Mr. Conrad: Madam President, I suggest the absence of a quorum.
The Presiding Officer: The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Ms. Klobuchar: Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The Presiding officer (Mr. Conrad): Without objection, it is so ordered.
Ms. Klobuchar: Mr. President, I rise today in support of the budget resolution currently before the Senate. I particularly wanted to speak in support of the additional funding that the resolution provides for the Veterans' Administration, funding that will help one of the most important challenges facing the Nation today.
That challenge is how do we repay our men and women in uniform who have sacrificed for us on the frontlines, on the battlefield, when they return home, and how do we ensure they have all the support and services they need to resume their lives.
But before I turn to the VA funding, I want to first speak about the current economic situation in America and how this resolution will help to even the economic playing field for the people of this country. When I would go around, especially in rural America, which I think you understand, Mr. President, and start talking about economic issues, I would be in a situation where I would think 10 people would come to a small cafe and 100 people would show up.
When the price of gas goes up over $3 a gallon, such as it did last summer, people who have a longer way to drive will feel it first. When they have two kids they are trying to send to college, and tuition at the University of Minnesota goes up 110 percent, they feel it first. When their health care premiums go up 60 percent in 7 years, such as they have been in our State, middle-class people feel it first. When it is their kids who are going to war and their neighbors and their cousins and their grandkids, they feel it first in their hearts.
That is what this is about, at the national level, the economic policies that produce record deficits and ever-mounting debt. What was a $128 billion Federal budget surplus in 2001 turned into a $258 billion deficit in 2006. A $5.6 trillion 10-year projected surplus in 2002 has turned into a $2 trillion projected deficit.
Federal deficits have gone up by $1.5 trillion, with most of it being held by Government and companies in China and India and many of our economic competitors. This resolution will begin the effort to restore fiscal sanity and responsibility to our Government. It includes a strong pay-as-you-go rule that requires that we pay for any new mandatory spending or offsets or else get 60 votes to approve it. There will be no more spend-as-you-like bills.
This does not mean there will be no new mandatory spending or tax cuts to help working families. In fact, the resolution includes a reserve fund for new tax relief measures but only if we find appropriate offsets. It means we have to work to implement them in a fiscally responsible way.
The resolution also makes it much harder to push through budget reconciliation measures that are now used in the opposite way than they were intended, to increase the budget deficit or decrease the budget surplus. This resolution signals an end to the spend-as-you-like policies that have created our current fiscal problems at the national level.
My colleagues and I have, in the Budget Committee, started reversing this trend and putting the interests of middle-class families front and center. This budget resolution is a good start.
I would like to address the veterans provisions in the resolution, which I think are also very important to the middle-class families in our country.
In the past 4 years, American military service personnel and their families have endured conditions that are unprecedented, including repeated deployments. I cannot tell you how many families I speak to where their kids have been asked to serve not once in the National Guard but to be repeatedly called back, and every time they say "yes."
One and a half million American service men and women have served in Iraq and Afghanistan. These wars are creating a new generation of veterans who need their country to stand with them. These are men and women who have served our country on the frontline, and when they come back to the country, they are too often shunted to the end of the line waiting for health care, waiting for education benefits, and now as the shocking revelations from Walter Reed have shown us, some have been left waiting in the most squalid of conditions.
I wish to commend you, Mr. President, and members of the Budget Committee for recognizing that the President's request for fiscal year 2008 severely shortchanged the needs of veterans in this country. Passage of this resolution, with $3.5 billion added to the President's request for a total of $48.1 billion in discretionary veterans spending should be our highest priority.
At a time when we are spending billions on awards of reconstruction projects overseas, we can certainly afford this increase in veterans funding at home.
In addition to providing billions more for veterans health care and other support programs, this resolution rejects the President's apparent belief that now is the time to increase mandatory fees that veterans must pay under TRICARE. The President's budget called for an increase in TRICARE pharmacy copayments from $8 to $15. It calls for an annual enrollment fee based on a veteran's family income. It proposed to require veterans to cover their entire copayment for nonservice- connected disabilities. This budget resolution blocks those outrageous proposals.
This administration has shockingly underestimated the number of veterans who would require medical care. To give you an example, in fiscal year 2005, the Department of Defense estimated it would have to provide care for 23,500 veterans when they came home from Iraq and Afghanistan. In reality, Mr. President, more than four times that number required help.
Last year, the Pentagon underestimated the number of veterans who would require care by 87,000. That this administration underestimated and underfunded veterans programs should not come as a surprise. Ever since the war in Afghanistan and Iraq began, the administration has seemed oblivious to the fact that when you send hundreds of thousands of solders into battle, you must have a plan to provide for the hundreds of thousands of veterans whom you are creating and Active-Duty soldiers who will require substantial support when they return home.
With this additional discretionary spending, we can begin to seriously address the repair of traumatic brain injury and polytraumatic injuries suffered by the soldiers in Iraq and Afghanistan that have so tragically become the signature injuries of this war.
We can enhance and expand the recovery and rehabilitation centers for the 30,000 wounded Iraq and Afghanistan veterans. We can provide increased counseling and create greater awareness of the tens of thousands of veterans suffering from post-traumatic stress disorder and other mental illnesses. According to a Veterans Health Administration report, roughly one-third of Iraq and Afghanistan veterans who sought care through the VA have been diagnosed with potential symptoms of post-traumatic stress, drug abuse or other mental disorders.
On an issue that is particularly important to Minnesotans, we can increase benefits for National Guard members and Reservists who are being asked to play the role of Active-Duty soldiers on the battlefield but then are treated as second-class veterans when they return home.
This past weekend, I traveled to Iraq with three of my colleagues to visit our troops in the field and assess the situation on the ground. I was fortunate to have the opportunity to thank the brave men and women from my State for their sacrifice. The sacrifices our troops are making and the risks they are taking was driven home in a poignant and powerful moment at the Baghdad airport, when I stood with nine Duluth firefighters who are members of Minnesota's National Guard.
They were there to show their respect for fallen soldiers. They stood there and saluted as six caskets were loaded onto an airplane, all of them draped in the American flag. I watched these men stand stoically but sadly, and then I saw them return to their task at hand.
With all the political noise in Washington about the war in Iraq, we often lose touch with what the perspective is of the men and women on the frontline. I went to Iraq to find that perspective. I met marines in Fallujah from Roseville and Rochester. I met a Navy Seabee from Appleton, MN. I met Army soldiers assigned to help train Iraqi troops from Minneapolis and St. Paul. I met Army Reservists based out of Fort Snelling. I met National Guardsmen attached to the fighter wing in Duluth. These soldiers and National Guard members I met in Kuwait, Baghdad, and Fallujah, they did not ask about the resolution the Senate was debating, they did not ask me about what my plan was to bring them home to their families; they did not ask about the shortages in equipment and body armor; they did not ask about repeated tour extensions. They only asked about two things: First, they wanted to know what the results were of the Minnesota High School Hockey Tournament.
But they asked one more thing. They asked that we take care of them when they return home. I pledged to them, and I bring that point to the Senate floor today, that their sacrifice will not be overlooked, that their service will not be forgotten, and their debt will be repaid.
The VA funding in this resolution is the first in a series of payments toward the debt we owe these soldiers on the frontlines who have sacrificed for us. I have always believed when we ask our young men and women to fight and to make the ultimate sacrifice for our Nation, we make a promise we are going to give them the resources they need.
This has always been a country that believed in patriotism, and patriotism means wrapping our arms around those who have served us.
In his second inaugural address, President Lincoln reminded the American people that in war, we must strive to finish the work we are in, to bind up the Nation's wounds, to care for him who shall have borne the battle and for his widow and his orphan.
Today, Americans are again called to bind up our Nation's wounds and to care for those who have borne the battle, as well as their families who have shouldered their own sacrifice.
Let us live up to this solemn obligation to bring our troops home safely and to honor our returning soldiers and their families by giving them the care and the benefits they have earned.
That is why I support the veterans funding included in this budget resolution.
I yield the floor and suggest the absence of a quorum.
The Presiding Officer (Mr. Menendez): The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. Conrad: Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The Presiding Officer: Without objection, it is so ordered.
Mr. Conrad: I ask unanimous consent that the time from 12:30 to 1:30 today be for debate only, equally divided and controlled between Senators Schumer and Brownback--this is the Humphrey-Hawkins report that is part of any consideration of a budget resolution; that at 1:30, Senator Grassley be recognized to call up two amendments, one relating to payment limits and one relating to the Smithsonian institution; that there be a total of 60 minutes for debate with respect to the two Grassley amendments, with the time controlled 30 minutes for Senator Grassley and 30 minutes for the chairman of the Budget Committee; that no amendments be in order to either amendment during this debate time.
The Presiding Officer: Without objection, it is so ordered.
Mr. Conrad: I thank my colleagues for their continuing cooperation.
On the Collins amendment, we could accept that amendment at this point.
The Presiding Officer: The Senator from New Hampshire.
Mr. Gregg: I can't speak for Senator Collins. I don't know if she needs a vote or not.
Mr. Conrad: I asked her the direct question if she would require a rollcall vote. She said she did not.
Mr. Gregg: Then let's proceed.
Mr. Conrad: Mr. President, I ask unanimous consent, on the Collins amendment creating a deficit-neutral reserve fund for a teacher classroom expense deduction, that that amendment be considered on a voice vote.
The Presiding Officer: Without objection, it is so ordered.
The question is on agreeing to amendment No. 480.
The amendment (No. 480) was agreed to.
Mr. Gregg: I move to reconsider the vote and to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. Conrad: The 12:30 hour having arrived, this is time controlled by Senators Schumer and Brownback.
Mr. Gregg: Mr. President, we hope to also, later this afternoon, after Senator Grassley has proceeded with his two amendments, proceed potentially to amendments from the other side of the aisle relative to SCHIP and from our side of the aisle relative to SCHIP and then an amendment in response to the amendment of the Senator from Montana, the chairman of the Finance Committee. That would be the sequence I hope we can get to later today. Those are all important amendments. We would like to get them done. It would be constructive.
Mr. Conrad: The Senator is correct. That is the intention. After the amendments of Senator Grassley are discussed and debated, we would then be able to turn to a discussion of SCHIP with both sides participating, Senator Kyl thereafter to be recognized to offer an alternative to the amendment offered by the Senator from Montana.
We await the Senators whose time has been reserved. I suggest the absence of a quorum.
The Presiding Officer: The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. Schumer: Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The Presiding Officer: Without objection, it is so ordered.
Mr. Schumer: Mr. President, I rise to speak as chairman of the Joint Economic Committee in terms of our Humphrey-Hawkins budget debate time.
Today, we are going to begin putting the Nation's fiscal house back in order and to get our economic policy priorities straight. I salute the chairman of the Budget Committee, the indefatigable Kent Conrad, for the great job he has done over the years in trying to get our country back on the right fiscal track.
For the last 6 years, we have been governed by a shallow economic strategy, guided by deep and indiscriminate tax cuts. The strategy has produced burgeoning deficits, mediocre economic performance, and a serious global trade imbalance. My colleagues and I on this side of the aisle have a different policy vision. We believe the middle class is the backbone of the country and that when we pursue policies to help the middle class feel confident about their economic future, we produce a strong economy, capable of meeting just about any challenge.
We have not had those kinds of policies or that kind of economy over the past 6 years. The economy went through the most prolonged jobs slump since the 1930s, as it struggled to recover from the 2001 recession. Then, while the economy was growing, it was not producing enough jobs. In the summer of 2003, job creation began to turn upward again but not as rapidly as we were used to in past economic recoveries. Something was still missing--growth in real wages.
In the past, increased productivity meant real wages increased. In recent years, American workers have continued to be remarkably productive. However, while our output per hour grew 18 percent from 2001 through 2006, after adjusting for inflation, workers' pay and benefits grew only by half as much--8.7 percent. That is serious stuff. When output goes up and workers only retain less than half of it, something is the matter.
Even that modest growth in compensation came much more from benefits than from wages. It is not that employers were becoming more generous in providing benefits. To the contrary, benefit costs have been increasing because health care insurance costs are rising, and employers have had to make contributions to restore the solvency of their pension plans. Those higher benefit costs squeezed take-home pay, but workers have not been getting more generous benefits in return. They are shouldering more of the burden for their health insurance, and their pensions remain in jeopardy.
So where have the benefits from economic growth been going? They have been going to profits and salaries and bonuses of top executives. Profits as a share of national income are at an alltime high, and incomes at the very top of the economic scale have been soaring. At the same time, middle-class families and families striving to get into the middle class have been struggling to get ahead.
I wish I could say businesses have been investing their profits to make the economy grow, but another remarkable feature of the current economic recovery is how slowly business investment is growing relative to profits. Business profits have been flush, yes, but business investment spending has been weak. There hasn't been any real trickle down from the President's huge tax cuts to the rest of the economy. We had a small growth spurt for a couple of years, but the most recent news paints a picture of an economy that is growing at a pace below its long-term sustainable potential.
The main results of the President's tax cuts have been, A, larger budget deficits, and B, reduced national savings. With less of our own savings, we are borrowing more from the rest of the world to support our current standard of living. The record current account deficit last year--the amount we had to borrow from the rest of the world to finance our trade deficit--was equal to a stunning 6.5 percent of the entire GDP; 6.5 percent of the GDP goes to financing our trade deficit. We are borrowing more than ever from the rest of the world. Those debts will be paid back with interest from the income of our children. The Federal Government is increasingly reliant on the rest of the world to buy our public debt, and who knows what kind of financial crisis would ensue if the rest of the world decided they no longer wanted to hold such vast quantities of U.S. debt. Even if they don't, the idea that we are saddling our children to repay this debt is not fair to them and not good for the future of America.
To conclude, it is no wonder that middle-class families do not give President Bush much credit for the economy. They are paying more for gas and utility bills. Their health insurance and prescription drug costs are rising much faster than their pay, and college tuition costs are through the roof. They see good manufacturing jobs disappearing and a wave of new competition from economies such as China and India. They are also less likely to support expanded trade because they sense that the Government is not on their side when it negotiates trade agreements, and they see that some of our largest trading partners regularly flout the rules of free trade. They see a Federal Government that doesn't pay its bills and is building up foreign debt that will be a burden on our children and our grandchildren.
I commend Senator Conrad for crafting a budget resolution that gets us started on the road to recovery from these misguided policies. There is much work to do, but we are off to a good start with this budget resolution.
I yield the floor.
The Presiding Officer: The Senator from Kansas.
Mr. Brownback: Mr. President, I thank my colleagues for having this discussion on the budget.
I am ranking member on the Joint Economic Committee. I wish to discuss some of the things Senator Schumer was talking about on economic performance. What I would like to do in making this presentation--I will speak for 10 minutes now and 20 minutes later--is to talk first about what has taken place in the economy recently and then to talk about human capital development that is important for us to develop more and into the future.
I think we have a bit of a different presentation on the factual setting of what has happened as a result of the tax cuts. I believe there would be agreement that if the economy has not substantially performed as well as some may suggest, as the Senator from New York suggested, then the answer is certainly not a big tax increase. That would clearly not be the case if what we want to do is stimulate economic growth. I believe there would be a broad basis of support and a realization of that from economists and people around the world. If your economy is not performing well, the answer is certainly not to put on a trillion-dollar tax increase to try to stimulate that economy to perform better. That would be clearly the wrong answer. Yet we are finding that in this budget.
I am here to discuss what has taken place in the economy. One of the key questions the Senate will address during this debate is what procedural rules to put in place to help instill budgetary discipline on this institution. Unfortunately, those proposed fiscal discipline measures which appear in this budget amount to a little more than a guaranteed tax increase for the American public on the magnitude of $900 billion to $1 trillion.
As my colleague from New Hampshire has noted, it is the largest tax hike ever on American workers and their families--the largest ever. That certainly would not be the prescription I would hear from most economists as to how to get the economy performing better, to put on a $1 trillion tax hike.
As part of the majority's rhetoric, we will hear much talk about how the fiscal policies--most notably the pro-growth tax policies--of the past 6 years have not benefitted everybody in this society. To substantiate that assertion, one can only rely on bits and pieces of data and not the full view and the big picture of what has happened in the economy, which is what I would like to cover, and cover now, and cover with charts, to let people see what the facts are and draw their own conclusions.
It is undeniable our Nation was heading into recession during the year 2000, the last year of President Clinton's administration. I was in the Senate, and one could certainly see that in the economic data. The dot-com bubble was bursting; economic growth turned negative in the third quarter of 2000. The unemployment rate bottomed out in April of 2000 and began its rise. In the period from January 2001 to August 2001--the first year of the Bush administration--only 1 month registered positive job growth. In that period, 700,000 jobs--nearly three-quarters of a million--were lost.
Then came the horrors of 9/11, and the Nation's economy tumbled further. It was like hitting a brick wall and falling. From September to December more than a million jobs were lost. We all remember the trauma to us as a country, and the trauma to the economy at that time.
I have a number of charts I will present today, and I hope they will put some perspective on our debate. We can argue about the degree to which pro-growth and pro-job tax relief enacted in 2003 caused the economic turnaround. I think that is a legitimate debate. I would note, however, that recent economic conditions display a striking contrast to the conditions that prevailed prior to enactment of pro-growth tax relief under the Jobs and Growth Tax Relief Reconciliation Act of 2003 that was passed in May of 2003.
Consider these charts and the data behind them, and then draw your own conclusion.
Let's look at this chart on economic growth since 2000: inflation- adjusted annualized GDP growth. You can see where we were prior to and then in 2000 and 2001 with negative economic growth rates taking place. You can see anemic growth rates taking place afterwards. You can see what took place: tax relief enacted in May of 2003 and the strong spike, continuous spike in growth that took place.
Since the enactment of tax relief in 2003, annualized growth in the inflation-adjusted GDP, our gross domestic product--that is, the size of the pie, the size of the economy in the country--has averaged a robust 3.5 percent growth rate. That compares with the relatively tepid average of 1.3 percent from the first quarter of 2001 to the second quarter of 2003.
So you look at this period before tax relief: 1.3 percent; you look at the period since the tax cut enactment: a 3.5-percent average growth rate. I would much rather have a 3.5-percent growth rate than a 1.3- percent growth rate.
What about investment? That is a key part of our growth, to make productivity grow, to make wages grow. Business investment is a key component of economic growth.
Since the enactment of tax relief in 2003, growth in real business fixed investment has averaged 5.7 percent. With tax relief enacted. You can see where we were beforehand, negative investment; afterwards, positive investment at a nice rate, 5.7 percent.
Prior to the enactment of tax relief, from the first quarter of 2001 through the second quarter of 2003, business investment declined at an average rate of 5.6 percent; but it increased 5.7 percent on average afterwards--a direct mirror opposite with the investment and tax cuts that took place.
Let's talk about unemployment rates. That is certainly a key. We want to have people employed in this economy, and employed at an aggressive growth rate. The unemployment rate has declined from a peak of 6.3 percent in June of 2003, when tax relief was implemented, to 4.5 percent in February of 2007.
So you can see again, with tax relief enacted, a decline in the unemployment rate takes place. At 4.5 percent, the unemployment rate stands below the average rate of the 1960s, the 1970s, the 1980s, and the 1990s. Where we sit today stands below those average unemployment rates.
Again, tax relief was enacted. We can argue about, did that cause it or not, but I think you have to clearly say we have had a nice improvement that has taken place in the time period following enactment of tax relief.
What about payroll employment changes since 2000? There have been 42 months of consecutive gains in payroll employment. Close to 7.6 million new payroll jobs have been created during the period since September 2003--again, that period when we did the tax relief.
From June of 2003 through February 2007, payroll employment gains have averaged a healthy 169,000 per month. In contrast, 91,000 jobs were lost on average in the period between January of 2001 and May of 2003.
Again, you get this mirror situation where you were losing jobs prior to this time period, and you are growing them at a nice, strong, clip and engagement rate which is taking place after the enactment of tax relief. Good, positive rates have taken place.
With that, Mr. President, I believe in our time agreement I had until 12:50, and then I have 20 minutes at a later point. I will go through a series of additional charts later, but my colleague from Pennsylvania, I believe, was going to speak. I do not know if the manager would like to take the time of Senator Casey at this point in time.
Mr. President, I ask the manager of the bill if her side desires to have the floor at this point in time.
Ms. Klobuchar: Yes, we would like to do that. We are awaiting the arrival of Senator Casey. I thank the Senator.
Mr. Brownback: Mr. President, if I could, I will yield to Senator Casey as soon as he arrives on the Senate floor, if that would be acceptable to the manager?
Ms. Klobuchar: That would be acceptable. He is on his way.
Mr. Brownback: I thank the Senator.
Mr. President, let's look at these numbers, the Institute for Supply Management activity indexes. This indicates whether expansion or contraction is taking place. The Institute for Supply Management indexes of manufacturing and non-manufacturing activities signals expansion or contraction taking place in the economy. When it is above 50, there is expansion. When it is below 50, there is contraction. This, again, displays robust expansion following tax relief. In contrast, it displays contraction or tepid growth prior to tax relief.
So you can see, again, the tax relief point that took place, as shown on this chart. You had some growth. You had some decline taking place at this 50-percent point. Where it is below that 50-percent point, you have contraction. Where it is above that 50-percent point, you have expansion. After tax relief, you have a strong expansion rate, which is taking place in these numbers.
While correlations do not imply causality, there has been a clear and striking turnaround in a wide array of economic indicators from signals of contraction or tepid growth prior to enactment of the pro-growth tax relief in 2003 to signals of strong expansion and robust growth following tax relief taking place.
One final point. A key to increases in incomes, wages, and living standards is growth in productivity, as this chart clearly shows.
Again, we have a period where there is productivity growth and real hourly compensation going up. Pro-growth tax relief, such as that enacted in 2003, lays a solid foundation for continued strong growth in the productivity of American workers. That growth is ultimately what boosts the wages, salaries, benefits, and living standards of American workers and their families--built on a solid economic basis. Raising taxes--raising taxes--as some on the other side are suggesting--is not a productive way to proceed in us increasing real wages, real incomes for individuals to stimulate the economy. In fact, the other route is the way to go: get the economy growing built on fundamentals and built on cutting taxes.
With that, Mr. President, I know my colleague from Pennsylvania is in the Chamber.
I yield the floor and reserve the remainder of my time.
The Presiding Officer: The Senator from Pennsylvania.
Mr. Casey: Mr. President, I thank the Senator for yielding.
Mr. President, I would like to speak today about the budget we are going to be debating and about our economic prospects as we go forward. I also want to thank those who have been working so diligently to put this budget package together. Senator Schumer has worked, especially as the chairman of the Joint Economic Committee, to focus our attention on some of the economic realities we face in the weeks ahead.
The fact is, when we look at the economic data, Wall Street has done pretty well over the last 6 years, but the average American, however, has not shared in that prosperity.
Since 2001, median household income is down after inflation. More than 5 million more people--a total of 37 million Americans--live in poverty today, including 1.3 million more children. So now we have some 12.9 million children in poverty.
Long-term unemployment is up 80 percent. Three million manufacturing jobs have been lost in that time period, many from my home State of Pennsylvania, like in manufacturing States across the country.
We also have to look beyond the data from where we are now and have been in the past. We have to look to the future. We all know we face a tremendous challenge when the retirement of the baby boom generation begins in earnest. The coming retirement of those Americans means the Social Security and Medicare obligations we owe them, because of their decades of work, are coming due. At the same time, this administration has been issuing debt, in my judgment, at an irresponsible and reckless pace--most of it being purchased by governments across the world and by individual countries we are competing against.
We hear a lot in the context of our energy policy about reducing our dependence on foreign oil. There is tremendous agreement about that goal. I think in the economic context we can use the same language. It is about time the U.S. Government, especially this administration, began to get on the road of reducing our dependence on foreign debt. We need to have policies that will do that.
For the last 10 years, prior to coming to Washington as a Senator, I was a public official in Pennsylvania--8 as auditor general and 2 as treasurer. One of the jobs I had, especially as auditor general, was to be one of the so-called issuing officials. We issued debt in State government. As part of that, one of my responsibilities, one of my basic requirements, by statute, was to certify that Pennsylvania was not only staying within its constitutional debt limit but was assuring it was not straining its borrowing capacity from an economic or fiscal standpoint because doing so would undermine Pennsylvania's debt rating and drive up the cost of future borrowing.
I do not think there is anyone in this administration, or in this Congress for that matter, who could certify or would certify the Federal Government is not straining its borrowing capacity today, and certainly for the last several years. The fact is, our debt is not just a piece of paper filed away in some cabinet. It is real. It represents a lot of things. It represents, first of all, a dependence upon other governments in terms of our foreign debt. It often represents a taking away from investments in very important programs for people.
I say to the Presiding Officer, you understood that in your work in the Congress and now in the Senate. You understand those critical investments. If you drive up the cost of borrowing, you make it more difficult for us to not only borrow money but to invest. All of our families will be the losers in that scenario.
So I think in addition to gaining control of our fiscal house and putting our fiscal house in order and beginning to reduce our dependence on foreign debt, we must also, at the same time--and I think it is obviously related--increase our investment in American families. We need to start to do that by keeping our promises to those of our families who rely upon good investments by the Federal Government.
We all know in a global economy--and certainly the newer global economy--it is very clear that goods can be moved all over the world. We are happy about that. It is amazing what technology and transportation have done to bring that about. Money can move in a matter of minutes now. We know that. But people, by and large, tend to be much more stationary in the sense that they do not move nearly as fast as money or goods.
America, in particular, has been able, over a long period of time, to develop our own talent--the talents of our people--and to attract talent from all over the world. But the only way we are going to maintain that, to maintain our competitive edge, to be able to invest in strategies that will work, is to actually focus our attention on the skills and the education and the advancement of the American people. In order to do that, we have to give the American people the tools they need to compete in a global economy.
We all know if we do that and we meet our obligations and keep our promises, we will ensure the global marketplace and trade are conducted on a fair basis and that we don't put our workers at an unfair disadvantage. But in order to do that, we have to invest. That is why, as the Presiding Officer knows from listening to our colleagues in the Democratic caucus, and certainly by analyzing the budget that was put together by the Budget Committee, especially under the leadership of Chairman Kent Conrad from North Dakota, what that budget has done, what the proposal does is puts together a budget that makes sense, that makes fiscal sense, that begins to reduce our deficit and brings us into balance by 2012. In fact, it brings us beyond balance. It gives us a $132 billion surplus.
Also, it realizes that right now we are in a hole because of how we have been conducting fiscal business in this town for the last several years. It realizes that when you are in a hole, as the old expression goes, you should stop digging. It realizes people are our most valuable resource. This budget invests in them in so many ways. One good example of that, or two actually, is the State Children's Health Insurance Program, the so-called SCHIP program, and the Presiding Officer knows in the State of New Jersey the benefit that program has had in his State and in the State of Pennsylvania and in so many others. We have to make sure we get that right, not only to maintain the coverage for the millions of children already enrolled and their families and their communities and the economy as a whole benefit when they are enrolled, so we have to keep them covered, but we also have to meet the larger challenge of insuring the 9 million other children who have no health insurance at all and won't even begin to be covered under the President's budget. That is an important investment this budget proposal makes.
It also increases education funding at the same time by funding No Child Left Behind, making sure our families get help with higher education and all the rest. This budget makes sure we are making the right decisions on Medicare and Medicaid. The Presiding Officer knows Medicaid increasingly and overwhelmingly is about making sure that older citizens have the opportunity to get quality care in nursing homes, and it is also ensuring we are covering poor children and poor families.
This budget does all of this while also being fiscally responsible by reducing the size of the deficit and by beginning to lower our debt to foreign governments, and making sure we are doing this in the context of both reducing debt and deficit, but also making important investments. This budget focuses on the right priorities in an economic sense, but it also bears in mind that we have obligations. We have promises to keep. This budget goes a long way toward making sure we are being fiscally responsible and keeping our promises.
Mr. President, I yield the floor.
The Presiding Officer: The Senator from Kansas is recognized.
Mr. Brownback: Mr. President, I appreciate the chance to talk about some of these economic issues, and I join my colleagues from Minnesota and Pennsylvania in a discussion of these items.
I note from the discussion of my colleague from Pennsylvania that he focuses on human capital, which I absolutely agree with. I have a few charts I will cover in a few minutes about an investment in human capital I hope we can all agree on, and that is trying to encourage and rebuild the family structure in the country. This is something I have worked on across the aisle with my colleagues, particularly in the District of Columbia when last year I was chairman of the DC Appropriations Subcommittee. We were deeply concerned about the lack of family formation in the District of Columbia, so it became the key area and the initial place to begin to develop human capital being within the family structure.
We are finding in the District of Columbia and in many urban areas in particular, and all across the country, but in the District of Columbia in total we had 63 percent of our children born out of wedlock. This puts a child in a situation where it is more difficult to develop human capital. You can develop a child and a child can be raised well in that setting, but it becomes much more difficult. I worked with the Mayor at that time, Mayor Williams, and I worked with Delegate Eleanor Holmes Norton, and we put together a program called the Marriage Development Account. If you were at 85 percent of poverty or below and got married, we would put in a Federal dollar, raise two private sector dollars, and you as a couple would put in a dollar. We would match this 3 to 1 to encourage the formation of married units--a family--around which to build a family.
This has broad bipartisan support, left and right support this, and I am hopeful we can look at ways in reforming welfare programs in particular to encourage the formation of families as one of the key and vital steps for human capital development and growth. This is something we ought to be able to agree on across the aisle. We have agreed previously, and I hope we can do that now, because we have to develop human capital. We particularly have to do it now, and the best place to start is the family and developing the human capital there. Clearly, one of the best ways we can break the poverty cycle is forming more family units. That shows up in all of the data. It is broadly supported in a bipartisan fashion and it is something where we need to change the welfare policies.
I wish to also look at this idea that tax policies since 2003 have been more beneficial to upper income households and less beneficial to lower income households in the United States. Here again, I have a series of charts. I will first start with conditions under the Clinton administration and look at impacts of Federal policies as far as a share of the overall economy. This is an instructive chart when you look at income, after-tax income, distribution data during the Clinton years. Let's consider the distribution. The data for all of these charts comes from CBO's December 2006 historical effective Federal tax rates. The data are from 1979 to 2004. First, it is interesting to look at what happened to after-tax income between 1992 and 2000. These would be the Clinton administration years. The only group of households that saw a share of the Nation's after-tax income increase was the top 20 percent. Their share during the 1992 to the 2000 time period--you see these arrows all going down: the lowest 20 percent, the second lowest 20 percent, middle, second highest, everyone is down, down, down; up is the top 20 percent. Their share of after-tax income went up during the Clinton administration years and their tax policy.
Now let's postulate the same question--because the charge is often made that the tax cuts have only benefitted--the wealthy in this country. I have seen the charts repeatedly, and it is important to discuss what the data have shown. What happened for 2000 through 2004 is the opposite of what happened during the Clinton years as far as who grew what share of after-tax income that happened during 1992 to 2004. It went the opposite. The only group that didn't see a share of after- tax income increase was the top 20 percent. Everybody else saw their share of the after-tax income grow: the lowest 20 percent, the second lowest 20 percent, middle, the second highest. The only people who went down were the top 20 percent.
It is important to point out, when we have talked about these things in generic numbers and phrases--about only the upper income households having benefitted--but we ought to look at the actual data we have available to us.
Again, I will go back to what happened in 1992 and remind people these are the Clinton years. The lower income all saw their share of after-tax income decrease; the upper income group saw theirs go up. In 2000 to 2004, we saw a reversal of those arrows under these tax policies that are being so castigated as being against lower income. The share of after-tax income received by the top 1 percent of households grew 42 percent, from 10.9 percent in 1992 to a peak of 15.5 percent at the end of the Clinton years. Again, we are talking about the Clinton years, the share of after-tax income, the top 1 percent of all households, up 42 percent during the Clinton era and the Clinton years. That is what took place.
What happened from 2000 to 2004 is after-tax income received in the top 1 percent of households actually declined. This declined at the end of the first Bush term. They do not support the assertion that there has been a massive shift of income to the highest income households since 2000. The data don't support it. The critics of the pro-growth tax policies enacted after 2000 assert that the highest income households have disproportionately benefitted. That simply is not supported by the data.
Let's look at the top 10 percent of households paying their share of income taxes. Since 1984, the top 10 percent of households have paid an increasing majority of all Federal income taxes. In 2004, the final year of data available in CBO's report, the share of Federal income taxes paid by the top 10 percent of households reached a high of 70.8 percent--70.8 percent. So you can see it was continuing to grow.
It is worth noting that in 2004, the bottom 40 percent of households paid a negative share of Federal income taxes. I want to show that chart. That is, they received resources from the income tax system. In other words, they were paid by the income tax system--not paid into. They received from the income tax system. Since 2000, the "relative Federal income tax burden," or the share of all Federal income taxes paid compared to the group's share of all income, has declined for all income groups except the top 20 percent--except the top 20 percent. So again we have these tax lines going in a different direction.
Striking is the fact that the relative Federal income tax burden of the top 1 percent of households declined for 1992 to 2000 during the Clinton administration. So again we have this comparison of Clinton policies to Bush policies. This is the relative Federal income tax burden of the top 1 percent of family households income. That declined, the percentage, their share that they paid of the overall tax burden, and it went up in 2000 and 2004 in the Bush years. In 2004 it not only increased but it was higher than in 1992 when President Clinton took office.
The CBO's report also reveals that for the time period from 2000 to 2004, the effective total Federal tax rate reduction has been the highest on a percentage basis for the lowest income groups. In other words, you have the most decline as far as the Federal tax rates for the lowest income groups. I think that is as it should be. We shouldn't be critical of the tax policy saying it is harming low income and benefitting disproportionately high income when the data don't support that.
The same is true if you look at the income tax rate reductions. Again, the lowest 40 percent of households have a negative effective income tax rate and a negative income tax share. In other words, they were paid back by the Federal income tax system.
Clearly the tax policies enacted since 2000 have benefitted all income groups and have not resulted in a shift in income shares in favor of high-income households or in tax burdens toward lower income households. Indeed, the data say the opposite. The top 10 percent of households are paying a bigger share of total Federal taxes and total Federal income taxes than in any prior time covered by the report.
I appreciate my colleagues' indulgence, but the falsehoods about tax cuts and a bigger share of the pie for the wealthy need to be addressed. I think it is important that we do address these.
I also note in yesterday morning's Wall Street Journal in discussing this budget, it says the Senate Budget Committee chairman is pulling off a neat magic trick--and here I am quoting the Wall Street Journal:
… of claiming his budget includes "no tax increase," even as it anticipates repeal of the Bush tax cuts after 2010.
These are the same tax cuts I have been discussing, the tax cuts that have helped stimulate growth, that have helped stimulate employment, that have helped reduce the tax burden on the lower income people in the United States.
The Wall Street Journal goes on to say:
How does he pull that rabbit out of his hat? By positing what amounts to a giant asterisk where the tax increase is supposed to go and hoping no one will notice.
In other words, the taxes go up after 2010, since the tax reductions put into place in the Bush tax cuts are not continued.
The article continues that the chairman has:
… no intention of extending the Bush tax cuts, which he voted against and whose repeal would slap the economy in 2011 with the largest tax increase in U.S. history. But Senate Democrats don't want anyone to know this, at least not before the 2008 election… . All of this is really sleight-of- hand to disguise that Democrats are intent on repealing the Bush tax cuts.
What would the impact of that be? People talk about it in generic terms, but let's unpack it a little bit. The Wall Street Journal reports that:
This would raise the tax on capital gains to 20 percent from 15 percent, more than double the tax rate on dividends to 39.6 percent from 15 percent, and sharply increase marginal tax rates at all levels of income.
This will hurt growth, this will hurt investment, this will hurt job creation, and this will hurt wages. This backdoor tax increase sends a bad signal to the economy. That bad news, if allowed to stand, will be bad news for the economy throughout for the working men and women of this country. This isn't fiscal responsibility; it is bad tax policy that hurts people.
This budget will only increase the burden on families. We need to step back and be willing to get control of entitlement spending and across-the-board spending. We need policies that encourage the formation of families, and support the preservation of traditional families, as a way of developing human capital.
We need to help those who need a hand, but we are quickly reaching a point where we are asking too few people to carry too much of a burden on the tax rates. We are on the verge of killing incentive and initiative.
We need to get serious about reforming a tax system that even the most educated Americans cannot comprehend. We need to put in place an alternative flat tax and let people choose a tax system. This current tax system is unintelligible, burdensome, manipulative, and it needs to be changed. We are in desperate need of a tax system that is simple, efficient, and globally competitive. We need to just have a fair system. Our tax system needs to treat everyone the same, not heap dizzying layers of regulation on top of regulation or carve out loopholes for the privileged who have the ability to hire lobbyists.
Despite the chairman's call for simplifying the Tax Code, there is nothing in his budget that promotes greater simplicity. Despite the chairman and his colleagues in the majority being fully aware of the need for entitlement reform, they choose to totally ignore our looming fiscal problem. They choose, in this budget, to completely ignore the urgent need to address entitlement reform, especially as the first baby boomers begin retiring next year. This budget does not contain any proposals that, on net, would reduce mandatory spending or the debt. The majority, evidently, wishes to simply wait for a fiscal train wreck to happen.
If we sit on our hands and let this budget and its "magic act" budget enforcement provisions take effect, all we will do is impose the largest tax increase in American history at the worst possible time-- when the fiscal train wreck begins as the baby boomers enter their golden years of retirement. That is not a budget; that is recipe for disaster.
I look forward to further debate on this budget, and I really hope we can start working together on it in a bipartisan fashion to address the clear problems we have. We can do that, and we need to do it. Now is the time. The sooner we act, the more options we have.
I yield the floor.
The Presiding Officer: The Senator from Minnesota is recognized.
Ms. Klobuchar: Mr. President, I am here to speak on behalf of the budget resolution and to share some statistics about what has been going on in this country for middle-class families. I have to tell you this before I show the statistics. Having met with people all over our State and having sat in living rooms and had meetings with people, they could not really understand why their kids who just graduated from college could not buy a house, and they could not understand why they were struggling to send their kids to college and why they were struggling to go on vacations because of the high gas prices.
While having meetings with these people, lightbulbs would go on in their heads about these things. That is what is going on with a lot of people in this country. That is what the statistics show. That is why it is so important to have a budget that gets these families and kids on a strong fiscal track. At least this budget brings us back to the pay-as-you-go rule. At a time when the wealthiest have been getting wealthier and wealthier, at least this budget says how can we help the middle class going forward.
Let's look at the statistics.
First, look at the productivity. Typically, real compensation for workers--the wages and benefits--tends to track productivity growth. That is what it did in the late 1990s. This hasn't really happened since the 2001 recession. Our productivity growth, as you can see, has been strong, as the blue line on this chart represents, but compensation growth has been relatively weak. That is the red line there.
Recent gains in real compensation have not significantly narrowed the gap that has been opened. Workers have a long way to go to catch up with the gaps they have missed out on so far in this recovery. So it is because of their work that we are seeing this productivity gain, but they are not getting their piece of the pie. That is what we see in the increasing gap every year.
We have to look at the next chart reflecting real earnings growth. This looks complicated at first, but it makes sense when you look at what the lines represent. The bluish-purplish bars are for the kinds of real earnings growth we saw in the late 1990s. If we focus on usual weekly earnings of full-time workers, we see only modest gains--and that is the red here--in the distribution from 2000 to 2006. This contrasts sharply with the gains you see in the late 1990s, which is the blue part of the graph, when productivity first accelerated.
I note this marked difference between what you saw from 1996 to 2000 and from 2000 to 2006. This doesn't even include bonuses of highly paid executives or capital gains and other nonwage income earned at the very top of the income distribution. This chart shows how real earnings growth has been weaker and more unequal than in the late 1990s. For me, when I think about those people in the living rooms in Brooklyn Park, MN, as they talk about how they could not afford health care, this is what it is about, because their real earnings growth has been much weaker and it has been harder for them to afford these important parts of their expenditures, such as health care, gas, and those things. Those prices have gone up.
Now, at the same time we have this going on, we have this: CEO compensation, right now, is 350 times average work pay. I think the average person has to work an entire year to make up for what so many of our top CEOs make in the first day of the year. In 1980, the average CEO made about 50 times as much as the average worker. In 2004, that ratio was nearly 350. The average CEO made 350 times the pay of the average worker.
So you can see what has been going on with the share of wealth in this country and why we have these people all over the country who are working hard and who are the engine of the economy--the middle class-- and it is harder and harder for them to keep up and to get by. That is what we are trying to do in this budget resolution--start the process of getting the country back on track so that we respect the people doing the work, the middle class, the hard-working men and women of this country.
The last thing I wish to share with you is about the distribution of wealth in this country. This is a similar way of looking at the CEO distribution issue. In 2004, the wealthiest 1 percent of households had more net worth than the bottom 90 percent of households. So here you have the top 1 percent. This is their portion of the pie, 33 percent. Here is the bottom 90 percent, the middle class people; 9 out of 10 people are here, and their wealth is actually less than this top 1 percent of the people in this country. Even when you go to the next 9 percent, which is about 36 percent of the wealth, when you include them until you have the top 10 percent, the wealthiest 10 percent of people in this country, they have more than two-thirds of the total wealth.
So statistics are important, but what really matters is the people in this country. When you look at the statistics, you understand why, for a student from the University of Minnesota, Jay Boler, it was hard to get by day after day and to afford college tuition when it had gone up 110 percent at 4-year colleges in the last 2 years. He is not in that top 1 percent. That is not where he is. You can understand why Jeanne O'Hearn, who owns a drycleaner in Robbinsdale, MN, is trying to get by with few employees. It is hard to afford health care for her employees. You can understand because she is not in that top 1 percent. You can understand why a mom in Mahnomen, MN, whose child had been called back to Iraq for the third time, cannot sleep at night and why she is upset because he is probably not going to get the benefits he needs when he gets back. She is not in that top 1 percent.
What this budget resolution does is at least acknowledge the fiscal issues of this country by putting back pay-as-you-go, because this interest doesn't hurt the top 1 percent, but it hurts everybody else in this country. It also says we are going to start helping the people who have helped us; that is, the middle class.
Mr. President, I yield the floor, and I suggest the absence of a quorum.
The Presiding Officer: The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. Grassley: Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The Presiding Officer: Without objection, it is so ordered.
Mr. Grassley: Mr. President, I rise to offer an amendment on the agricultural portion of the bill to provide payment limitations on payment to farmers. The American people recognize the importance of family farmers in our Nation and the need to provide an adequate safety net for family farmers. That is what a farm program is all about.
In recent years, however, assistance to farmers has come under increased scrutiny, and it should. Take a look at some of the headlines that ran last year on the front page of the Washington Post. The first headline reads:
Farm program pays $1.3 billion to people who don't farm.
That is going to make any taxpayer, rural or urban, mad because the general assumption is that farm programs support family farmers and do not go to people who don't farm.
A second headline reads:
Federal subsidies turn farms into big business.
In other words, the Federal taxpayers are paying to help big farmers get yet bigger.
The article goes on to say:
The shift in subsidies to wealthier farmers is helping to fuel this consolidation of farmland. The largest farm's share of agriculture production has climbed from 32 percent to 45 percent, while the number of small- and medium-size farms has tumbled from 42 percent to 27 percent.
These were just a couple of headlines from a series of articles from the Washington Post on waste and abuse in farm program spending.
Critics of farm payments have argued that the largest corporate farms reap most of the benefits of these payments. What is more, farm payments that were originally designed to benefit small- and medium- size family farms have contributed to their own demise. Unlimited farm payments have placed upward pressure on land prices and have contributed to overproduction and lower commodity prices driving many family farmers off the farm.
The law creates a system that is out of balance. This is pointed out in the chart I have, which shows that we have a system where 10 percent of the farmers--10 percent of the farmers--maybe I should say just 10 percent of the farmers get 72 percent of the benefits, and the top 1 percent of the biggest farmers get almost 30 percent of the benefits. I believe we need to correct our course and modify the farm programs before those programs cause further concentration and consolidation in agriculture and lose the support of urban taxpayers because without their support, we could not have a farm safety net.
Today, most commodities are valued off demand. Markets dictate profitability. When farmers overproduce by planning for, according to the farm program, whether its a loan or the LDP Program or whatever it might be, then markets are not functioning.
I mentioned earlier that the Federal farm programs are influencing land prices across the country. Iowa land is now selling for between $4,000 and $6,000 an acre in counties near my home of New Hartford, IA.
When I was chairman of the Senate Finance Committee, before the last election, I was also a member of the Budget Committee and the Agriculture Committee. I have used those committee positions as opportunities to file amendments that I believe will help revitalize the farm economy for young people across this country.
My amendment today will put a hard cap on farm payments at $250,000. The average taxpayer listening to me might say: What planet did you come from--$250,000 is an awful lot of support. But I am saying in comparison to limits that are now in the bill of $360,000 and legal subterfuge to get around the law to allow some farmers to get millions of dollars. So this is a $250,000 hard cap--still too high for some family farmers but a compromise that has gotten through this body in the past and I am counting on getting through this time.
No less important, this will close those legal subterfuges or loopholes--whatever you want to call them--that have allowed large operations to evade even the $360,000 limit and, as a result, receive benefits many times larger.
To remind everybody, I voted against the conference report of the present farm bill in the year 2002, and this was one of my many reasons, because it did not have this hard cap in there, even though it passed the Senate. I have been fighting to reduce large-scale subsidies for over 30 years. If one looks at the Congressional Record in the 1970s, it will show I was leading in that area. More recently, I worked with the good Senator from North Dakota, Mr. Dorgan, on a similar measure in the 2002 farm bill, and it passed with bipartisan support of 66 to 31. That amendment, as I said, was taken out in conference. So I urge my colleagues to check their past votes on this issue during the last farm bill debate.
One section that was added in the farm bill was section 1605, which set up a Commission on the Application of Payment Limitations for Agriculture. The purpose of the Commission, after the failure of our legislation in 2002 in the farm bill because it didn't come out of conference, was to set up this Commission. The purpose of the Commission was to study this issue. The Commission also said that the 2007 farm bill is the time for these reforms to be made as part of the change to permanent law. So that is why it is legitimate to have it as part of this budget debate.
Congress enacted the Agricultural Reconciliation Act of 1987, called the Farm Program Integrity Act, to establish eligibility conditions for recipients and to ensure that only entities engaged actively in agriculture receive farm payments. To be considered actively engaged in farming, that act required an individual or entity to provide a significant contribution of inputs--capital, land, equipment--as well as significant contributions of services of personal labor or active management to the farming operation. But people have been able to find loopholes around this act, facilitating huge payments that our hard cap is meant to overcome.
I held a hearing through the Finance Committee on a Government Accountability Office report that was released about 3 years ago, April 24, 2004. The GAO report recommended that measurable standards and clarified regulations would better assure that people who receive payments are, in fact, engaged in farming.
Of the $17 billion in payments the USDA distributed to recipients in 2001, $5.9 billion went to just 149,000 entities. Corporations and general partnerships represented 39 and 26 percent of these entities respectively.
Here is an example from the March 2005 Washington Post article of someone who qualified for payments. I quote from the newspaper:
If the purpose of farm subsidies is to make family farms viable, it's hard to see why payments of more than $400,000 a piece should have gone to 54 deceased farmers between 1995 and 2003, or why residents in Chicago should have collected $24 million in farm support over that period.
This type of arrangement, and others such as that, raises questions about the interpretation and enforcement of the 1987 act's requirements that each partner be actively engaged in farming. This is why I wrote the Government Accountability Office to conduct that study I referred to on which we held a hearing in the Finance Committee. I encourage Members of this body to take a look at that report as well.
During past markups of the Senate Budget Committee, I was able, with the help of the current chairman, Mr. Conrad, to include a sense-of- the-Senate amendment expressing support for stronger farm payment limits. The proposed amendment would cap Farm Commodity Program payments at $250,000 a year per person during any one year. This would encompass direct payments, countercyclical payments, loan deficiency payments, and marketing loan gains. Gains from commodity certificates will be counted toward limitations, closing another very abusive loophole, particularly those farming in cotton and rice.
By adopting this amendment, it could save the taxpayers over $500 million in savings over a 5-year period of time and more than $1 billion over 10 years. With these savings, the amendment that is being presented by Senator Grassley and Senator Dorgan would put money toward conservation, nutrition, research, value-added agriculture, and renewable energy programs.
The budget resolution before us provides a very much needed reserve fund for the farm bill of $15 billion. Every penny of this fund will be needed if we are to adequately respond to the major needs and opportunities to increase energy independence, restore cuts in conservation, improve farm income through value-added grants, reduce hunger, and invest in the future of food and agriculture through cutting-edge research.
However, the reserve fund is conditioned on offsets. The amendment I am offering is part of the solution to this reserve fund dilemma. A vote for this amendment, then, will help us get a better farm bill done, not just to help farmers but to help the entire society as it includes so much that benefits people just beyond agriculture.
Not only has the Senate previously agreed to payment limit reform, but the President, in his past budgets--I think at least the last 3 years--has supported a broad set of savings proposals recommending reduction in subsidies for larger, more financially secure farmers and promoting more efficient production decisions, although this year the administration proposed that no one should get farm payments if they have an adjusted gross income of over $200,000 a year. That is just another way, and not a bad way, but another way of getting what I am trying to get through this hard cap. So I don't find fault in what the administration is proposing in that area. I think the administration is proposing a very good bite and another bite at the apple.
I have been hearing directly from producers for years exactly what the Secretary of Agriculture heard at his farm bill forums. We are hearing that young producers are unable to carry on the tradition of farming because they are financially unable to do so because of high land values and cash rents.
Neil Harl, a distinguished agricultural economist at Iowa State University and one of the contributors to the Payment Limitation Commission, wrote this:
The evidence is convincing that a significant portion of the subsidies is being bid into cash rents--
Making the cash rents higher--
and capitalized into land values.
All making it very difficult for new, young farmers to get started in farming. If investors were to expect less Federal funding or none at all, land values would likely decline, perhaps by 25 percent.
On March 20, 2005, the Atlanta Journal-Constitution printed this:
As time has gone by, smaller farmers most in need have received less and less of the government's support and corporate-like farms more and more.
By voting in favor of this amendment, we can restore the cuts that were made to conservation, rural and renewable energy programs during the markup of the Ag section of reconciliation. We can allow young people to get into farming and lessen the dependence on Federal subsidies. This will help restore public respectability for Federal farm assistance by targeting this assistance to those who need it, where it has traditionally been over the 70 years of the farm program.
Before I close, I wish to remind everyone who voted against a similar amendment during the 2005 reconciliation vote, the argument that we need to wait until the farm bill debate is not going to work anymore-- that was the argument some people who changed their vote used at that particular time--because this is the year of farm bill debate. This is the budget that contains the baseline for the farm bill that we are going to pass this year.
Let's stop kicking the can down the road and say we have to wait until the farm bill debate. The here and now is the here and now. How can you say you are for conservation or you are for renewable energy or you are for child nutrition--that you are for all those things and then come to the floor and vote the opposite way? This is an opportunity to show to the people of this country we are not going to subsidize the biggest farmers getting bigger, wasting taxpayers' money, keeping young people off the farms and out of the farming profession and bringing ill-repute to a farm program that it takes city folk, represented in the Congress, to vote for in order to sustain the safety net for farmers.
The Presiding Officer: The Senator from North Dakota.
Mr. Dorgan: Mr. President, my understanding is the Senator from Iowa has this half hour. I ask the Senator from Iowa if he will yield me 10 minutes?
Mr. Grassley: I will yield 10 minutes, yes.
Mr. Dorgan: I am pleased to be a cosponsor, as I have been in the past. The Senator from Iowa is offering a budget amendment. It is a good amendment. The Senator from Iowa will join me in introducing some legislation on this subject following this discussion. Some will say: Let's have this during the farm bill. We will have this debate then, too, I assume.
Let me say, I don't think there is a bigger supporter or stronger supporter in this Chamber for family farmers than I am. I know my colleague from Iowa is a family farmer. It goes without saying he has been supportive. But I am not interested in supporting the corporate agrifactories that have grown up this country. That is not the purpose of a farm program.
I come from a rural State. I am proud to stand here and support farmers who have names, in my State: Olsen, Larson, Christianson, Johnson, Schmidt, Schmaltz, Cooper. I am proud to support them. They are out there living under a yard light, struggling, trying to make a living. They plant a seed and hope it will grow. If it grows, they hope it doesn't hail. They hope it rains enough and it doesn't rain too much. Finally, when they get in and get the seed off and the crop off and after that seed has grown into a plant, they put it through a combine, take it to the elevator, and then they hope and pray there is a decent price, so in the end, if everything went right, maybe they made a living for themselves and their families. It is a big struggle for them.
What is the value of having these families living out there? A friend of mine from North Dakota wrote a piece about that. He said: What is it worth? What is it worth for a kid to know how to fix a tractor, to plow a field, to hang a door, to butcher a hog, to pour cement, to weld a seam? What is it worth for a kid to know all those things? That university is on a family farm; that is where kids learn it. What is that worth to our country?
We have on the floor of the Senate this issue of a farm program. A farm program is a safety net, a bridge over troubled times when prices collapse, when the crops are destroyed. This is a bridge over price valleys, a bridge over difficult times. Regrettably, it has grown to become a set of golden arches for some of the biggest enterprises in the country, and we propose that we put some payment limits on here that are reasonable payment limits. I am pleased to be a cosponsor along with my colleague, Senator Grassley. I think this is common sense.
Let me give some examples of what persuades us to come to the floor of the Senate. Ten years ago, the top 10 percent of recipients of farm program payments received just over half of all farm payments. Now, 10 to 11 years later, the top 10 percent get 72 percent. It has grown from about half to about three-quarters for the top 10 percent. The top 1 percent receive nearly a quarter of all farm payments.
Mr. President, a 61,000-acre operation in a southern State got $38 million in farm payment programs over 5 years. I didn't come to fight for that. I don't support that. The farm was organized into 66 separate corporations so its 39 owners could avoid payment limits. That is not farming the land. That is farming the farm program. I don't support that.
A 12,000-acre cotton farm took in $2.1 million, a cotton factory in California, $16 million over 8 years. This is not the farm program we ought to be supporting.
The U.S. Department of Agriculture pointed out that they paid $400,000 each to 55 farmers who were dead; 27 of the dead farmers received payments every year for 9 years--$400,000 each for dead people. That is unbelievable.
I support a farm program, one I can be proud of, one that says to families living out there: We want to help you. We know you take unbelievable risks, and when you run into trouble, into tough times, we want to reach out our hand to say we are with you, we want to help you. That is what the farm program is supposed to be about. But it is becoming a perverse program when millions of dollars are taken from taxpayers in the form of taxes and then transferred to big corporate agrifactories who get millions of dollars.
From the Government Accountability Office: Eleven partners ran an 11,900-acre farm and collected a million dollars, and every single one of the farmers lived outside the State where the farm was located. The only engagement they had in the farm was a telephone conversation.
Six partners received $700,000 in farm payments for a 6,400-acre farm. They said they provided daily management, living several hundred miles away.
I don't think we need to say more. It does not take much more to illustrate the absurdity of what is happening. My colleague and I are offering--get this--a proposal that limits program payments to $250,000. Let me say again, I come from farm country. No one here cares more about family farmers than I do. I believe in the farm program. I fought for a good farm program. But I have not fought for a program that hands over millions of dollars to people who reorganize into farm factories in order to farm the farm program and suck money out of what we put aside to help people during tough times.
It is beyond me why we would not take this step quickly and easily, to say payment limitations that would be effective are the right thing for us to do. This should not be controversial at all. This ought to be accepted by unanimous consent. That is what ought to happen. We ought to have a unanimous consent request.
I will say this. If there are those who argue that multimillion dollar operations need millions of dollars from the American taxpayer to continue their operations, then there is something horribly wrong with the farm program that accedes to that request. That is not why we created a farm program in this country. We said we want America's landscape to be dotted by yard lights that represent a farm. I understand that big corporate agrifactories could farm from California to Maine. I understand we have operations that milk 3,000 to 4,000 cows a day, three times a day. That has nothing to do with family farming. I understand you could farm from the west coast to the east coast and you would not have to have people living out there.
But I also understand that there is value to this country, cultural value to this country, where the seedbed of family values began, on the farm and in small towns, and rose to our big cities as a set of family values that this country has always appreciated.
That is the cultural value of having family farms. It is the economic value of having family farms. The way we will keep family farms is to have a decent farm program that says, when you are in trouble, when you have prices collapse, you have a safety net. That is what we are trying to do. We will try to save it. What will happen is we will lose the farm program one day with stories that say this program gives millions of dollars to people with millions of acres who do not need this help.
I am pleased be a cosponsor with my colleague, and I look forward to working with him on these issues.
I yield the floor.
