STATEMENT OF SENATOR EDWARD M. KENNEDY
"OUR BUDGET REFLECTS OUR
VALUES"
April 4, 2001
For Immediate Release
Contact: Jim Manley
(202)
224-2633
The Democratic budget plan stands in stark contrast to the Republican
plan. Budgets are a reflection of our real values, and these two budgets
clearly demonstrate how different the values of the two parties are. In
political speeches, it is easy to be all things to all people. But the
budget we vote for shows who we really are and what we really stand for.
There are the four major criteria by which we should evaluate a budget
plan: 1. is it a fiscally responsible, balanced program? 2. does it
protect Social Security and Medicare for future generations of retirees?,
3. does it adequately address America's urgent national needs?, and 4.
does it distribute the benefits of the surplus fairly amongst all
Americans?
By each of these yardsticks, the Republican budget fails to measure up.
The Democratic budget offers a far sounder blueprint for building
America's future.
I. Is it fiscally responsible?
Once the Social Security and Medicare surplus are reserved for the
payment of future benefits, the available surplus is projected to be $2.7
trillion over the next ten years. The heart of the difference between the
Democratic and Republican budgets is how each would use this surplus. The
Democratic proposal would divide the surplus into thirds; allocating $900
billion for tax cuts, $900 billion for priority programs, and $900 billion
for debt reduction. This contrasts sharply with the Republican plan, which
would consume 90% of the surplus on tax cuts.
When President Bush cites $1.6 trillion as the cost of his tax cut, he
neglects the increased cost - more than $400 billion - of interest on the
larger national debt caused by the tax cut. He ignores the $240 billion
cost already added to elements of the Bush plan by House Republicans. His
plan also ignores the $200 billion cost of revising the Alternative
Minimum Tax to prevent an unintended increase in taxes on middle income
families, and the $100 billion cost of extending existing tax credits
through the decade. In reality, the Bush tax cut will consume $2.5
trillion over the decade.
By consuming $2.5 trillion of the $2.7 trillion available surplus on
tax cuts, the Republican budget would leave virtually nothing over the
next ten years— o to strengthen Social Security and Medicare before the
baby boomers retire, o to begin the quality prescription drug benefit that
seniors desperately need, o to provide the education increases that the
nation's children deserve, o to train and protect the American workers
whose increased productivity has proved essential to our strong economy, o
to advance scientific research, o to improve the nation's military
readiness, o to improve the security of family farmers, and o to avoid
burdening our children with the debt that we have accumulated.
After the Bush tax cut, we will not have the resources to meet these
urgent challenges. There will simply be no money left.
The Democratic plan strikes a balance between tax cuts and addressing
these important national priorities. It provides $900 billion dollars to
finance tax relief for the American people. This amount would allow a tax
rate cut for all taxpayers, plus marriage penalty relief, and a doubling
of the child tax credit. It would also enable us to implement several of
the most widely supported targeted tax cuts such as making college tuition
tax deductible and providing a tax credit for long term care costs.
I support a substantial tax cut, such as the one I just outlined, but
not one that is so large that it crowds out investment in national
priorities like education, health care, worker training and scientific
research. Not one that is so large that it jeopardizes Medicare and Social
Security. Not one that is so large that it threatens to return us to the
era of large deficits.
By authorizing a third of the surplus for spending on the nation's most
important priorities, the Democratic plan would enable us to improve
education by reducing class size and enhancing teacher quality, to provide
senior citizens with meaningful assistance with the cost of prescription
drugs coverage, to extend health care coverage to many uninsured families,
and to expand worker training opportunities and scientific research that
will strengthen our economy. These are important initiatives that have
overwhelming public support. The Democratic budget gives us the resources
to pursue these goals. Unfortunately, the Republican budget does not.
By reserving one third of the surplus for debt reduction, the
Democratic plan provides a safety value should the full amount of the
projected surplus not materialize. We are not spending every last dollar
of the $2.7 trillion, we propose to hold $900 billion in reserve. If the
full surplus materializes, it will be used to pay down the debt. If
projections fall short, we will have a cushion.
$2.7 trillion is only a projected surplus. CBO itself recognizes that a
small reduction in the growth rate of the economy would reduce its surplus
estimates by trillions of dollars. Its projection for the next decade is
based on a growth rate which the economy has only achieved in 5 of the
last 35 years. Forecasting a budget surplus over ten years is no more
reliable than forecasting the weather ten years in advance. Recent events
should vividly remind us how difficult it is to predict the economy even
one year ahead. CBO acknowledges that there is a 35% chance that the
on-budget surplus will be less than half the size it has projected...less
than half! Without a large reserve, Social Security is vulnerable to a new
raid if the projected level of surplus fails to materialize.
II. Does it protect Social Security and Medicare?
In order to truly protect Social Security and Medicare, the budget we
adopt must 1) reserve the entire Social Security surplus and the Medicare
surplus to pay for future retirement and medical benefits; and 2) devote a
substantial portion of the available surplus to financially strengthening
Social Security and Medicare by reducing long term debt. The Democratic
budget does both, and the Republican budget does neither.
The Social Security and Medicare surpluses are money that workers
deposit with the government through the payroll tax to pay for their
future Social Security and Medicare benefits. Just because the government
does not pay all those dollars out this year does not make us free to
spend them. Over the next ten years, Social Security will take in $2.5
trillion more dollars that it will pay out and Medicare will take in $400
billion more dollars than it will pay out. But every penny of this will be
needed to provide Social Security and Medicare benefits when the baby
boomers retire.
The Republican budget fails to set the entire $2.9 trillion aside to
cover the cost of future Social Security and Medicare benefits. It only
protects $2 trillion of that amount. The remaining $900 billion is used
for other purposes. This seriously threatens the retirement benefits of
current workers. While the Bush budget is vague on just how this money
will be used, it appears that more than $500 billion of it will be used to
finance the Administration's scheme to create private retirement accounts.
I believe it would be terribly wrong to take money out of Social Security
to finance risky private accounts.
The Republican budget is even more reckless in its treatment of the
$400 billion Medicare surplus. The Bush Administration would give the
Medicare dollars no special protection. It would co-mingle them in a
contingency fund available to pay for their tax cuts and new spending.
The threat posed by the Republican budget to Social Security and
Medicare is very real. It invades the Social Security and Medicare Trust
Funds by removing $900 billion that already belong to these essential
programs.
Democrats are committed to keeping Social Security and Medicare strong.
We do this by reserving all payroll taxes to pay for the retirement and
medical benefits that are now promised to seniors under current law. No
qualifications, no exceptions. This commitment means that workers' payroll
taxes are not available to fund income tax and estate tax cuts, private
retirement accounts, or new spending.
The contrast between the Democratic and Republican budgets on Social
Security and Medicare could not be greater. The Democrats would use $900
billion of the available surplus to strengthen Social Security and
Medicare by paying down the debt. The Republicans would remove $900
billion from Social Security and Medicare - dollars that workers
specifically paid to the programs for future benefits - and they would
spend these dollars for other purposes.
III. Does it adequately address America's urgent needs?
Many of America's most critical unmet needs are in the areas of health
care and education. The surplus affords us an unprecedented opportunity to
address these national concerns. Unfortunately, the Republican budget
seriously short-changes them both.
One of our highest health care priorities should be assisting seniors
with the cost of prescription drugs. America's seniors desperately need
access to prescription drugs, and President Bush only provides a placebo.
He says the right things about how important it is to provide prescription
drugs, but the numbers in the Republican budget prove that his words can
not pass the truth in advertising test.
There can be no question about the urgent need for a Medicare
prescription drug benefit. A third of senior citizens–12 million
people–have no prescription drug coverage at all. Only half of all senior
citizens have prescription drug coverage throughout the year. Meanwhile,
last year alone prescription drug costs increased an average 17%.
The Bush budget provides only $153 billion over 10 years to finance
prescription drug assistance for seniors. That amount is woefully
inadequate. A real drug benefit available to all senior would cost more
than twice that amount. However, even the $153 billion which the
Administration purports to provide is not real. These are not new dollars.
They come out of the $400 billion Medicare surplus which was improperly
removed from the Medicare Trust Fund.
The Democratic budget provides $311 billion to make prescription drugs
affordable for seniors. Unlike Republican proposals, the Democratic plan
would provide drug coverage to all seniors through Medicare. It is the
only real way to solve the problem.
The Republican budget also fails to address the needs of the nation's
uninsured. An uninsured family is exposed to financial disaster in the
event of serious illness. The health consequences of being uninsured are
even more devastating. In any given year, one-third of the uninsured go
without needed medical care. The chilling bottom line is that eighty-three
thousand Americans die every year because they have no insurance. Being
uninsured is the seventh leading cause of death in America. Our failure to
provide health insurance for every citizen kills more people than kidney
disease, liver disease, and AIDS combined.
Candidate Bush severely criticized the Clinton-Gore Administration for
what he described as an inadequate response to this crisis. But the budget
President Bush has presented does nothing meaningful to expand health
coverage. In this time of unprecedented budget surpluses, isn't it more
important to assure that children and their parents can see a doctor when
they fall ill than it is to provide new tax breaks for millionaires?
The Democratic budget provides $80 billion new dollars over the decade
to extend health care coverage to uninsured families. Over the last few
years, we have made great strides providing health coverage for children.
However, there are many more uninsured children who we have not yet
reached. These children, and their entire families, desperately need
access to health care. The most effective way to provide health coverage
is to insure the entire family. We are committed to taking this next step.
Given how much President Bush has talked about education, it may come
as a surprise to hear that education is one of the national priorities he
has seriously shortchanged. But, sadly that is what the facts of the
Republican budget show. The claim that President Bush increases funding
for the U.S. Department of Education by $4.6 billion or 11.5% this year is
the purest fantasy. Smoke and mirrors produced these numbers.
President Bush counts $2.1 billion that President Clinton and the 106th
Congress approved last year as part of this year's increase. If President
Bush did nothing on education, almost half of "his increase" would happen
anyway. The real increase that he proposes is $2.4 billion—only 5.7% above
a freeze. And $600 million of the $2.4 billion increase is needed just to
keep up with inflation. In reality, President Bush proposes only $1.8
billion in new money for education next year, a mere 4 percent above
inflation.
President Bush's education budget is a step backwards. It does not keep
up with the average 13 percent annual increase Congress has provided for
education over the last 5 years, and it will not enable communities and
families across the country to meet their education needs.
This year, schools confront record enrollments of 53 million elementary
and secondary school students, and that number will continue to rise
steadily, reaching an average six percent increase in student enrollment
each year. President Bush's budget fails to keep pace with population
growth in schools, and under the budget he proposes, federal education
support per student may well decrease over the next ten years.
I applaud President Bush for making the reauthorization of the
Elementary and Secondary Education Act a top priority. I applaud him for
challenging the nation to "leave no child behind." But I am disappointed
that he has not backed his words with the resources needed to produce the
action that we all agree is necessary. The Republican budget will leave
many children behind.
In sharp contrast, the Democratic budget would increase investment in
education by $150 billion over the decade. It is the second largest
spending commitment in the Democratic plan.
This will provide the resources which will enable us to keep pace with
the needs of the steadily expanding number of students in our public
schools. It will allow us to significantly reduce class size, so that
teachers can give individual students the attention they need. It will
provide for better professional development for teachers and for greater
access to information technology in the classroom. It will make after
school programs available for children who currently have no where
constructive to go. And, it will make college financially attainable for
many of the students who simply cannot afford it today. It would be
extraordinarily shortsighted to turn our back on these national
responsibilities.
IV. Is it fair to all Americans?
All these program cuts are made to finance the Republican tax cut, and
the tax cut they would enact is grossly unfair. In reality, the wealthiest
1% of taxpayers, who pay 20% of all federal taxes, would receive over 40%
of the tax benefits from Bush's plan. Their average annual tax cut would
be more than $54,000, more than a majority of American workers earn in a
year.
The contrast is stark. Eighty percent of American families have annual
incomes below $65,000. They would receive less than 30% of the tax
benefits under Bush's plan. The average tax cut those families would
receive each year is less than $500. Twelve million low-income families
who work and pay taxes would get no tax cut at all under Bush's plan. If
we are going to return a share of the surplus to the people, that
certainly is not a fair way to do it.
Because the Bush tax cut is slanted so heavily to the wealthy, it is
possible to enact a tax cut that costs less than half of President Bush's
proposal, yet actually provides more tax relief for working families. That
is what the Democratic tax cut would do.
The Democratic tax cut proposal incorporated in our budget would cost
$900 billion. It would provide a tax cut for everyone who pays income tax.
In addition, it would provide tax relief for the 12 million working
families that the Bush plan ignored. These low income families pay
substantial payroll taxes, and they too deserve relief. The Democratic
plan also provides help to couples currently hurt by the marriage penalty.
A tax cut of this size would also allow us to help families by doubling in
the child tax credit, making college tuition tax deductible, and providing
a tax credit for long term care costs. Such a program would provide
greater tax relief for a substantial majority of taxpayers than the far
more expensive Bush plan. That is because the tax benefits are distributed
fairly.
A close look at President Bush's budget only confirms that indeed we
can not have it all. There is no way to provide massive tax cuts,
eliminate the national debt, and meet the nation's priority needs. This
Republican budget is a fantasy.
In essence, President Bush is asking working families to sacrifice
while the wealthiest families in America collect far more than their fair
share. This Republican budget threatens our prosperity and ignores the
most fundamental national needs. It does not have the support of the
American people, and it does not deserve their support.
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