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WASHINGTON, DC - House Majority Leader Steny H. Hoyer (MD) will address the National Press Club today to discuss the upcoming appropriations battle and larger fiscal issues. Below is the text of his speech as prepared for delivery:
"I first want to thank Alan Greenspan for putting the issue of fiscal responsibility back on the political map. This is a very healthy development, even though it embarrasses the Administration.
"In his new book, the former Federal Reserve Board Chairman writes: 'Most troubling to me was the readiness of both [the Republican-controlled] Congress and the Administration to abandon fiscal discipline.' And this: 'Deficits don’t matter,' to my chagrin became part of the Republicans’ rhetoric. . . . Deficits must matter.'
"I was tempted to come here and deliver the shortest speech of my professional life. Eight words in all. 'Chairman Greenspan is correct. Are there any questions?'
"But the bar is higher today. So, I intend to convince you of four main points: First, this Administration has pursued the most fiscally irresponsible policies in American history.
"Second, the Democratic Party is the party of fiscal responsibility today – which is a very under-reported story.
"Third, the President needs to put down his veto pen and pick up the telephone. Our differences on funding levels for domestic appropriations for Fiscal Year 2008 – which begins on Monday – are relatively minor. We need to work out those differences, rather than engage in political posturing.
"And finally, we must not allow our disagreement on appropriations to distract us from the ominous, long-term fiscal challenges that confront our nation. The United States of America is on an unsustainable fiscal path – and the longer we wait to address our challenges, the more difficult it will be to avert a fiscal crisis.
THE REPUBLICANS’ FISCAL TRAIN WRECK
"There’s no other way to say it, the Republicans’ fiscal record is like a decades-long train wreck. For 18 of the 26 years that I have served in Congress, a Republican has occupied the White House.
"And, in every single year of those Republican Administrations, the federal government ran a budget deficit. The cumulative deficits under Presidents Reagan, George Herbert Walker Bush, and George W. Bush total more than $4.1 trillion.
"In contrast, the Clinton Administration had a cumulative surplus of nearly $63 billion over eight years. Under President Clinton’s stewardship, the federal government reduced the deficits he inherited and recorded four consecutive surpluses – the first time that had happened in 70 years.
"So, forgive me for dismissing the Republican Party’s claim that it is fiscally responsible.
"Forgive me for rejecting the Republicans’ repeated assertion that supply-side tax cuts pay for themselves – an assertion that has been challenged by the Treasury Department, the Congressional Budget Office, and the current Chairman of the Federal Reserve, who told the Senate in 2005: 'I think it’s unusual for a tax cut to completely offset the revenue loss.'
"In fact, revenues have grown by just 3.6 percent since the President’s 2001 tax cut was enacted – less than half the 8.4 percent annual growth during the Clinton Administration.
"And forgive me for being somewhat amused by the Administration’s defensive push-back on Alan Greenspan’s recent comments.
"The President claimed last week that his fiscal record is 'admirable and good.' Does he really believe this? He came to office inheriting a projected 10-year budget surplus of $5.6 trillion, and proclaimed, 'We can proceed with tax relief without fear of budget deficits, even if the economy softens.'
"But then, the Republican-controlled Congress passed and the President signed the largest tax cuts in a generation – tax cuts disproportionately skewed toward the wealthiest citizens – while increasing spending at a rate (7.1 percent) nearly twice that of the Clinton Administration.
"As predicted, these irresponsible policies turned surpluses into massive deficits: $158 billion in Fiscal 2002, $378 billion in Fiscal 2003, $413 billion in Fiscal 2004, $319 billion in Fiscal 2005, and $248 billion in Fiscal 2006.
"On Sunday, when we close the books on Fiscal 2007, we’ll record another $158 billion deficit. The President will crow that he is reducing the deficit, ignoring the fact that, but for his policies, we would not even have deficits. And consider: The Administration projected a budget surplus of $573 billion this year when it took office. So, Fiscal 2007 really represents a swing of three-quarters of a trillion dollars, virtually all of it the result of policies enacted by a Republican Congress and signed by President Bush.
"The exploding national debt is equally disturbing. Today, the debt stands at more than $9 trillion, a 56-percent increase (or $3.3 trillion) under President Bush. That’s $29,728 for every man, woman and child in our nation.
"All these figures can be mind-numbing. So, let’s put them in perspective:
"In 2007, the interest payments on the national debt – the fastest growing major category of spending in the budget – are a projected $235 billion. That’s more than Congress appropriates in discretionary spending for any government department or agency other than Defense. It’s four times more than we spend on education, and seven times more than we spend on the Department of Homeland Security.
"In other words, these interest payments – which increasingly are paid to foreign governments that hold our debt – cannot be used to build roads and bridges; to invest in research and development; to improve education, to protect our nation, or, yes, to provide tax relief.
"The Republicans’ record of fiscal irresponsibility speaks for itself. As Republican Congressman Jeff Flake of Arizona said last year: 'Whether we want to admit it or not, the Republican Congress’s failure to discipline itself is sending us all down a flower-strewn path to fiscal insolvency.'
DEMOCRATIC MAJORITIES WORK TO RESTORE FISCAL DISCIPLINE
"The truth is, Democrats are the party of fiscal discipline in Washington today.
"In one of our first acts after regaining the Majority, we reinstated the pay-as-you-go budget rules (or PAYGO) that are widely credited with producing record budget surpluses during the Clinton Administration. In a nutshell, PAYGO means the federal government must offset tax cuts or spending increases elsewhere in the budget. It’s a common-sense rule that millions of American families apply to their own personal budgets.
"Adopted on a bipartisan basis in the 1990s, PAYGO was even rhetorically supported by President Bush in his first three budgets – although he exempted his 2001 tax cuts from the rule and Republicans allowed it to expire in 2002.
"The President’s new Director of OMB, former Budget Committee Chairman Jim Nussle – who supported PAYGO in the ‘90s – later had a change of heart, explaining: 'We don’t believe you should have to pay for tax cuts.'
"And so, Republicans didn’t. They just kept on billing the costs of tax cuts and spending increases to future generations through higher deficits.
"Today, Democrats are fighting to restore the fiscal discipline that has been sorely lacking since 2001. Why? Because we believe deficits and spiraling debt threaten our future prosperity and national security. And because we believe that it is simply immoral to force our children and grandchildren to pay this generation’s bills.
"That’s why we passed a budget for Fiscal 2008 that would bring the budget back to balance by 2012. Last year, the Republican Congress failed to even pass a budget.
"And, that’s why we have honored our commitment to PAYGO. We have not violated the PAYGO rule once in the approximately 30 bills with direct spending or revenue provisions of more than $1 million, as will be detailed in a report next week by John Spratt, Chairman of the House Budget Committee.
"If you examine the four major House bills with mandatory spending increases – children’s health insurance, the farm bill, higher education and energy – you’ll see that approximately 80 percent of the spending increases have been financed by spending cuts.
"For all their talk about being tough on spending, our Republicans friends in the House actually have opposed the spending cuts that we have put forward. House Democrats, for instance, paid for our SCHIP bill by, among other things, cutting subsidies for insurers – cuts Republicans opposed. We have made the tough decisions with respect to spending priorities that Republicans never made when they were in power.
"And, as we enter the final stages of this Session of Congress, I want to make one thing clear: The House will not waive PAYGO for any tax cuts or entitlement spending increases that are not offset.
"Today, we are examining different proposals to permanently reform the alternative minimum tax, as well as a temporary AMT fix that would be offset by closing tax loopholes and cracking down on special interest tax breaks. In either case, simply waiving PAYGO is not an option – even if some members of the other body prefer that we do so.
THE CURRENT APPROPRIATIONS FIGHT IN CONTEXT
"Now, let me focus on the current disagreement between Democrats in Congress and the Administration over domestic appropriations. Don’t be fooled. This is not a fight about spending. This is a fight about our priorities as a nation - and about the Administration's desire to posture for its base.
"Let me say, I am not pleased that we have not completed our appropriations work on time. The Administration’s unjustified veto threats have only impeded our progress. Nonetheless, we have passed a continuing resolution to ensure that our government is funded and functioning, and to give us time to work out our differences.
"But the bottom line is, the Administration is itching to instigate an appropriations fight with Congress in a vain effort to establish its bonafides with its conservative base.
"After failing to veto even one appropriations bill or other legislation that substantially added to the deficit during his first six years in office, the President is now threatening to veto eight of the 12 annual spending bills for Fiscal 2008 over a total of $23 billion.
"There is no question that $23 billion is a lot of money. However, let’s put it in perspective: $23 billion is about eight-tenths of 1 percent of a total federal budget of nearly $3 trillion.
"Twenty-three billion dollars is not quite half of the $42 billion in additional funding for Iraq that the Administration requested on Wednesday, and about 12 percent of the Administration’s total request of $190 billion for the war for 2008 – a war the White House estimated would have a total cost of $60 billion.
"The truth is, $16 billion of the $23 billion that Democrats are fighting for would simply restore cuts proposed by the President to key programs – a 50-percent cut in vocational education; the elimination of student aid other than work study and Pell Grants; and deep cuts in medical research, law enforcement grants and rural health programs, to name a few.
"This is a fight about whether we adequately fund No Child Left Behind, special education, medical research, Head Start, clean water programs, public safety, and appropriate health care for our veterans and men and women in uniform.
"Please, Mr. President, do not lecture us about fiscal responsibility. And please, do not tell us that we cannot find funding to invest in our children, our infrastructure, and our future when you are proposing to spend another $190 billion on the war in Iraq.
"Democrats believe the President’s priorities are deeply misguided, and not supported by the American people. We believe, in this appropriations fight, the President is playing politics, pure and simple.
"If you doubt that, just consider that funding for non-defense appropriations in 2008 (when adjusted for inflation and population growth) is actually below the funding levels passed by the Republican Congress and signed by the President for Fiscal 2002, 2003, 2004 and 2005.
"I know that Chairman David Obey remains hopeful that in the next few weeks the Congressional leadership and White House will sit down and negotiate a reasonable agreement on funding levels.
"But as the rhetoric heats up, ask yourself: If the President is really fiscally conservative, why didn’t he veto one appropriations bill in six years? Why didn’t he veto the corporate tax bill in 2004 – a bloated bill that doled out $139 billion in corporate welfare when all that was needed was a $5 billion tax fix to put us in compliance with our trade agreements?
"We Democrats are going to fight for the priorities of the American people. The President should not try to rehabilitate his fiscal record by vetoing responsible appropriations bills – or, for that matter, the bipartisan children’s health insurance bill.
OUR LONG-TERM FISCAL CHALLENGES
"Finally, let me say that as important as this disagreement over appropriations is, we must not be distracted from the long-term fiscal challenges that face our nation. Fiscal responsibility is not some virtue that exists in a vacuum. It’s vital to our future.
"As Bob Bixby of the Concord Coalition points out: 'The basic facts [of our fiscal challenges] are a matter of arithmetic, not ideology. Two factors stand out: demographics and health care costs.'
"With the imminent retirement of 78 million Baby Boomers, and the attendant demands on Social Security and Medicare, we are on the cusp of a fiscal tsunami that threatens to drown our nation in a sea of red ink.
"Over the next quarter century, the number of Americans 65 and older will nearly double – from 12 percent of the population today to 20 percent.
"Medicare and Medicaid will grow by nearly five times as a share of the economy by 2050, if we assume the growth of health care costs does not slow. And these programs will absorb as much of our nation’s economy by the late 2040s as the entire federal budget does today.
"According to the 2006 Financial Report of the United States – signed by Treasury Secretary Paulson – our fiscal exposures (explicit liabilities and implicit obligations) had a present value of $44 trillion, or about as much as the net worth of all household assets.
"We are not going to grow our way out of this problem, through some magic supply-side solution. The GAO estimates that it would require inflation-adjusted average annual economic growth in the double-digit range every year for the next 75 years to close the gap through growth alone.
"It is imperative that we get serious about our long-term fiscal challenges. There is plenty of room for debate over the mix of options that should be considered. But we do not have time to waste.
"Senators Conrad and Gregg and Congressmen Cooper and Wolf have put forward proposals for a bipartisan task force. While I would like to believe that Congress could address these issues through the regular legislative process, the experience of recent years suggests that this is extremely difficult in the current political environment.
"Thus, I support the Conrad-Gregg and Cooper-Wolf proposals in concept, although I have concerns about several specific provisions.
"My preference certainly would be to have Members of Congress and this Administration make recommendations that are considered in this Congress. But there are two problems with that: First, this is now an outgoing Administration, with little over a year left. And second, despite the good-faith efforts of Secretary Paulson, this Administration is loathe to put all options on the table.
"As a result, I believe that we must move forward with such a task force after our new President is inaugurated in January 2009, with a process allowing the President and Congress to consider alternatives.
"Turning a blind eye to our long-term challenges would not only be irresponsible, it would be unforgivable. As Comptroller General Walker has warned: 'Continuing on the unsustainable fiscal path will gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately our national security.'
"Our fiscal future need not be filled with peril – if we have the courage and will to recognize and address these challenges."