WASHINGTON, Jan. 3, 2013- In his final floor speech Wednesday, retiring Senator Kent Conrad, D-N.D., said the tax bill approved by Congress this week increases the debt of the United States.
“I told our colleagues on that night that I believed we had to support the proposal before us because to fail to do so would send us back into a recession,” he said, regarding the Senate’s New Year’s Eve vote on H.R. 8. “At the same time, I told my colleagues: I hate this agreement. I hate it with every fiber of my being because this is not the grand bargain I had hoped for and worked for and believe is so necessary to the future of the country.”
“I leave here in many ways with a heavy heart because I came here 26 years ago believing one of the foremost responsibilities of a Senator was to guide the fiscal affairs of this country,” Conrad said.
He cited the Congressional Budget Office (CBO) when he explained that the path of the plan will increase the nation’s debt of 104 percent of gross domestic product (GDP) to 115 percent by 2022 if no more is done. “So further action is absolutely essential,” he said. “To sum it up, when we have a gross debt of more than 90 percent of our GDP, we are headed down a path that dramatically reduces our future economic growth.”
According to the CBO, the revenue loss from that plan passed this week is $3.6 trillion while the new spending is $332 billion and the total impact on the deficit and debt is $4 trillion.
“That doesn't account for the additional debt service which is another $650 billion,” explained Conrad, noting the total increase in the debt as a result of the plan is over $4.6 trillion.
Conrad emphasized his belief that the government must reduce spending and increase revenue, because the revenue is typically 18 percent of the budget, but “the last five times we have balanced the budget, revenue has been 19.7 percent, 19.9 percent, 19.8 percent, 20.6 percent, 19.5 percent of GDP.”
Although he said the Budget Control Act passed in 2011 successfully decreased domestic spending, the nondiscretionary accounts are continuing to rise excessively. “Medicare, Medicaid, and other Federal health spending are the 800-pound gorilla,” he said. “That is where we see such a dramatic increase in spending, both in real and nominal dollars, and as a share of GDP.”
“We are going to have to have more revenue at the same time we have more spending discipline, especially with respect to the health care accounts,” he said.
He also emphasized the need for reform to the Tax Code, particularly the $1.2 trillion spent per year in tax expenditures. “People say we are spending too much,” he said. “But through the Tax Code, we spend more there than we spend through all the appropriated accounts.”
Noting that the United States is borrowing 31 cents of every $1 spent and is on course to take the debt of the nation from over 100 percent of gross domestic product to over 200 percent by 2050, Conrad promoted the National Commission on Fiscal Responsibility and Reform created by the President in 2010 and its report called “The Moment of Truth.”
The report called for $5.4 trillion in deficit reduction using the current baseline, which Conrad said lowered the deficit to 1.4 percent of GDP in 2022, stabilized the gross debt by 2015 and reduced discretionary spending to 4.8 percent of GDP by 2022.
“We build on the health care reform savings. We called for Social Security reform and savings to be used only to extend the solvency of Social Security itself, and we also included fundamental tax reform that raised revenue and did it in part by reducing those tax expenditures I just referred to,” he insisted.
Conrad said the gross debt of the country as a percentage of GDP under the fiscal commission plan would go from 104 percent of GDP in 2012, down to 93 percent of GDP in 2022.
“Stabilize the debt, then begin to bring it down,” he said. “That ought to be our challenge.”
Conrad, who first served in the Senate 26 years ago, said the 113th Congress should “get back to doing the grand bargain, the big deal” to reduce the nation’s deficits and debt by at least $4 trillion over the next 10 years.
“My deep regret, my greatest regret, in leaving here is that we have not been able to fashion the grand bargain to put us back on track,” he concluded.
For more news, go to www.agri-pulse.com