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[Page: S1682]  GPO's PDF
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   Mr. KENNEDY. Mr. President, last night I listened with great interest as President Bush outlined his budget proposal. It was a strong speech, and I commend the President for his encouraging comments on education, as well as his kind words for our good friend Congressman JOE MOAKLEY. But our challenge now is to produce a realistic budget. As the President describes it, the surplus is so big that the American people can now have it all--huge tax cuts for everyone, increased spending on national priorities, and elimination of the national debt.

   I fully agree with President Bush that budgets are fundamentally about our values and priorities, but I strongly disagree with him on what those priorities should be. While President Bush made the benefits of his plan appear real and the costs painless, I think the American people correctly suspect that his words sound too good to be true. Just as there's no such thing as a free lunch, there's no such thing as a free $2 trillion tax cut.

   I support a substantial tax cut, but not one that is so large that it crowds out continued debt reduction and investment in national priorities like education, health care, and worker training and protection efforts. Not one that is so large that it jeopardizes Medicare and Social Security.

[Page: S1683]  GPO's PDF

   This budget claims to provide massive tax cuts and maximize reduction of the national debt and keep our commitments under Social Security and Medicare and make the investments needed to keep the nation strong. It makes five claims that are arithmetically impossible. The numbers simply do not add up.

   First, this budget argues that the nation can afford a $2 trillion tax cut right now. The White House claims that its proposed $1.6 trillion tax cut ``uses only one fourth of the budget surplus.'' This is highly misleading. Make no mistake about it--President Bush's tax cut really consumes about 90% of the available budget surplus.

   The tax cut now sought by the Administration would consume well over $2 trillion of the budget surplus. When President Bush cites the $1.6 trillion figure, he neglects the increased cost of interest on the larger national debt caused by the tax cut, and he ignores the added cost of his plan to make the tax cut retroactive.

   We must be clear about the real size of the surplus. While the Congressional Budget Office projects that the federal government will collect $5.6 trillion more than it spends over the next ten years, only $2.7 trillion of this amount can properly be called a ``surplus.'' The other $2.9 trillion is money that workers deposit with the government so they'll be protected by Social Security and Medicare when they retire. Workers pay this $2.9 trillion in payroll taxes for specific retirement and medical benefits. It is wrong to include money from workers' Social Security and Medicare payroll taxes in the same pot used to finance the Administration's income tax and estate tax cuts.

   Thus, at most $2.7 trillion in available surplus is projected over the next ten years. Even the Congressional Budget Office acknowledges the great uncertainty of its own surplus estimate. CBO itself recognizes that a small reduction in economy's growth would reduce its surplus estimates by trillions of dollars. Any responsible budget would reserve a significant share of the projected surplus in case the projections prove too optimistic. Without such a reserve, any shortfall could return the nation to large deficits and raids on the Social Security Trust Fund. Yet the Administration's budget commits every last dollar of the projected on-budget surplus and more, sacrificing the fiscal caution that uncertainty in the surplus projection demands.

   President Bush's tax cuts would consume well over $2 trillion of the $2.7 trillion available surplus, leaving precious little over the next ten years--to strengthen Social Security and Medicare before the baby boomers retire, to begin the quality prescription drug benefit that seniors desperately need, to provide the education increases that the nation's children deserve, to train and protect the American workers whose increased productivity has proved essential to our strong economy, to advance scientific research, to improve the nation's military readiness, to improve the security of family farmers, and to avoid burdening our children with the debt that we have accumulated.

   After the Bush tax cut, we will simply not have the resources to meet these urgent challenges.

   All American workers deserve a tax cut, but its total size must be reduced far below the $2 trillion Bush proposal so that we can address our legitimate national needs.

   Second, this budget pretends to protect Social Security and Medicare . More than half of what President Bush terms the ``surplus'' is actually 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 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 than 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.

   If we use that money for other purposes now, we would be increasing the long term deficits in the Social Security and Medicare programs, accelerating the date on which each of those programs will not have sufficient revenue to pay the full cost of the benefits provided under current law. The only fiscally responsible use for the so-called Social Security and Medicare ``surpluses'' is to set those funds aside to pay future retirement and medical benefits owed under current law.

   The Administration's 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. Money is diverted from the Social Security Trust Fund to finance those accounts. I believe it would be terribly wrong to take money out of Social Security to finance private accounts. Without the guarantee of Social Security's monthly benefit check, one half the nation's elderly would be living in poverty. Taking money out of the Social Security Trust Fund will weaken the program's ability to meet its legal obligations to the senior citizens it serves.

   The President also plans to use current payroll taxes to finance prescription drug assistance for some seniors. But these dollars already belong to Social Security and Medicare , and they are needed to pay current benefits. The Bush plan really just tells Medicare to offer a prescription drug benefit without providing one new dollar to fund that benefit. His plan spends the same dollars twice. It is a cruel hoax.

   The Bush budget also allows part of this $900 billion in payroll tax revenue to be used for purposes ranging from military preparedness to farm aid, flagrantly violating what I have taken to be broad bipartisan agreement to protect payroll taxes for Social Security and Medicare .

   The threat posed by the Bush budget to Social Security and Medicare is very real. Not only does it fail to reserve any of the on-budget surplus to financially strengthen Social Security and Medicare by paying down the debt; 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.

   Third, this budget alleges that it meets the nation's core health needs. America's seniors desperately need access to prescription drugs, but this budget provides only a placebo. President Bush said the right things about how high a priority prescription drugs are for America's seniors, but the numbers in his budget show that his words can't pass the truth in advertising test.

   While the Administration's budget lavishes new tax breaks on the wealthy, it leaves little for the elderly whose lives often depend on prescription drugs. The budget gives five times more money to the wealthiest one percent of taxpayers than it allows for the Medicare drug benefits that 39 million senior and disabled citizens need.

   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 percent.

   President Bush's budget responds with baby steps toward prescription drug coverage. After adjusting for inflation, President Bush's budget actually proposes one-third less than the inadequate amount he proposed in his campaign. His ``immediate helping hand'' program for the lowest income senior citizens virtually exhausts the resources that he allocates, leaving the majority of seniors with nothing. This plan is even less generous than the Republican bill passed by the House last year. And the Congressional Budget Office said that the House Republican

[Page: S1684]  GPO's PDF

   Medicare is a solemn promise to senior citizens.. It says, ``Work hard, pay into the trust fund during your working years, and you will have health security in your retirement years.'' But this promise is being broken each and every day, because Medicare does not cover prescription drugs. The sad reality is that the Bush budget does not mend that broken promise--and it is now the responsibility of the Congress to keep faith with senior citizens.

   The Administration's 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. Unpaid medical bills account for 200,000 bankruptcies annually. Over 9 million families spend more than one fifth of their total income on medical costs.

   The health consequences of being uninsured are even more devastating. In any given year, one-third of the uninsured go without needed medical care. Eight million uninsured Americans fail to take medication their doctors prescribe because they cannot afford to fill the prescription . Four hundred thousand children suffering from asthma never see a doctor. Five hundred thousand children with recurrent earaches never see a doctor. Thirty-two thousand Americans with heart disease go without life-saving and life-enhancing bypass surgery or angioplasty--because they are uninsured. Twenty-seven thousand uninsured women are diagnosed with breast cancer each year. They are twice as likely as insured women not to receive medical treatment until their cancer has already spread in their bodies.

   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.

   The Administration's budget provides only a small amount for refundable tax credits to purchase health insurance policies--an amount too small to help the vast majority of the uninsured. 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?

   Fourth, this budget does not meet the education needs of school children. The claim that this budget increases education funding by $4.6 billion or 11.5 percent is just plain wrong. This budget contains little more than a cost of living increase for our nation's schools, and few new investments to improve them.

   The Administration's budget counts $2.1 billion that President Clinton and 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 percent above current levels. The reality is that President Bush proposes only $1.8 billion in new money for education next year, a mere 4 percent above inflation.

   We need strong new investments to turn around our failing schools. But this budget does not even 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.

   I applaud President Bush for trying to make education a top priority. I applaud him for challenging the nation to ``leave no child behind.'' But I am disappointed that this budget fails to provide the resources needed to produce the action that we all agree is necessary.

   President Bush says that he will increase funding for ESEA programs by $1.6 billion, including $600 million more for the Reading First program. I support the Reading First increase, but it leaves only $1 billion for new investments in all other elementary and secondary education priorities.

   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. The Administration's budget fails to keep pace with population growth in schools, and it is possible that under the budget he proposes, federal education support per student will decrease over the next ten years.

   Schools and communities will have to educate millions more children and help them meet higher standards of learning while addressing overcrowded classrooms, a shortage of qualified teachers, increased safety concerns, and a lack of adequate after-school programs. Schools simply cannot face these challenges alone. They need the help of their communities, their states, and the federal government to provide the best opportunities for all children.

   I am prepared to work with the President to enact his proposal for annual testing. But communities will need resources to develop and implement the tests, and ensure that they are of the highest quality. If overall education funding per student does not increase significantly, the nation cannot expect to achieve the right balance between investing in strategies that work and increasing accountability for results.

   Parents across the country will give President Bush and Congress a test at the end of the year. If our education investments do not help communities turn around every failing school, help all qualified students afford to go to college, and ensure that workers have the training they need, this Republican Congress and this Republican White House will deserve a failing grade on education.

   I hope we will work together to make the improvements in President Bush's budget that will be needed to earn an A+ from the nation's parents.

   Finally, this budget claims that its tax cut is fair to working families. In reality, the wealthiest 1 percent of taxpayers, who pay 20 percent of all federal taxes, would receive 43 percent of the tax benefits from Bush's plan. Their average annual tax cut would be more than $46,000, 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 percent of the tax benefits under Bush's plan. The average tax cut those families would receive each year is less than $400. 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 Congress should accomplish this year.

   A close look at the Administration's budget only confirms that indeed we cannot have it all. There is no way to eliminate the national debt, provide massive tax cuts, and meet all of the nation's legitimate needs.

   President Bush's budget asks working families to sacrifice while the wealthiest families in America collect far more than their fair share. Overall, this budget threatens our prosperity and ignores the most fundamental national needs.

   Governing is all about choices. And I believe that this budget makes the wrong choices for working families in America.

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