Mr. President, I ask that the quorum call be lifted and unanimous consent that I be allowed to speak up to 30 minutes.
I rise today to call attention to the irresponsible and reckless fiscal path we find ourselves on as a nation, and to urge my colleagues to act now to take the first step toward meaningful, comprehensive tax and entitlement reform.
Mr. President, as you know, Tuesday night we gathered here on the Senate floor to cast our votes on the Omnibus Appropriations Act of 2009. I could not vote for this bill, because it ignores the fiscal realities we find ourselves in today. This omnibus bill, which includes $408 billion in non-emergency spending, is eight percent larger than it should be. Some agencies in the bill are set to get a 40-percent increase in funding.
This adds to the $787 billion ‘stimulus bill’ that was passed last month, increases the already staggering $10.9 trillion national debt, and continues to expand the size of government at what has become an alarming rate. As you can see here, federal spending as a percent of GDP averaged just under 20 percent under President Bush. This year under President Obama it will reach almost 28 percent, and his administration projects it will average out to over 23 percent across two terms.
And now, to complete the triple-whammy to our national debt, the administration adds to the stimulus and omnibus a new ten-year budget where the lowest deficit for a single year is larger than any annual deficit from the end of World War II to President Obama’s inauguration. In fact, President Obama’s smallest deficit is larger than President Bush’s largest deficit – and that is true despite proposing the largest tax increase in American history, including a new energy tax that will expose the false claim that President Obama will not raise taxes on the middle class. This $646 billion tax increase will affect rich, poor, and middle class alike, and yet future generations will still be burdened with higher debt.
Simply put, our spending is spinning out of control. We are spending and funding more money at a time when we should be finding ways to work harder and smarter and do more with less. Just look at the stimulus, we spent $787 billion dollars, and now some congressional leaders are talking about putting together a second package. We cannot continue down this path. It is our responsibility to make budgeting decisions based on our nation’s fiscal situation.
Over the past year we have been hit by an economic avalanche that started in housing, quickly spread to the financial and credit markets, and then continued onward to every corner of our economy. We have taken steps over the past months to dig out of the avalanche, Mr. President, but we have not reinforced our tax and entitlement system’s crumbling foundation.
There is a reason why despite the enormity of the legislation passed over the past months, there is still a sense of great anxiety on Main Street. It is because the American people get it. The stimulus and omnibus has caused everyone who paid attention to say, my God, we have to do something to get back on firm fiscal footing. They know that unless we fix our tax and entitlement system, we might as well be flying a kamikaze plane.
When I arrived in the Senate in 1999, gross federal debt stood at $5.6 trillion, or 61 percent of GDP. The Obama administration recently projected the national debt to more than double to $12.7 trillion by the end of Fiscal Year 2009. That would amount to a 126 percent increase, compared with only a 56 percent increase in GDP during the same ten-year period. From 2008 to 2009 alone, the federal debt would increase 27 percent, boosting the country’s debt-to-income ratio – or national debt as a percentage of GDP – from 70 percent last year to 89 percent this year.
And under the Obama budget, in 2017, for the first time since 1947 when we were paying down our World War II debt, the national debt will be larger than the size of the entire American economy. At that point, we will be too fat and out of shape to escape from our creditors around the world.
Today if we are candid with the American people, when you consider the TARP, the stimulus package, and the money we continuously borrow from the social security trust funds, we are facing a projected budget deficit of $1.9 trillion, which is more than quadruple the reported 2008 deficit of $455 billion. As a share of the economy, the 2009 deficit will become the largest recorded since World War II.
Last June, when I spoke here on the floor to call attention to the fiscal crisis, I pointed out that our national debt was $9.4 trillion and the per-capita debt, or each American’s share of the national debt, was $31,000, up from $20,500 in 1999. This year, that figure will reach $41,000. Let’s put that into perspective. In 2007, according to the Bureau of Labor and Statistics, the median income for an Ohio family in 2007 with one earner was $40,888. That means each person’s share of the national debt is more than many hard working Ohioans make in an entire year.
Alarmingly, those figures don’t even count our accumulated, long-term financial obligations, which grew by $2.5 trillion last year as a result of the increase in the costs of Medicare and Social Security benefits as the baby boomer generation retires. If we include those numbers, taxpayers are on the hook for a record $57 trillion in federal liabilities to cover the lifetime benefits of everyone eligible for Medicare, Social Security and other government programs – that’s nearly $500,000 per household!
It doesn’t take an economist to realize our course is unsustainable. As our former Comptroller General and head of the Government Accountability Office David Walker likes to say, “We are facing a fiscal time bomb.” We must come to terms with the fact that the U.S. government is the worst credit card abuser in the world, and it is time that we come to terms with the fiscal realities of 2009. We cannot continue to heap debt onto the backs of our children and grandchildren without a second thought. Lip service from Congress and the administration isn’t going to pay the bills, Mr. President.
Recently, Office of Budget and Management Director Peter Orszag spoke to a group of bipartisan senators who have breakfast together regularly. He pointed out that as we are confronted with the economic tsunami hitting our country, we are lucky that our interest rates are very low because many investors in America, and around the world, are parking their money in treasury bills. Mr. Orzsag continued on to say we cannot expect that rate of borrowing to last, and said that it is imperative we take advantage of this phenomenon now before foreign markets and our people demand more interest for their investment in the U.S. Debt.
I could not agree more, Mr. President. We cannot rely on luck, and foreign investors – like China and OPEC, may not have our best interests at heart – to finance our way of life. I was recently stunned to learn that some of our nation’s top economic experts like Larry Sumners, Martin Feldstein and Larry Lindsay, have said that our current fiscal path is only sustainable as long as the Japanese, Chinese, and others have confidence that we will pay back our debt.
This has serious implications. Foreign creditors provided more than 70 percent of the funds that the U.S. has borrowed since 2001. As a result, as recently as this past summer, 51 percent of the privately owned national debt is held by foreign creditors – mostly foreign central banks. That’s up from 37 percent just six years ago. If these foreign investors lose confidence and pull out of U.S. Treasuries – Katy, bar the door! Borrowing hundreds of billions of dollars from China and OPEC puts not only our economy, but also our national security, at risk. It is critical that we ensure that countries that control our debt do not control our future.
We cannot continue to live in the United States of denial. Back in 2006 I sent a letter to President Bush urging him to take on comprehensive tax and entitlement reform, which I would like to submit to the record, but sadly no action was taken. We missed a gigantic opportunity, Mr. President, to make meaningful reform while times were relatively good.
We are more or less lucking out now, but we cannot count on that luck to last. We have to tackle tax and entitlement reform to maintain our credibility, turn around our economy, and regain our global competitiveness. Not a year from now, not two years from now, not four years from now – now.
Our tax code, for example, is imploding from the hundreds of economic and social policies Congress pursues through tax incentives and from the dozens of temporary tax provisions. It is a nightmare; just ask the millions of Americans that are filing their returns right now.
Tinkering with the current tax code won’t get the job done. Tinkering is what got us into this mess in the first place. It’s time to rip the tax code out by its roots and replace it with something that works.
Since the last major tax reform in 1986, we’ve added over 15,000 new provisions to the Internal Revenue Code. Last year alone, there were 500 changes. It is no wonder why only 13 percent of Americans file their taxes without the help of either a tax preparer or computer software.
Clearly, we have waited too long to act. This is not just a matter of saving taxpayers time and effort. It is also about saving them real money. The Tax Foundation estimates that comprehensive tax reform could save Americans as much as $265 billion in compliance costs associated with preparing their returns.
We must enact fundamental tax reform to help make the tax code simple, fair, transparent and economically efficient.
Thankfully, there have been encouraging signs of new developments.
Earlier this month I attended a bipartisan press conference along with Senator Conrad, Representatives Cooper and Wolf, and Former U.S. Comptroller General and Peter G. Peterson Foundation CEO David Walker to urge Congress to take action to restore fiscal discipline.
We all agreed that now is the time to begin to enact the first pillar of meaningful, comprehensive tax and entitlement reform.
That’s why I am very disappointed that President Obama did not mention a vehicle to enact tax and entitlement reform in his address to Congress, just as I was very disappointed that the Bush Administration never once mentioned reducing our national debt after 2001.
I have been calling for the creation of a commission to facilitate tax and entitlement reform for some time now. In fact, back in 2006, I introduced the Securing America’s Future Economy, or SAFE, Commission Act, which I re-introduced in the Senate in the 109th and 110th congressional sessions. Congressman Jim Cooper of Tennessee and Congressman Frank Wolf of Virginia introduced a version in the House, where they enlisted 93 co-sponsors from both parties. This bipartisan, bicameral group had support from corporate executives, religious leaders, and think tanks across the political spectrum from the conservative Heritage Foundation to the liberal Brookings Institution.
Building on the SAFE commission, two of my colleagues, the Budget Committee Chairman from North Dakota, Senator Conrad, and the Ranking Member from New Hampshire, Senator Gregg, introduced a bipartisan bill that would create a tax and entitlement reform task force very similar to my SAFE Commission called The Bipartisan Task Force for Responsible Fiscal Action. I have signed on as one of 19 co-sponsors of this proposal.
We will never take the necessary steps towards fiscal responsibility unless we create this BRAC-like bipartisan commission. This commission could take on the tough issues of social security, healthcare and tax reform, creating recommendations that would then be fast-tracked through a special process and brought to the floor of both chambers for a vote.
Though the workload would be heavy, the commission could certainly benefit by taking a look at previous work that has been done to study these issues by numerous foundations. It could also start by considering some of the previous proposals that have been introduced by some of our former colleagues like Senators Mack and Breaux, who were co-chairs of a commission created by the Bush Administration to reform our tax code. Unfortunately, President Bush took their report, which had some great recommendations, and stuck it on a shelf to gather dust.
Mr. President, we all know we have our hands full. But if we continue to ignore the pressing need for tax and entitlement reform, we jeopardize the future of our nation, and risk the time when we cannot borrow money because we are deemed fiscally irresponsible by the world community.
That’s why I was pleased to hear President Obama mention the national debt in his address to Congress. But I was disappointed that when he mentioned the “crushing cost” we face and the reform we can no longer afford to put on hold, he only talked about healthcare. Although health care costs are a big part of our entitlement problem, addressing health care reform alone won’t get the job done.
This is not the time for dodging and ducking. This is the time for the cold hard truth. Everyone knows that we need tax and entitlement reform – I know it, the Obama Administration knows it and the American people know it, Mr. President.
The American people elected President Obama to make the tough decisions to put this country on the right track. As President Obama said himself so eloquently, “we must take responsibility for our future, and for posterity.” Sadly, so far he is missing in action on tax and entitlement reform.
In fact, in a February 27 column in the Washington Post, Michael Gerson called President Obama’s stance on tax and entitlement reform in his joint address to congress “timid” and “hardly courageous.”
In fairness to the president, he and his administration have been busy putting out fires, but if he ignores comprehensive tax and entitlement reform we could see an economic holocaust.
That’s why I would suggest to my fellow colleagues who have voiced similar calls for reform that we should gather our staffs, on a bipartisan and bicameral basis, to agree on language on a vehicle-commission that can get the job done. If the administration doesn’t like our proposals, then they would be free to weigh in with their own ideas, but doing nothing is simply not an option. Our duty is to position this nation so that we have the greatest opportunity for success in the future.
Each and every one of us should be able to look into the eyes of our children and grandchildren and know in our hearts that we have done all that we can to make sure that they at least have the opportunity to have the same standard of living and quality of life we have been so blessed to enjoy.
If I had to name one of the primary contributing factors to our worsening economic situation, it would have to be the loss of faith we seem to have experienced in ourselves.
In many ways, today America is mired in a crisis of confidence.
I do not share the sense of despair that many experts hold concerning the future of our country. When I first became Mayor of Cleveland back in 1979, the city was in default on its bonds. Unemployment over the first couple of years continued to grow to more than 18 percent. Cynics at the time joked jokingly asked the last person in town to turn off the lights, but we didn’t let that bring us down. We decided that no one was going to come to Cleveland and solve our problems for us. We had the courage to be more self-reliant and make difficult choices. Through the public-private partnerships we created, we were able to unite everyone behind common goals. We empowered the community, and it worked. In fact, Cleveland became known as “comeback city.”
Similarly, when I became Governor of Ohio in 1991, we faced a billion dollar budget shortfall, and we were a no-growth state. We made some tough decisions; we had to cut spending four times, and even raise taxes. But as a result, we were able to turn the tide, create 540,000 new jobs, and grow the state’s rainy day fund from 14 cents to more than $1 billion by 1998.
Mr. President, I know we can turn things around again. But we need to stop the spending spree, and start making tough decisions on tax and entitlement reform.
Let’s work together to get America back on track. Let’s work together to systematically deal with each of the problems, challenges and opportunities we have, and let’s work together to restore confidence in America, so that we will be filled with the same hope and optimism Ronald Reagan had when he said, “I know that for America, there will always be a bright dawn ahead.”
Thank you, Mr. President, I yield the floor.
Friday, March 13, 2009
Transcript: Voinovich Floor Speech on Obama Budget