February 13, 2014

On the Senate Democrats’ Budget

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Washington, DC – Today, U.S. Senate Budget Committee Chairman Patty Murray (D-WA) released her proposed budget resolution for Fiscal Year 2014, and the Committee began its markup of the resolution with members providing opening statements.  U.S. Senator Sheldon Whitehouse (D-RI), a member of the Committee, submitted a statement for the Committee’s record which read, in part:

“As we work toward additional deficit reduction, the choice is clear – the balanced Democratic approach of ending tax spending giveaways and investing in our nation’s infrastructure or the Ryan Republican plan of cutting Pell Grants, turning Medicare into a voucher program, and reducing aid for the neediest Americans.”

Chairman Murray’s budget resolution would raise nearly $1 trillion in new revenue by eliminating wasteful tax loopholes, make smart cuts in federal spending, and invest in roads, bridges, and water infrastructure to create jobs.  The Committee will begin voting on amendments to the resolution tomorrow.

Importantly, the Senate Democrats’ proposal would also protect programs like Medicare, Medicaid, and Pell Grants, which the House Republican budget resolution would cut.  According to data compiled by the Senate Democratic Policy and Communications Center, the House Republicans’ proposed budget would force more than 146,000 Rhode Islanders on Medicare to pay for preventive health care services they currently receive for free.  It would also re-open the Medicare prescription drug “doughnut hole,” which Senator Whitehouse helped eliminate as part of the Affordable Care Act – causing nearly 14,000 Rhode Island seniors to pay an average of $996 more per person for prescription drugs in 2014 alone.

Senator Whitehouse’s full statement for the Committee record is below.

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Thank you, Madame Chairman.  I want to congratulate you on your new chairmanship and commend you on the hard work you put into this budget resolution.  With an economy still recovering from the worst recession of our lifetimes, a harmful budget sequester underway, and a debt limit set to expire in a few short months, our task here is urgent.  

Before I comment on our budget blueprint for the next decade, I’d like to take a moment to review the history of our deficits and our work to reduce them.  Twenty years ago this week, our Committee, under the leadership of its Democratic Chairman Jim Sasser of Tennessee, reported a budget resolution that placed us on the path to budget surpluses and the elimination of the national debt.  In fact, in President Clinton’s last full year in office, that path led to the largest budget surplus in American history.

If President George W. Bush, had stayed on the Democratic budget path, we would be having a very different debate today, a debate on the investments and opportunities a debt-free nation can provide.  Instead, President Bush chose to squander the Clinton-era surpluses on tax cuts weighted toward the wealthy, a prescription drug plan that prohibits the government from negotiating for better prices, and an ill-conceived war in Iraq.

When President Obama entered office, he inherited the worst economy in generations and a federal budget badly out of balance.  The investments we made in the Recovery Act helped to stem the loss of jobs and put our economy back on the path toward growth.  Had we taken the advice of our Republican friends and adopted European-style austerity, we might instead be faced with double-digit unemployment and negative growth like Greece, Portugal, and Spain. 

The evidence from the austerity experiment is in, and the countries that have cut the deepest are hurting the most.  Just this morning, the Wall Street Journal reported industrial production in the United Kingdom has fallen to its lowest level in 22 years, and the country may face its third recession in five years.  Chairman Ryan and other Republicans who want to emulate European austerity should listen to Jeremy Warner of the conservative Daily Telegraph who said last month, “This is a truly desperate state of affairs that demands swift and decisive action.  We seem to have the worst of all possible worlds, with nil growth, some very obvious cuts in the quantity and quality of public services, but pretty much zero progress in getting on top of the country’s debts.”

Despite earlier warnings from Europe, two summers ago, Republicans held the economy hostage, threatening to allow the first U.S. debt default in history.  That standoff led to the Budget Control Act, which along with other spending cuts last Congress brought $1.5 trillion in deficit reduction.  While I believe those budget cuts were premature given high unemployment, I supported them to avoid a much more damaging debt limit crisis.

In January, we passed the American Taxpayer Relief Act, which cut the deficit by $600 billion by letting the Bush tax cuts expire for high-income earners.  Together with the BCA cuts and related interest savings, we’ve cut the deficit over the past two years by over $2.4 trillion.  This is more than half way toward the $4 trillion goal economists say is needed to make our deficits manageable.  To date, 70% of the deficit reduction has come from spending cuts and only 30% from revenue. 

I’m pleased our Democratic budget will provide for more balanced deficit reduction.  It includes significant new revenue from closing tax loopholes that benefit profitable corporations and the wealthiest individuals.   Currently, the tax code gives away nearly as much money through loopholes as it raises through rates.  While these expenditures are housed in the tax code, they are really a form of federal spending.  By cutting just 7% of deductions, exemptions, and credits, we can generate $1 trillion without negatively affecting middle-class families.

In addition to stabilizing federal borrowing, our budget provides for badly needed investments in our nation’s roads, bridges, and water infrastructure – all investments that are particularly important to my home state of Rhode Island.  By replacing crumbling infrastructure before it becomes unusable, we will save money and support jobs in construction, a sector with 16% unemployment.  Our budget also provides for the creation of a national infrastructure bank to efficiently leverage longer-term federal investments.  

As we work toward additional deficit reduction, the choice is clear – the balanced Democratic approach of ending tax spending giveaways and investing in our nation’s infrastructure or the Ryan Republican plan of cutting Pell Grants, turning Medicare into a voucher program, and reducing aid for the neediest Americans. 

As Americans review these two starkly different paths, they should consider a lesson from history.  In 1993, Republicans railed against the new revenue in Chairman Sasser’s budget resolution just as they are today.  Ranking Member Pete Domenici said, “We’re not going to get the deficit under control with the largest tax increase in the history of America . . . we’re not going to have good, solid job recovery in the American economy with that big a tax.” 

Of course, Senator Domenici was proved wrong.  The passage of the Clinton budget plan preceded eight years of growth with over 20 million jobs created.  During that time we brought down our deficits and generated the largest budget surpluses in American history.  I’m proud to say our budget resolution follows the balanced deficit reduction structure of the Clinton plan.  The balanced path has brought us to surplus before, and I’m confident it will again.  Thank you.   

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