Related Materials

Chart Used During Speech

Transcript

I have come to the floor on different business, which is to talk about the budget circumstance we are in and to try to answer the question we have heard asked in recent days:  Are we better off now than we were 4 years ago?  I believe the answer to that question is very clear.

I think to answer the question we have to take ourselves back 4 years and remember the conditions we faced then.  I will never forget as long as I live being called to an urgent meeting in the Capitol late one evening in September 2008.  I was the last one to arrive.  There were assembled the leaders of the House and the Senate, Republicans and Democrats, the Chairman of the Federal Reserve, and the Secretary of the Treasury of the Bush administration.

The Secretary of the Treasury and the Chairman of the Federal Reserve quickly told us they were going to take over the giant insurer, AIG, the next morning.  They weren't there to ask our approval or seek our support; they were there to tell us what they were doing.  They told us if they did not do it, they believed we would have a financial collapse within days. 

This was September 2008.  Barack Obama was not the President of the United States; George W. Bush was the President of the United States, and we were on the brink of financial collapse, according to the description of his own Secretary of the Treasury.

Let's remember what the economy was doing in the fourth quarter of 2008.  The economy was shrinking at a rate of over 8 percent.  In fact, it was shrinking at a rate of almost 9 percent.  In the first month of 2009, the last month of the Bush administration, we lost 800,000 jobs in 1 month.  So when people ask if we are better off today than we were then, just as a factual matter there can be no dispute.  We are dramatically better off today than we were 4 years ago. 

Four years ago we were on the brink of financial collapse.  Four years ago the economy was shrinking at a rate of almost 9 percent, and we were losing 800,000 jobs a month.  Those are facts.  They cannot be disputed.

Today we are growing, not as fast as we would like; jobs are being created, not as fast as we would like; but that is a dramatic improvement over 4 years ago.  Let's remember the housing market was in crisis.  Home building and sales were plummeting.  There were record foreclosures.  The financial market crisis threatened global economic collapse.  That was 4 years ago.  Anybody who wonders can go back and read the headlines themselves.  Those were grim days.

I also remember as though it were yesterday being part of the group who was given a responsibility to negotiate the TARP -- the Troubled Asset Relief Program.  I remember being in this complex late on a Saturday night, again with the Secretary of the Treasury of the Bush administration, and him telling us if we did not come up with a solution by 5 o'clock Sunday night, the Asian markets would open and they would collapse, and our markets would open the next day and they would collapse.

So when people ask if we are better off today than we were 4 years ago, as a factual matter there really is no question -- none.  We are dramatically better off.

The other thing we should keep in mind is, what happens after a severe financial crisis such as the one we faced 4 years ago?  Dr. Carmen Reinhart, from the Peter Peterson Institute for International Economics, and her husband, Dr. Vincent Reinhart of the American Enterprise Institute -- which, by the way, is a pretty conservative place -- have done an analysis, and here is what they found:  After a severe financial crisis such as the one we suffered 4 years ago, economic recoveries are shallower and take much longer.  Here is the quote from their analysis:  “Real per capita GDP growth rates are significantly lower during the decade following severe financial crises.    In the ten-year window following severe financial crises, unemployment rates are significantly higher than in the decade that preceded the crisis....”

That is what we had in 2008.  Again, Barack Obama was not the President of the United States; George W. Bush was President of the United States, and we had a severe financial crisis.  We were on the brink of financial collapse.  It takes a long time to dig out from a disaster of that magnitude.

Two of the most distinguished economists in the country -- one of whom, by the way, advised John McCain in his most recent Presidential race, and the other who is Deputy Chairman of the Federal Reserve -- did an analysis of what would have happened without the Federal response, what would have happened in terms of jobs.  Here is what they found:  With a Federal response we got 8 million jobs we would not have had otherwise.  In other words, if there had been no Federal response, the red line is what would have happened to jobs.  The green line is what happened as a result of Federal action:  8 million fewer jobs lost than if there had been no Federal response.

Again, this is work that was done by Alan Blinder, former Vice Chairman of the Federal Reserve, and Mark Zandi, who was one of the economic advisers to John McCain in the last Presidential race.

So when we go back to this question, are we better off now than we were 4 years ago, I think the answer is unequivocally, yes.  We are dramatically better off than we were 4 years ago.

Now, those people who are still unemployed don't feel better off.  I understand that.  That is dreadful, that is painful, and it is painful in every way.  Not only does it hurt in the pocketbook, but much more than that:  It hurts the way people feel about themselves.  It hurts the way people feel about their role in their families.  So we have lots of work to do, but if we are going to be honest with people about comparing where we are today and where we were 4 years ago, there really can be no serious question about the answer to that question.

This chart shows the economy in the fourth quarter of 2008 -- that is the last quarter of the Bush administration -- was shrinking at a rate of almost 9 percent.  Now the economy is growing at a rate of 1.7 percent, for the most recent quarter.  Is that good?  No.  Would we like it to be stronger?  Absolutely.  But is this better than almost any other developed country in the world?  Yes.  The Eurozone is in recession.  Their economies are shrinking.  Japan is not doing as well as we are doing. 

So when we look around the world and compare ourselves, the answer by comparison is we are doing remarkably well given the depth of the financial crisis we experienced.

Not only is it true in economic growth, it is true in terms of private sector jobs. Again, in the last month of the Bush administration, this economy lost over 800,000 jobs -- in 1 month.  In the most recent month in the United States, we gained 103,000 private sector jobs.  That is a turnaround of over 900,000 jobs in a month.  That is a dramatic improvement. 

And if we look at the stock market, we can answer that question as well.  Are we better off now than we were 4 years ago?  Well, this chart shows the stock market.  In March of 2009, it hit its low of 6547 -- the low during this period.  Look where it is today.  More than double what it was 4 years ago. 

So, again, if we are seriously asking the question, Are we better off than we were 4 years ago?  In terms of economic growth?  Yes.  In terms of job creation?  Yes.  In terms of the stock market?  Yes.  In terms of economic performance?  Yes. 

I have also heard my colleagues on the other side say at the convention just concluded that there has been no budget here for 3 years.  Well, there has been no budget resolution.  But there is a budget law that was passed called the Budget Control Act.  And a law is much stronger than any resolution.  A resolution is purely a congressional document.  It never goes to the President for his signature.  A law, obviously, has to go to the President for his signature. 

So when they say there has been no budget passed, there has been no budget resolution passed, but, instead, Congress passed the Budget Control Act.  Look what it said in the Budget Control Act:   “...the allocations, aggregates, and [spending] levels set in subsection (b)(1) shall apply in the Senate in the same manner as for a concurrent resolution on the budget for fiscal year 2012....”

That same language is repeated in the next paragraph:  “...the allocations, aggregates, and levels set in subsection (b)(2) shall apply in the Senate in the same manner as for a concurrent resolution on the budget for fiscal year 2013....”

I say to you, a budget is a limitation on spending.  The Budget Control Act contained very clear limitations on spending for 2012 and 2013.  So when our friends say there has been no budget passed by this body, oh, yes, there has.  There has been a budget passed for 2012, and one for 2013.  Instead of a resolution, it was done in a law. 

What we do not have is a long-term plan, a 10-year plan.  That is what we need.  But it is pretty clear both sides are not ready yet, and perhaps will not be until we have had this election, to sit down and agree to the kind of 10-year plan we so desperately need. 

The Budget Control Act represented the largest deficit reduction package in the history of the United States.  How can that be?  Well, because it contained $900 billion in discretionary savings over 10 years, and it included the so-called sequester that we hear so much about that added another $1.2 trillion of spending cuts over the next 10 years, for a total of $2.1 trillion in spending cuts.  That is the largest deficit reduction package we have ever passed. 

So, again, when people say there is no budget, there has been no action taken, it is not accurate.  The Budget Control Act operates in the same way as a budget resolution, and it is a law, not a resolution that is purely a congressional document that never goes to the President.  The Budget Control Act passed both Houses of Congress, went to the President for his signature, and cut $2.1 trillion in spending. 

People may not like it.  There are a lot of things I do not like about it -- certainly the sequester.  I think we ought to find alternative savings for it.  But the fact is, this is now law, and it cut $2.1 trillion. 

That still leaves us with the problem that we are borrowing 40 cents of every $1 we spend, and that cannot be permitted to continue.       

So we have to add a package on top of the Budget Control Act.  We have to do more.  I would prefer, strongly, to do another at least $3 trillion.  I tried to convince the Bowles-Simpson Commission to do a package of $5 trillion of deficit reduction.  Actually, I tried to persuade them to do a package of $5.6 trillion of deficit reduction because we can balance the budget if we would do a package that large.  The people who were on that commission will tell you I tried repeatedly to convince my colleagues to go big, let's do a package that really balanced the budget.

And we could do it.  It is not that hard.  I think people sometimes get it in their head this is some impossible task.  I told them, let's talk about a 6-percent solution.  If we would do 6 percent more revenue than current law provides and 6 percent less spending, we would save $6 trillion over 10 years and balance the budget.  I actually would argue for more weighting on the spending cut side of the ledger than on the revenue side.  But I do this for illustrative purposes, to indicate we cannot do 6 percent?  Come on.  We cannot do 6 percent?  Sure we can.

The occupant of the chair, the Governor of West Virginia in his previous life in politics -- I will tell you, he did not have any trouble making tough decisions, and I will bet you he reduced spending a lot more than 6 percent.  He survived.  He is here.  He is respected. 

We can do this.  Hey, we have done much tougher things than this in the past.  I hope colleagues think about this carefully. 

This next chart is so important because it looks at the spending and the revenue lines of the Federal Government going back to 1950.  This is 60 years of our economic history on one little chart.  The red line is the spending line.  The green line is the revenue line.  And look what it shows.  We got to, in 2010, an all-time high in spending for the last 60 years, taking out the effect of inflation, so you have an even-steven comparison over that 60-year period.  And we were at a 60-year high in spending -- not surprising given the dimensions of the financial crisis we faced.  But at the same time, we were at a 60-year low in revenue. 

When you have record spending and record low revenue, you have record deficits and record additions to the debt.  That is exactly what was happening to us.  We have seen some improvement in the last few years.  Spending is down as a share of GDP.  Revenue is up a little bit.  We still have a big chasm. 

In the midst of all this comes Representative Ryan and his plan.  I would say to those who might be attracted to his plan:  Be careful what you wish for -- be careful what you wish for -- because, first of all, the Ryan plan does not balance the budget, if ever, until 2040, and it only balances in 2040 because of certain assumptions he told the Congressional Budget Office to make about his plan and the revenue contained in it. 

I personally do not think it ever balances.  I do not believe it ever balances.  It is absolutely an unbalanced plan.  All of the deficit reduction is on the spending side.  He actually digs the revenue hole much deeper, extends all the Bush era tax cuts, and then adds hundreds of billions of dollars of more tax cuts, primarily to the most fortunate among us. 

There is $1 trillion in tax cuts for the wealthiest.  He gives those with an income of over $1 million an average tax cut of $265,000 a year.  Somebody is sitting out there saying:  How is that possible?  A person earning $1 million a year probably does not pay much more than $265,000.  How can they, on average, be getting a $265,000 tax cut?  Remember, this is the average for everybody over $1 million, so this includes people making $1 billion a year.  And there are a fortunate few who make $1 billion a year.  So if you take everybody over $1 million, and you average the tax cut they get under the Ryan plan, it is over $265,000 a year. 

He has $2.9 trillion in health care cuts.  So first of all, he extends all the Bush era tax cuts.  Then he adds hundreds of billions more of tax cuts for those who are the most fortunate.  And to start to make up for it, he has $2.9 trillion in health care cuts -- not million, not billion:  trillion.  He repeals health care reform.  He shifts Medicare to vouchers.  And he block-grants Medicaid and cuts Medicaid drastically. 

Who benefits from Medicaid?  Well, low-income people, disabled people, but also a lot of middle-income people in this country benefit from Medicaid because their folks are in nursing homes and they have spent down their assets, and the only way they can stay in the nursing home is that Medicaid picks up the tab.  There are hundreds of thousands of families in America, middle-class families, who have benefited from Medicaid because that is what has paid the nursing home bills for their relatives -- their mom, their dad, their grandpa, their grandma.  That is the truth. 

The Ryan budget also dramatically cuts the safety net for seniors, the children, the disabled.  It increases the uninsured by more than 30 million people.  It is going to increase the number of uninsured by 30 million.  Well, if you are not uninsured, why should you care?  I will tell you why you should care.  Because if they are not paid for by insurance, they are going to be paid for by all the rest of us.  Because the hard reality of how the health care system works in America is this:  If you are in a car accident and you do not have insurance and you are taken to the hospital, you are treated.  If you do not have insurance to pay for it, and you do not have resources to pay for it, guess who pays for it.  All the rest of us pay for it.  

That is why it is absolutely in our interest to have as many people insured as is possible.  It is not just a nice thing to do; it is a smart thing to do.  Because one of the things we have found out is that about a third of the people who do not have insurance can afford it.  They can afford it.  They just choose not to have it because they know if something drastic happens to them, all the rest of us are going to pay. 

There are also large cuts in the Ryan budget for education, for energy, for infrastructure -- building roads, bridges, highways, and the rest.  Those things undermine the engines of economic growth.  So I do not think that is the way to go.

When we look at the Ryan budget plan on revenue, here is what we find.  It provides $1 trillion in tax cuts for the wealthiest among us.  It gives millionaires an average tax cut of more than $265,000 a year.  It does not contribute one dime of revenue to deficit reduction.  And the revenues reach 18.7 percent of GDP by 2022.  Now why does that matter?  Because the last four times we have balanced, the revenue of the country has been 19.6 percent, 19.7 percent, 19.8 percent, 20.6 percent.  So, hey, if we are going to be serious about belling this cat, we are going to have to cut spending, we are going to have to reform the entitlements, we are also going to have to raise some revenue, hopefully not in a way that hurts economic growth, because we think we have found ways of doing it. 

But the Ryan tax plan, I have to say, I do not think adds up.  Why don't I believe it adds up?  Well, let's look at what he proposes. 

First of all, he says we should reduce individual tax rates to just two -- one at 10 percent and one at 25 percent.  Right now, the top rate is 35 percent.  If you reduce that rate to 25 percent, and you have only one other rate of 10 percent, that package costs $2.5 trillion over the next 10 years.  So instead of filling in the hole, you are digging the hole deeper.  Then he puts the top corporate rate at 25 percent.  Again, that is a significant reduction from the top corporate rate today.  That costs another $1 trillion.  Then he repeals the alternative minimum tax.  That costs another $670 billion.  Then he repeals all the tax levies in the health care reform.  That costs another $350 billion.  Then he allows the stimulus provisions to expire from the Recovery Act, which raises $210 billion. 

Before he starts filling in the hole, he has dug the hole deeper by almost $4 1/2 half trillion, and he says he is going to offset all of that with individual base broadening and corporate base broadening.  We are spending about $1.2 trillion a year in tax expenditures.  Over 10 years that is about $15 trillion with inflation. 

So we could come up with this $4 1/2 trillion, but what would we have to do in order to do it?  Almost every objective observer has said we would have to raise taxes on the middle class -- because he says this is going to be somehow, in the Romney plan, revenue neutral.  I do not know that the Ryan plan ever claimed to be revenue neutral.  But if we are going to pay for this, how are we going to do it, which of the exemptions and the exclusions?  Are we going to reduce the mortgage interest exemption?  Are we going to reduce the health care tax exclusion?  Because those two affect middle-class people.  Let's be honest.  Let's be straight.  So there is no way Congressman Ryan's plan does all the things he claims for it without raising taxes on the middle class.

When he gets to a revenue level of 18.7 percent and says that is the historic average, that is true.  The problem with that is we have never balanced the budget, going back to 1969, with that amount of revenue.  The five times we have balanced since 1969 -- that is 43 years ago -- revenues have been at 19.7, 19.9, 19.8, 20.6, 19.5.  So just getting back to the historic average, I do not think it is going to be enough.  If we are looking at what it has taken to actually balance the budget in our history, we can see we have to be very close to 20 percent.

By the way, these levels of revenue were before the baby boom generation, and the baby boom generation, that is not a forecast.  That is not a prediction.  Those people have been born.  They are alive today.  They are going to be eligible for Social Security and Medicare.  If we are going to be honest with ourselves, honest with the American people, I do not think what Congressman Ryan is talking about adds up.

If we look at his budget on health care, we see $2.9 trillion in health care cuts.  As I indicated, he repeals health care reform.  I hear a lot -- I hear it in my State:  Let's repeal health care reform.  Why not?  Because the Congressional Budget Office tells us if we repeal it we add over $1 trillion to the debt.  We add over $1 trillion to the debt, we deny coverage to 30 million people who would otherwise have it. 

His plan also ends the effort to promote quality over quantity of care, reopens the prescription drug doughnut hole that raises costs to seniors by $4,200, allows insurance companies to drop coverage when we get sick.  It ends the provision allowing young adults to stay on their parents' plan until the age of 26.  It shifts Medicare to vouchers in 2023 and includes, after that, an aggressive cap on payments that most analysts have said would dramatically increase what Medicare beneficiaries would have to pay for their own health care. 

Currently, Medicare pays 75 percent of the cost.  The beneficiary pays 25 percent.  If the Ryan plan were adopted, the original Ryan plan -- he has subsequently put out other plans.  But his original plan would have stood that on its head.  He would have Medicare beneficiaries paying the substantial majority of the cost.  Instead of Medicare beneficiaries paying 25 percent, he would have them paying 68 percent of the cost -- Medicare beneficiaries.

I have a brother who is gravely ill in the hospital, Medicare eligible.  I can tell you, he is getting phenomenal care -- very costly.  I would say it would break our family.  If we had to pay 68 percent of the cost instead of 25 percent, it would break our family.  We are a middle-class family.  I am talking about the extended family. 

These things have real consequences.  Anybody who thinks these are just political statements and they do not affect people’s lives, oh, yes, they do.  They have a profound effect on people's lives. 

The Ryan plan block grants Medicaid, shifts the cost to seniors, children, disabled, and States.  I do not think that is the path America has in mind.  I like Paul Ryan.  I agree with him that we are on an unsustainable course.  I was on the Bowles-Simpson Commission with him.

But unlike him, I was one of the 11 who supported the recommendations of Bowles-Simpson.  Of the 11 of us who did, 5 are Democrats, 5 Republicans, and 1 Independent.  That is about as bipartisan as we can get.  There were 18 Commissioners.  We had to get 14 to get the recommendations to a vote in the Congress.  We got 11.  That is 60 percent of the membership who voted yes; five Democrats, five Republicans, one Independent. 

Paul Ryan was part of Bowles-Simpson.  He voted no because it was not just the way he wanted it.  It was not just the way I wanted it either.  I hated things on almost every page of that report.  But as I told my staff, the only thing worse than being for it would be being against it because it would have gotten us back on track.  It would have lowered our deficit and debt by $4 trillion and have done it with revenue and spending cuts and reform of entitlements, maybe not as much on any one of those areas as I would do, but it would have made a profound difference in the economic future of this country. 

Perhaps the most striking thing to me in all the speeches at the Republican convention was the claim by Congressman Ryan and the attack on President Obama for supporting $716 billion in Medicare savings.  Why was I so taken aback by that?  Because I have read Congressman Ryan's own budget.  His budget has precisely that same level of Medicare savings that he now politically attacks President Barack Obama for supporting. 

Did you see what former President Clinton said?  He said that takes real brass, to attack somebody for something you have done.  Congressman Ryan, when you give a speech, make your speech before tens of millions of people listening and you attack the President for supporting $716 billion in Medicare savings and you have the exact same savings in your budget, shame on you.  Shame on you.

The Catholic bishops reviewed the Ryan budget.  Here is what they said.  They said it fails the moral test.  These are Catholic bishops in America.  Look, they have issues with the President too.  I understand that, but this is what they said about the Ryan budget.  They said:  It fails the moral test.  The Nation's Catholic bishops reiterated their demand that the Federal budget protect the poor and said the GOP measure fails to meet these moral criteria.  I think they got that right. 

Here is what a former Reagan economic adviser said about the Ryan budget.  This is Bruce Bartlett, former Reagan administration economic adviser.  This is what he said about the Ryan budget.  Again, this is a former President Reagan economic adviser.  Here is what he said about the Ryan budget:  “Distributionally, the Ryan plan is a monstrosity.  The rich would receive huge tax cuts while the social safety net would be shredded to pay for them.  Even as an opening bid to begin budget negotiations with the Democrats, the Ryan plan cannot be taken seriously.  It is less of a wish list than a fairy tale utterly disconnected from the real world, backed up by make-believe numbers and unreasonable assumptions.  Ryan's plan isn't even an act of courage; it's just pandering to the Tea Party.  A real act of courage would have been for him to admit, as all serious budget analysts know, that revenues will have to rise well above 19 percent of GDP to stabilize the debt.”

Mr. Bartlett, I do not know the man.  He is telling the truth.  He is telling the truth, as painful as it is.  He is telling the truth.  When we go to the question of are we better off than we were 4 years ago, let's remember where we were 4 years ago.  We were on the brink of financial collapse. 

Republican policies led the United States to the brink of financial collapse.  They cannot rewrite history.  We know what happened.  We tried their experiment.  It did not work.  Now things have improved, not as much as we would like, and there is much more work to be done.  But I trust in the judgment of the American people.  I do not think they have forgotten.  I certainly have not forgotten.  I will never forget where their policies took us in the fall of 2008.  We were on the brink of financial collapse.  Let's not repeat that failed experiment.