Floor Statement on the Fiscal Year 2007 Budget Resolution
MR REED: Mr. President, the Humphrey Hawkins Act of 1978 specifies that time should be set aside in the consideration of the budget resolution for debate on economic goals and policies. As the ranking member of the Joint Economic Committee, I rise today to talk about how the budget submitted by President Bush and the version of that budget which we are debating this week in the Senate embody the wrong goals and policies to address the challenges facing the American economy. If you listen to the President and my colleagues on the other side of the aisle, you would get the impression that the economy is in good shape and that their policies have been successful. But if you listen to the American people you know that there is considerable anxiety about the economy and considerable disapproval about how the other side has managed economic policy. The American people are right. All is not well with the Bush economy and the President's economic policies. President Bush likes to cite statistics on how fast the economy is growing and how much productivity--the output a worker produces in an hour--has increased. What he doesn't mention is that on his watch the economy went through the most protracted jobs slump in decades; that there is still considerable evidence of lagging labor force participation and hidden unemployment; and that the benefits of productivity growth have been showing up in the bottom lines of companies rather than in the paychecks of workers. The President doesn't mention that disparities in wages and incomes are growing wider. Those who are already well-to-do are continuing to do very well. But the typical American family is struggling to make ends meet in the face of rising costs for energy, health care, and a college education for their children. The administration and its supporters will not take responsibility for the failure of their policies. They say that their tax cuts are working and that all the American economy needs is more tax cuts. But the Bush tax cuts have not created an economy that works for ordinary Americans and they have mortgaged our future. Responsible analysts have shown that the President's tax cuts for the rich were poorly designed for generating jobs and putting people back to work in the wake of the 2001 recession. They had very low bang-for-the-buck'' in terms of job stimulus in the short run, but they were so massive that they created a legacy of large budget deficits and mounting debt that will be a drag on the economy in the long run. President Bush has squandered the hard-won fiscal discipline achieved in the 1990s. He inherited a 10-year budget surplus of $5.6 trillion and turned it into a stream of deficits. This year's budget gives the illusion that we will be making substantial progress in reducing the deficit over the next few years. But that is not what responsible analysts say. They point out that a realistic budget assessment shows continuing structural deficits over the next several years and a potential explosion of the deficit once the costs of the baby-boom generation's retirement kick in fully. With a $5.6 trillion 10-year budget surplus now a deficit of at least $2.7 trillion, this administration has turned us into a nation of debtors, relying on the rest of the world to finance our budget deficits and the rest of our excessive spending. Yesterday we learned that the current account deficit--the broadest measure of our international payments imbalance--was $805 billion last year, an amount equal to 6.4 percent of GDP. That is a record both in dollar terms and as a share of GDP. The ballooning international trade and budget deficits dramatize the misplaced fiscal priorities of the President and the Republican Congress. The administration's large Federal budget deficits and mounting Federal debt are putting enormous pressure on the trade deficit and the dollar. We are mortgaging our future to foreign investors and foreign governments instead of getting our fiscal house in order and boosting our own national saving. And we are not investing in people here at home the way we should be. A new analysis of the President's budget by the Democratic staff of the Joint Economic Committee shows that the President's policies would add to the deficit and reduce investments that aid moderate- and lower-income families in order to pay part of the cost of tax cuts going disproportionately to those with very high incomes. The JEC Democratic staff analysis shows that the burden of cuts in those programs that provide benefits to individuals would be borne disproportionately by families in the bottom 40 percent of the income distribution. The share of spending cuts borne by those families would be disproportionate to their share of aggregate family income and to the share of any benefits they could expect to receive from the President's proposed tax cuts. Families in the bottom 20 percent of the income distribution would absorb 32 percent of the cuts in payments for individuals, even though their share of aggregate family income is only 3 percent. Families in the next lowest fifth of the income distribution, with 8 percent of aggregate family income, would bear 23 percent of the budget cuts in payments for individuals. Disparities in the impact of the President's budget proposals on families in different parts of the income distribution are even more pronounced when the tax cuts are taken into account. Families in the bottom 40 percent of the income distribution would receive only 6 percent of the benefits from tax cuts while bearing over half the burden of the spending cuts. In contrast, families in the top 20 percent of the income distribution would receive over 70 percent of the benefits of the tax cuts while bearing only 14 percent of the burden of the spending cuts. The net impact of those cuts would leave families at the bottom of the income distribution shouldering nearly all of the pain while families at the top of the income distribution would reap nearly all of the net benefits. A budget resolution that echoes the President's budget neither meets the pressing needs of the American people nor addresses the long-term challenges that lie ahead. Clearly, we're in for another year of policies that do little to help the average family or bring down the deficit. A long-term budget and economic disaster looms if we don't restore fiscal discipline. The President's large and growing Federal budget deficits leave us increasingly hampered in our ability to deal with the host of challenges we face. We need policies that address the problems facing the country's most disadvantaged citizens and help ordinary working families deal with job and retirement insecurity and the rising costs of energy, health care, and education for their children. We can and should do better.