without a budget. We have to have a budget if we are going to do anything responsibly. Budgeting is not that difficult; it is merely a way of taking the money we have coming in and allocating it on a priority basis for what we think money should be spent for. There is never enough money. There isn't an enterprise in the world that has enough money. Everyone has to make decisions as to what are the priorities and do the best they can with the money they have.

As I said, over 1,000 days have passed since the Senate has adopted a budget. Last year, a similar budget the President produced was actually put on the floor here of the Senate for a vote. It failed, with zero ``yea'' votes to 97 ``no'' votes. That is not a party-line vote.

This budget, one can only conclude, just like the budget produced by the President last year, spends too much, taxes too much, and it borrows too much.

The budgeting process is something that is extremely important. The American people demand it. Common sense demands it. Anyone who has ever operated a government or a business enterprise knows we must budget. Every Governor in the United States does it--all 50 States. Every legislature does it. As was pointed out by Senator Johanns, when he was Governor he had to cut 7 percent.

Let me tell my colleagues about the state of play in Idaho. When I was Governor, the budget was $3.5 billion when I left. The current Governor is operating with a $2.5 billion budget. He cut $1 billion out of a $3.5 billion budget. If it can be done at the State level, it can be done at the national level, and, indeed, it has to be done at the national level. We are going to have to cut.

The proposed budget spends about $10.4 billion every day, and I put it on a daily basis because when we start talking about trillions, people's eyes glaze over. There is no possible way--there is no human being on the face of this planet who can determine what $1 trillion is, let alone the $3.8 trillion this budget spends. But if we put it on a daily basis, it is $10.4 billion every day. Remember, in the State of Idaho, for a year, the State spends $2.5 billion. This government spends $10.4 billion every day. That comes down to about $7.2 million every minute.

One wouldn't have a whole lot of argument about that if indeed the government had $10.4 billion to spend every day or $7.2 million to spend every minute. But, indeed, every day, under this budget, the Federal Government will borrow $2.4 billion--every single day. The borrowing comes down to about $1.7 million every minute.

When we put it in terms of how much it is a day and how much it is a minute, it becomes staggering. Right now, because we have been dealing with this, every time I see nationally a business engaged in a huge deal at $5 billion or something such as that, we can put it in perspective of how the Federal Government is doing its business. This borrowing that is being done every day by the Federal Government has yielded us now a $15 trillion debt. Again, I don't know what that is; nobody knows what that is. But what I do know is we will never pay it off in our lifetime. It will be our kids and our grandkids who are saddled with that particular amount. That is the real deal.

I wish everybody could have the experience I had, and a number of Senators have done this. Every day, the Federal Government has to pay its bills at the end of the day. They are not like businesses; they don't pay every month. They pay at the end of the day. How do they do this? When I first got here, I thought: This is staggering, and what have you. But I went and watched them do it. The Treasury has a checkbook, like everyone else does, and at the end of the day it has a balance, like everybody else. How does it balance it? It balances it by going out and borrowing the money. I watched them borrow. This is indeed borrowing. About a fourth of it comes from China, about a fourth comes from other countries, and about half comes from wealthy institutions including banks and trusts and individuals around the world. But it is real borrowing and it has to be paid back. Indeed, they not only borrow the amount of money they need every day for the daily deficit, but they borrow enough money to pay back the people whose debts are coming due that day.

After you walk out of there and watch them actually do that, you can't help but walk away from it feeling sick. Because when we look at these kinds of numbers, the government can't pay its bills at the end of the day. The only way it can pay its bills is if it borrows.

We need systemic change. Everything has to be reformed. If I were in charge of everything, the first thing I would reform is this ridiculous idea that we budget on a 10-year basis. That is outrageous.

Mr. President, 10-year budgeting allows smoke and mirrors and allows gimmicks and games so you can stand up and say: Why, this budget saves $4 trillion. It does not save a dime next year. All this alleged savings is 10 years out, and, indeed, on this 10-year cycle they use to budget, the second year never comes.

We need an annual budget. We need to look in the mirror and talk about how much we are spending next year versus how much is coming in. Forget this 10-year basis. It is absolute nonsense.

Senator Blunt talked about Greece. Greece is going through what we are going to have to go through at some time; that is, cutting back. They lived happy for decades. Well, they spent their children's and their grandchildren's money, and all of a sudden what happened to them? Nobody would loan them money anymore. If that happens to us, we are out of business. If nobody will loan us any money on a daily basis, we are out of business.

So what do we need? We need compromise. It is compromise that got us into the position we are in. Compromise every year caused us to take each budget item, where the Democrats wanted to spend more, the Republicans wanted to spend less, so they compromised somewhere in the middle. Now we are operating, even under this budget, at a trillion-dollar deficit for the year.

It is time to compromise again. But we need to go in the other direction. We need to compromise on: How much are we going to cut this year? The Republicans are going to want to cut more. The Democrats, I hope, will agree that we need to do some cutting and we need to wind up somewhere in the middle. That is the only way we are going to get this back on track. This budget does not cut it. This budget does not even come close to it. We are going to bankrupt America if we do not start doing things differently.

I see Senator Isakson has joined us on the floor.

Sen. Mike Johanns

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Mr. President, I thank my colleagues for laying out what this budget is all about and the problems we are seeing.

Senator Isakson has been a leader in trying to reform the budget process.

I say to Senator Isakson, I would like you to offer thoughts on what you see in this budget and some ideas on how we can improve this situation we find ourselves in with the President's budget wanting more taxing, more borrowing, more spending.

Sen. Johnny Isakson

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Mr. President, I thank the Senator for the opportunity.

I commend Senator Risch for his remarks. I want to make a little addition to those remarks in a second. But specifically, in answer to Senator Johanns' question, the only thing you can do with this budget is start over.

Senator Risch has very importantly recognized the 10-year fiasco we look at every year by pushing savings out into years 8, 9, and 10, when this President will not be here and another Congress will be here.

In talking about compromise, one of the things Senator Shaheen from New Hampshire and I have pushed for 2 years is a process 40 States operate under, including the Senator's, if I am not mistaken, I say to Mr. Johanns, and that is a biennial budget process. So instead of talking about 10 years, you are talking about 2 years. Instead of talking about appropriating every year, you appropriate in 1 year for 2 years, and in the second year--which happens to be the election year, or the even unnumbered year--your total obligation is to look for savings, efficiencies, and the fine functioning of the government.

We do not ever do in this Congress what our families do and our children do every year at home. We do not ever sit around our kitchen table, reprioritize our expenditures based on our needs, and find out how to live within our means. The American people do not get the luxury of printing money. Japan does not come in and buy notes to fund their money. They have to figure out how they themselves can manage their budget in such a way as to live within the income they have and not go into big debt. The United States of America ought to do the same.

One of the things Senator Risch hit on that I want to hammer on for a second--because there is a big part of our problem that is solvable; and it is solvable if good people would be willing to talk about it rather than politic about it--is known as entitlements.

Entitlements are Social Security, welfare, Medicare, Medicaid, retirement disabilities, et cetera. But two of them are not entitlements. Two of them are obligations of the United States of America. That is not an entitlement. That is something somebody has paid for. America's people pay 6.2 percent of their payroll normally--except for the recent holiday we have had--to go into a Social Security trust fund to pay them a benefit. They pay 1.35 percent of their income every month--from day one, since 1968--to pay for Medicare. Those are not entitlements they are entitled to. Those are obligations we have committed them to from moneys they have paid.

This document we are looking at in this budget does not portend a single change in benefits or in obligations for Medicare and Medicaid and Social Security, which simply means the day they go broke comes that much faster. We are defaulting on the obligation we have to the American people. Whereas, if we sat down honestly, put those programs on the table, looked at the outyears, when my grandchildren and children may be beneficiaries, and modify the obligation, pushing out the eligibility, we can save the obligation we owe the American people for Social Security and Medicare. But if we do not do it, it will be gone. That is something they paid for that we took out of the trust fund and used for something else--not the least of which was the $500 billion the President took out of the trust fund for Medicare to help pay for the affordable health care bill, which has not even gone into effect yet.

I think it is time we ask of ourselves what the American people have to ask of themselves: Sit around our kitchen table, decide what our priorities are, live within our means, and budget for the future. Do not budget for failure. This is budgeting for failure.

Sen. Mike Johanns

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Mr. President, I appreciate the comments made by Senator Isakson. I wish to take a moment to follow up on his comments relative to Medicare and Social Security. Then I would ask Senator Blunt to offer a few words on where we go from here, what do we anticipate we have to do to set the ship of state on the right course, if you will.

But let me speak to the issue of Medicare and Social Security. Senator Isakson could not be more right. When you get paid, you can literally go to your paycheck stub and you can see the amount of money that is being withheld out of your paycheck--throughout your life--for Social Security benefits and for Medicare benefits.

When these programs were set up, thereabouts, a group was put together--they were referred to as trustees--and they basically did a fair analysis of where these programs were and where they were headed. Every year, they put out a report, and we will be getting another annual report in the not too distant future. But I think we all know what the report is going to say. The report is going to say that in the vicinity of about 2024, if not a bit sooner, Social Security literally is going to be insolvent. It is also going to say Medicare is literally in a position where it will be upside down financially sooner than that. The greatest challenge between the two, obviously, is Medicare.

What does that mean to people who are currently beneficiaries or about to retire and planning on these items being there for them? Well, what it means is, that plan could be in serious jeopardy.

It is not because Mike Johanns woke up last night and said that or dreamt it or thought about it. It is because people who are empowered to look at Social Security and Medicare have studied it very closely, have looked at the financial pieces of this, and have come to this conclusion.

Now let's examine the President's budget. What plan does he have to protect Medicare or Social Security? Well, he does not have a plan. These are not easy issues. I am not arguing here today this is easy to take on. But what I am saying to the American people is, if you study this budget or any other budget submitted by this President, he is doing nothing to arrest literally our progress toward these very important programs becoming insolvent. If there was ever an area in this budget where we need Presidential leadership, it is right here.

I would ask Senator Blunt for his thoughts. The Senator has studied these issues over the years and has offered great insight. Where do we go from here? What are the Senator's thoughts in terms of this budget and how we get back on track?

Sen. Roy Blunt

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Mr. President, I say to the Senator, I think my first thought is, the insight is not that difficult; it is just that we need to do our job. We cannot expect to solve these problems if the Senate does not do the job it is supposed to do. And we cannot expect to solve these problems if we keep letting the size of our government get out of proportion to the capacity of our economy.

In 2008--the year before the administration started--the deficit was higher than I thought it should be by a lot. It was $459 billion. That was 3 percent of GDP, and I thought that was unacceptable. The very next year--the first year of this administration--it went to 10 percent of GDP, $1.4 trillion. Then after that, it has been a trillion, a trillion, a trillion--$1.4 trillion, $1.3 trillion, $1.3 trillion--$1.3 trillion in the year we are in now. This does not change that trajectory at all. And in the budget the President submitted, for the first time any President has said this, the President says the Social Security trust fund, during this 10-year window, will run out of money--that the money coming in, for the first time ever, will not equal the money going out--but proposes nothing to do anything about that.

This is a commitment the Federal Government has made to Americans. Social Security can continue to work if you periodically look at the facts, the demographics, and adjust it.

We have about worn out the Tip O'Neill-Ronald Reagan example on Social Security. But I say to the Senators, that was in 1983. On the supposed third rail of politics that a President will not touch, in the very next year, Ronald Reagan carried 49 States. This would have been a great year in divided government to solve this problem because one side could not spend the rest of the time blaming the other.

I do not think the changes in Social Security, made in 1983, to my knowledge, have ever been an issue in any political campaign anywhere. Because they were made in a way that anticipated people's needs to adjust, we are just now, 30 years later, getting to the final phase-in of the new retirement age--30 years later. But if you do not get that started, you will never get there, whether it is Social Security or the Social Security insurance fund, which gets into trouble even quicker, according to the President, in 2018, and there is no proposal to do anything about that.

For people who are absolutely dependent on that safety net--family members, dependent children--if something happens to the worker who is paying into Social Security, 5 years from now the President says that is in big trouble. But you go through all of these papers, and you see no indication anywhere of what we should do about that.

These are issues that have to be dealt with, and I suggest the most fundamental way to deal with them is for the Senate to do its job, for the Senate to produce a budget, for the Senate to get focused--as Senator Risch suggested we need to focus--not on some phony pay-for 10 years out that never materializes, but what are we going to do this year to change the course of the country, to change the trajectory.

One thing you learn in artillery is, you do not have to change the trajectory, you do not have to change the level of the artillery piece very much to make a big difference out there in the distance. But if you do not change it at all, you keep landing at exactly the same place. And this is a budget that actually lands in even a worse place because it spends more money, it spends too much, it taxes too much, it borrows too much, and the American people know we cannot continue to do that, as was the case made very well by Senator Risch.

I ask the Senator, does he have any other thoughts on what we need to be doing and how we need to be doing it?

Sen. Jim Risch

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First of all, one of the things people have to accept--and it does not happen around here--is we do not have an income problem. We have a spending problem. All the money in the world would not get us to where you are able to solve every problem that comes down the pike and people want to resolve.

The President is urging that somebody is not paying their fair share. I wish he would hang more details on that. I wish some media person would ask him: Identify these groups for us, please. I think he is trying to create a national dialog as to who is or who is not paying their fair share. I think that might be appropriate.

I think when the American people started on this, they took the numbers and said: OK, if you take the first half of income earners from the lowest to the median, they are paying zero percent in taxes; the top 10 percent is paying 70 percent of all the money the government takes in, so let's have a dialog as to which of those two groups is paying their fair share.

There are some very good sociological reasons why the upper income pays more than the lower income, and I do not think anyone is going to argue with that.

But there is only so much we can do. I am not here defending the rich. The rich take care of themselves. They can move their capital wherever they want to move it. Indeed, we all know a good deal of it is moved offshore. There is $2 trillion offshore right now that Americans--American businesses--want to bring back, but they will not bring it back because there is a war on capital in this country with the government trying to take the capital. We need to have a national dialogue about that. We need to land in the middle someplace.

Again, no one is going to defend the rich. They do not have to; the rich can take care of themselves. But the fact is, we have to come to the conclusion at some point that the resources of the American people are finite. Be it the rich, be it the poor, be it the middle class, their ability to pay for government is finite. There is a point at which we have to say wait instead of saying we are going to bring in more. We have to say we are going to have to prioritize the money we have and how we are going to spend it.

I think that is the way we get out of this situation, having an acceptance that there is a finite amount of money. It is too easy for us to borrow money. We have seen that in our own lives. We have seen friends of ours who have gone down to the bank and borrowed money. If the money is too easy to borrow, they get into trouble, and they get into trouble relatively quickly.

Well, we have gotten into trouble because it is so easy for us to borrow. People still want to loan us money. People are still loaning us money every day. They lend us billions and billions. Indeed, if they did not, we would be out of business. So it is time for this national dialogue on where we are going to go.

As I said, the only way this is going to be resolved is if we compromise. Instead of talking about how much more we are going to spend, we need to do something we have not done since World War II; that is, compromise on how much we are going to cut.

The Senator's time has expired.

Sen. Mike Johanns

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Mr. President, I anticipate Senator Heller will probably seek the floor. But this concludes our colloquy.

I yield the floor.