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Finally, what we say is that after all of these priorities, after all of these goals are met, there is still money left over. After we pay for education, after we pay for our national defense, after we pay for our environment, after we

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   How does the surplus add up? Well, because of the projections that the Congressional Budget Office puts forward, we believe that there will be $5.6 trillion worth of surplus over the next 10 years. What do we propose to do with that? We propose to pay down the debt by setting aside all of Social Security. As we know, when our FICA taxes come in, they pay for benefits. Those that are left over usually get rolled into Treasury notes.

   Well, we are able to not only pay down that debt because we are getting more surplus; but we are also able to, as a result of this, set aside for debt service, for a contingency reserve, and for Medicare the entire amounts to allow not only for reform, but for a rainy day. We have a contingency reserve over the course of this next 10 years of $517 billion as a cushion.

   We recognize that the projections are not always very accurate. We believe these are very reasonable and very conservative projections; but we recognize that it may not hit exactly where we say, even though over the last 6 years they have come in larger than expected. But we still set aside over half of $1 trillion in addition to Medicare, in addition to Social Security, in addition to paying the debt service; and we still set aside half of $1 trillion to deal with that which we know is coming in the future: a farm crisis, a national defense review that may require additional spending.

   We believe that this is a responsible budget, one that should be supported not only by my colleagues, but should be supported by the American people as a solid foundation to build upon, but also one that is flexible enough to deal with the contingencies and the concerns of the future. We have a good budget, it is a realistic budget, it is an enforceable budget. Support the budget.

   Mr. Chairman, I reserve the balance of my time.

   (Mr. SPRATT asked and was given permission to revise and extend remarks.)

   Mr. SPRATT. Mr. Chairman, I yield myself such time as I may consume.

   Mr. Chairman, some years when we do the budget it is routine, even inconsequential; but some years, as in 1990 when we did the budget summit with President Bush and again in 1993 when we did the Clinton budget, and in 1997 when we did the Balanced Budget Agreement, the budget lays down a path that we follow for many years to come. This is such a budget. Because of what we did in 1990, 1993, and 1997, we are reaping the consequences of our fiscal good behavior. We think we see enormous surpluses projected at as much as $5.6 trillion; $2.6 trillion to $2.7 trillion, after we back out Social Security and Medicare. So this is a watershed budget. We are going to make an allocation of these surpluses that will last for at least 10 years and beyond, and that is why what we are doing has to be done with great gravity.

   The chairman of our committee, the gentleman from Iowa (Mr. NUSSLE), just laid out six principles. Well, let me compare the difference between us and them, using his criteria, his six principles. He started with debt retirement, and I heartily agree. The more debt we can pay down, the better for our children and the better for our future, the better for Social Security and Medicare. So what is the scorecard on debt retirement, debt reduction? Our budget, our resolution on the Democratic side over 10 years between 2002 and 2011 will reduce the debt held by the public, Treasury debt held by the public by $3.681 trillion. Their resolution, the Republican resolution, will reduce that debt by $2.766 trillion. We win on that score by $920 billion. Not even close.

   Tax relief. The gentleman said we should give some of the surplus back to the American people; and we agree, heartily agree. We have set aside one-third of the surplus to give it back to the American people in the form of tax relief to those taxpayers who need it the most. But in making room for tax cuts, we have also left room for other things that people clearly want: education. That was the next on the gentleman's list. The next criterion by which to judge the budget resolution he said was education. Listen to this: because we made room for other priorities, and were not just fixated on tax cuts alone, we provide $132.8 billion over the next 10 years, that much, $133 billion more than the Republican resolution would provide for the education of our children. There is no comparison. It is not even close. We went hands down on that particular issue.

   A stronger national defense. I have been on the Committee on Armed Services for all of the time I have served here, more than 18 years; and I heartily agree, we need to do more for national defense, we need to modernize our defenses. We have been living off what we spent in the 1980s during the 1990s and now we need to put a little bit more into defense, so we do it. We have in our budget resolution $48.2 billion more for financial defense than they provide. They provided the gentleman from Iowa (Mr. NUSSLE) the opportunity to supply a different number, but we are realistically budgeting for defense $115 billion in budget authority over and above the baseline set by the Congressional Budget Office, which is an inflated baseline, a baseline equal to inflation. That much more for national defense. At least for now, we win on that score as well.

   Medicare reform. That was the way it appeared on the gentleman's list. If we look through his budget resolution, the Republican resolution, we look in vain for any proposal for Medicare reform. It is not there. There is a vague proposal about prescription drug benefits for Medicare; but if we are really absolutely earnest about Medicare, then one of our chief concerns has to be how long will its solvent life last so we can tell older Americans it will be there when they need it. We will not be cutting it because we cannot extend its solvent life.

   We have drawn a strict principle here. We want to add prescription-drug benefits to Medicare; but because we do not have a huge tax cut, we have a moderate tax cut, we have the resources, the wherewithal to do that by using resources from the general fund of our budget, not by dipping into the trust fund of Medicare and diminishing that trust fund and shortening its life, which is what the Republicans propose to do. They want to give to Medicare with one hand and take from it with the other, so that the result is, they get a very meager prescription-drug benefit, mostly for low-income beneficiaries and a shortened solvent life for Medicare. We extend the life of Medicare, and we provide a robust $330 billion to provide prescription-drug coverage under Medicare.

   However, my biggest concern about their budget and the biggest difference between us and them and the point that I would close on is just this: I have been here for 18 years. I came here when the deficit was just beginning to mount. We have tried to

   get our arms around this terrible thing we call the deficit and change it; and we finally, finally, after 18 years, reversed some of the fiscal mistakes we made in the early 1980s and put this budget in surplus, surpluses that nobody ever thought possible. Surely we do not want to take any action now, now that we have gotten here, that would put our budget surplus in jeopardy. But this is what the Republican resolution does.

   If we want it drawn as a line graph, here it is to my right. That red line against the blue background is where their bottom line would go, what resources are left over. We take the surplus that is available, back out the tax cuts they propose, back out Social Security and Medicare, adjust it for spending increases; and this is the path that they are plotting for the future. From 2002 to right here around 2007, 2008, we are skating on thin ice. We are skating on thin ice. We barely have a surplus at all. There is no margin for error, no room for a mistake here.

   Let me show my colleagues what could happen if these robust assumptions about the growth of our economy on which these frothy, blue-sky surpluses are based. Let us assume that

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   Having worked here for years, to finally get to this day where we have a surplus, I hoped it would give us some freedom, some freedom for policy initiatives, for priorities that we have long deferred, help us pay down the debt of this country, help us address at long last the long-term problems of Social Security. That is a path we do not want to take. It has been too long, too hard getting to where we are to risk it all for this kind of projection.

   That is why I say, there is a real difference between the budget resolution that we present and theirs. It scores better on every criterion the chairman just presented. It provides funds for extending the solvent life of Social Security and Medicare. They do not. But it leaves room for other priorities, prescription drugs, education, defense, agriculture which they have not provided for in their budget. Ours is a better budget resolution, and I think the debate that is coming up will clearly, clearly show that.

   Mr. Chairman, I reserve the balance of my time.

   Mr. NUSSLE. Mr. Chairman, I yield 1 1/2 minutes to the gentleman from Alaska (Mr. YOUNG), the distinguished chairman of the Committee on Transportation and Infrastructure.

   Mr. YOUNG of Alaska. Mr. Chairman, I rise to engage in a colloquy with the gentleman from Iowa on House Concurrent Resolution 83, the fiscal year 2002 House budget resolution.

   Mr. NUSSLE. Mr. Chairman, will the gentleman yield?

   Mr. YOUNG of Alaska. I yield to the gentleman from Iowa.

   Mr. NUSSLE. Mr. Chairman, I would be pleased to engage in a colloquy with the gentleman from Alaska.

   Mr. YOUNG of Alaska. Mr. Chairman, first of all, I would like to commend the gentleman from Iowa (Mr. NUSSLE), the chairman of the Committee on the Budget, and the Committee on the Budget for bringing this resolution to the floor.

   The intent of this resolution is to honor the funding guarantees in TEA21 and AIR21 and provides substantial increases for other important transportation programs, such as the Coast Guard. It is my understanding that due to errors in the functional totals that were provided by the Office of Management and Budget and perhaps other discrepancies between OMB and CBO, the Function 400 totals in this resolution were inadvertently understated.

[Time: 17:45]

   I have been assured that a technical correction will be made in conference so that the final budget resolution accurately reflects the funding levels necessary to fully fund highways and transit under TEA21, and the Federal Aviation Administration's operating capital, and airport grant programs under AIR21, as well as provide increases for other transportation programs, such as the Coast Guard.

   I would like to ask the gentleman from Iowa (Mr. NUSSLE) if my understanding accurately reflects his intention.

   Mr. NUSSLE. Mr. Chairman, the gentleman from Alaska is correct. The Office of Management and Budget's budget submission contained recently identified errors in the transportation function.

   Let me assure the gentleman that we will address these errors in conference, and that the Function 400 totals will be fully funded for TEA21 and AIR21, and provide increased funding for the Coast Guard.

   Mr. YOUNG of Alaska. Mr. Chairman, I thank the gentleman very much.

   Mr. NUSSLE. Mr. Chairman, I reserve the balance of my time.

   (Mr. SAXTON asked and was given permission to revise and extend his remarks.)

   Mr. SAXTON. Mr. Chairman, I yield myself such time as I may consume.

   Mr. Chairman, let me begin by offering my congratulations to the Committee on the Budget, led by the gentleman from Iowa (Chairman NUSSLE), for the extremely hard work and efficient job they have done in bringing this budget to the floor which will be voted on here in the next day or so. We appreciate very much the work that has been done and the budget that has emerged, which I rise to strongly support.

   Mr. Chairman, as the chairman of the Joint Economic Committee, it is customary for us to have an hour at this time or at some point in the budget debate to discuss the effects, or the potential effects, as we see them, of the pending budget to be voted on on the economic performance of our country; and in fact, if we might be so presumptuous, since our economy has something to do with the world economy, on the effect that the budget and the spending program that it lays out would have on the economic performance of this country and the world during the next fiscal year.

   I think in order to put this in the proper perspective, from the perspective of a citizen of this country, it is very important to recognize where we have been and how we got there economically over the past number of years, and then to talk a little bit about where the economy appears to be going.

   I think it is important to point out, therefore, that we have done quite well over the last two decades. As a matter of fact, we are in the 10th year of an economic expansion, and yes, the economy is still expanding, albeit a bit slower than it was.

   I think it is also important to point out that the 10-year growth period that we are currently in was preceded by an economic expansion that lasted 8 years. So there are some good things at play in the United States economy, producing first an 8-year period of growth, followed by a very short 8-month recession, and a very shallow one, I might point out, during the last half of 1990 and the first quarter of 1991, and then we began to grow once again, and we have grown through today.

   We believe there are some reasons that happened. First, perhaps, is that in the early 1980s and in the mid-1980s, a stage was set in our country by the reduction of some tax rates which were brought about during the Reagan administration. Because we were able to build on that platform, if you will, of a new tax process, a new system, in effect, of at least lower rates, we were able to see the progress begin during the 1980s of building this long-term economic growth period that we have seen.

   Secondly, it is important to point out that not everything that affects the economy happens as a result of activities in this room or in the other body. As a matter of fact, the Congress had very little to do with the activities of the Fed, the Federal Reserve, during the last 12 years or so. Headed up by our friend, Dr. Greenspan, the Fed took upon itself a new, or at least a partially new, direction.

   In a book that I recently read about Dr. Greenspan, the introduction to the book called him ``an anti-inflation hawk.'' That is precisely what has characterized the last 12 years of the activities of the Fed: The Fed has targeted inflation. As a result of the targeting of inflation, they have brought inflation down so that interest rates, the long-term interest rates, are also relatively low.

   So between lower taxes than we have had historically, lower tax rates than we have had historically since World War II, and the lowest rate of inflation over a sustained period of time in that same period, we have seen very significant economic growth.

   There are other factors, but suffice it to say that our taxing system and our inflationary rates have been quite low.

   However, all good things tend to come to an end, although this one has not come to an end quite yet, and we hope it will not. We do know that the economic program has begun to change, and there have been signs of a slowdown.

   Although this slowdown was documented last December in a JEC study entitled ``Economic Performance and Outlook,'' there seems to be a little confusion in some quarters about when the slowdown actually started. A review of the facts demonstrates that the economic slowdown has been under

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   Recent economic developments are important, and it is important to understand that. Because policymakers cannot afford to be unaware of what has actually been happening in the economy, I would like to present some facts about where we have been.

   The best single indicator of the slowdown is the decline in the rate of economic growth in the second half of the last year. That would be, of course, 2000. This decline in GDP growth was already evident in numbers released by the Clinton Commerce Department last year, and confirmed in subsequent releases.

   Real economic growth, as a matter of fact, during the second quarter of 2000, was at 5.6 percent. This chart that I have here next to me shows here in the second quarter of 2000 we had a very significant increase to 5.6 percent from 4.8 percent during the first quarter. So things were really moving along quite well.

   But then as the year progressed and we got into the third quarter, we can see here on the chart that the rate of growth actually dropped from 5.6 percent, which occurred in the second quarter, to 2.2 percent GDP growth in the third quarter, and in the fourth quarter it fell significantly again to 1.1 percent. So we are looking at a rate of growth today that is much lower than the rates that we saw early in 2000. As a matter of fact, we believe that this demonstrates quite conclusively that the slowdown actually began during the third quarter of 2000.

   Some components of the economic slowdown, some additional components, are also important. For example, a very large portion of the private economy is accounted for by personal consumption and investment; that is, personal investment. The real personal consumption spending growth, as a matter of fact, decreased during that same period of time. It decreased, as a matter of fact, from over 7 percent growth in the first quarter of 2000 to less than 3 percent in the fourth quarter, again demonstrated by the chart here to my left.

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