BALANCED BUDGET AMENDMENT
(Senate - July 20, 2011)

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[Pages S4713-S4715]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       BALANCED BUDGET AMENDMENT

  Mr. THUNE. I have been coming to the floor for several weeks to talk 
about the need to restrain spending and cut our deficit. As we look at 
the next few days, we are going to have an opportunity to debate 
something that does that. We are going to be talking about the Cut, 
Cap, and Balance plan.
  The third part of the plan--the balanced budget amendment--is 
something I have supported since I first ran for the House of 
Representatives about 15 years ago. This past week, I received a letter 
from a Boy Scout in South Dakota, who was writing in to earn a merit 
badge. I will read an excerpt from the letter. This is what he said:

       I feel that the Federal Government needs a balanced budget. 
     If we don't, the debt gets larger each year. I feel that 
     there are two solutions for this. In our house, we are 
     careful to only spend what my Mom and Dad earn. The needs 
     come first and what is left is for wants. Many times we were 
     told no when we asked for something. With my allowance and 
     lawn mowing money, I divide it between donations, savings and 
     spending. I can't spend more than I make.

  I think there are two very powerful thoughts in this statement. First 
is that the need for a balanced budget is obvious--even to this young 
man because, like him, we cannot spend more than we make. The second is 
that this has a profound impact on the younger generation. The debts we 
are running up now will have profound impacts on our children and our 
grandchildren.
  The Senator from New Hampshire is on the floor. She is fairly new to 
the Senate, but she has already had an immediate impact on many of 
these budget debates. She is also the mother of two young children, 
each of whom is carrying a $46,000 debt. I ask the Senator from New 
Hampshire about those two young children and the $46,000 burden that 
has been placed on them by the $14.3 trillion national debt we have. 
Does she feel comfortable having her children essentially owe $46,000 
of this massive national debt we have accumulated now for the past 
several years?
  Ms. AYOTTE. I thank my colleague from South Dakota. This is such an 
important issue, as he has pointed out, and as his constituent has 
written him.
  As a mother of two children, I am deeply concerned with what is going 
to happen to the next generation if we continue to kick this can down 
the road and if we don't use common sense to balance our budget.
  I have heard from constituents in New Hampshire--and I am sure the 
Senator from South Dakota hears the same--that basically only in 
Washington would the notion of balancing your budget be called 
``extreme.''
  It is common sense that you can't spend more money than you have. We 
need to pass the Cut, Cap, and Balance plan, because it is a 
commonsense proposal to ensure that we don't continue along this cycle 
of continuing to increase our debt and not have a plan to pay our 
bills.
  And borrowing money from China--that has to stop. When you think 
about all the money we have borrowed from a country such as China, 
which doesn't share our values--right now, there is no other plan that 
has been presented but the Cut, Cap, and Balance plan, which was just 
passed by the House. We can do this now and put our nation on a path to 
a balanced budget and make sure that the Senator's constituents--and I 
know he is a father as well--and our children don't bear the burden of 
our failure to make the tough decisions today. We owe it not only to 
everybody in our generation but to our children and our grandchildren.
  I wanted to ask the Senator from South Dakota this: The cut, cap, and 
balance plan puts emphasis on cutting spending instead of raising taxes 
to bring down our deficit and our $14 trillion debt. Does he believe 
that is the right approach for America?
  Mr. THUNE. Absolutely. I say to my colleague from New Hampshire that 
the cut, cap, and balance approach is the correct way to approach this 
problem, because it makes cuts to spending today--real cuts--this year, 
to this year's budget. It caps spending in the near term, and then it 
puts into place a balanced budget amendment that would require Congress 
to balance its budget in the future years. Obviously, that is something 
many States have. My State of South Dakota has that. I know that the 
``live free or die'' State of New Hampshire has some very distinct and 
direct views about the role of government and making its role limited, 
keeping spending under control, and living within your means.
  Cut, cap, and balance is the correct approach because it puts the 
emphasis on getting spending under control. If you look at the five 
times our country balanced the budget since 1969, the average amount we 
spent was just under 18.7 percent of GDP--our entire economy. This 
year, we are set to spend 24.3 percent of our GDP. That is just on the 
Federal Government--a historic high.
  The President spends substantially above this average in his budget 
for every year. You literally have to go back to the end of World War 
II to find a time when we spent this amount as a percentage of GDP on 
the Federal Government.
  Part of the reason for this is the huge increase we have seen in 
nondefense discretionary spending from 2008 to 2010. In those 2 years, 
in which the economy was hurting and families everywhere were cutting 
back, these accounts increased by a mind-boggling 24 percent.
  This year, part of our deficit is also caused by low tax receipts, 
which are caused by a slow economic recovery. If you look at the tax 
revenue that we brought in in 2006 and 2007, we brought in over 18 
percent of GDP in both years. So if we are able to constrain spending, 
we know we will be able to balance our budget once our economy 
improves.
  I argue that one of the ways we help our economy improve and get back 
on track is to get Federal spending under control. In 2006 and 2007, 
the income Tax Code--the way we collected taxes was similar to what we 
have today. We brought in over 18 percent of GDP in both of those 
years. So if we get back to a more normal footing in terms of the 
economy, we will see revenues start to come back. But we have to get 
spending controlled and actually start to rein in the out-of-control 
spending we are seeing here in Washington, DC.

  If there is still a gap, even if we get back to 18 percent of GDP in 
terms of what we collect in the form of tax receipts, there is still 
23, 24, 25 percent of GDP that the President wants to be comprised of 
Federal spending. The gap cannot be met through tax increases. It has 
to be dealt with through spending restraint.
  A couple of years ago--and I want to get back to my colleague from 
New Hampshire in just a moment--Senator Ayotte's predecessor in this 
job, Senator Gregg of New Hampshire, who was a great fiscal mind around 
here and somebody who was very focused on spending and debt, along with 
Congressman Ryan, asked the Congressional Budget Office to estimate how 
high tax rates would have to rise to pay for our projected spending. 
CBO's response had two parts. First, they said marginal rates would 
have to more than double to cover the expected expenditures of our 
government. They said:


[[Page S4714]]


       The tax rate for the lowest tax bracket would have to be 
     increased from 10 percent to 25 percent. The tax rate on 
     incomes in the current 25 percent bracket would have to be 
     increased to 63 percent. And the tax rate at the highest 
     bracket would have to be raised from 35 percent to 88 
     percent. The top corporate income tax rate would also 
     increase from 35 percent to 88 percent.

  That is a quote from the Congressional Budget Office in response to 
an inquiry from Senator Gregg and Congressman Ryan about what the tax 
rates would have to be in order to get our budget back into balance.
  CBO also said that, practically speaking, this is impossible; you 
cannot increase tax rates and create this huge disincentive that would 
have a profound impact on our economy and our ability to create jobs.
  So we know that amount of revenue would never be collected when you 
raise tax rates that high. We know the real way to deal with the budget 
and to get the budget balanced and under control in this country is to 
get spending under control. So I think the cut, cap, and balance 
approach is the correct way in which to proceed because it puts that 
focus on spending. We need to make sure to constrain spending and live 
within our means. The cut, cap, and balance approach does that.
  By the way, I would like to make one observation about that because 
there are people who have said the balanced budget amendment that has 
been proposed by Republicans is too Draconian and won't work. The cut, 
cap, and balance plan doesn't specify or prescribe a specific balanced 
budget amendment; it just says a balanced budget amendment.
  I think my colleagues on this side would be more than happy to work 
with our colleagues on the other side to come up with a balanced budget 
amendment that actually would work to ensure we don't spend more than 
we take in each and every year, which is what almost every State in the 
country has in its constitution. That is why they are able to live 
within their means.
  I would say to my colleague from New Hampshire, I am told she 
recently held a townhall meeting back in New Hampshire, and I am 
interested in knowing what her constituents had to say because I think 
New Hampshire has always been a good barometer when it comes to fiscal 
issues. What did they think about the crisis we are facing? Do they 
believe the way we ought to deal with this would be to constrain 
spending and to get our budget balanced in that way, as opposed to 
moving toward raising taxes, which is what many of our colleagues on 
the Democratic side and the President have suggested doing?
  Ms. AYOTTE. I thank my colleague. What I have heard from my 
constituents in New Hampshire--and we do have a requirement to balance 
our budget, and it is not easy to make those tough choices--is that 
they do not understand why in Washington there is controversy over the 
notion of balancing the budget because at home people are balancing 
their budgets. Families balance their budgets, and businesses balance 
their budgets.
  I meet with businesspeople, and they look at me in disbelief and say: 
I don't understand why in Washington they don't look at what they have 
to spend and then stick within a strict budget. It really comes down to 
common sense.
  One of the biggest issues I have heard about from my constituents is 
that they are concerned that it has been over 2 years--over 800 days--
since the Democrat-controlled Senate last passed a budget. The notion 
that we have been operating without a budget and running well over 
trillion-dollar deficits and haven't sat down and done the hard work of 
rolling up our sleeves, allowing the Budget Committee to do its work, 
astounds New Hampshire citizens because they understand that if we 
don't have a basic spending blueprint for our country, the end result 
is that we are going to continue to run up deficits and spend money we 
don't have, borrowing from countries such as China, which doesn't share 
our values.
  One of the things that is very important about this cut, cap, and 
balance plan is that it cuts $111 billion in fiscal year 2012 and it 
places firm caps on future spending, contingent upon the House and 
Senate passing a balanced budget amendment, which is so important.
  As we have talked about, let's let the States decide. Really, this is 
about sending it to the people of this country and allowing them to say 
whether we should balance our budget. I know what the answer will be in 
New Hampshire. They will say: Yes, please, balance the budget.
  If you look at where we are, as Senator Thune has mentioned, with 
respect to spending in terms of the size of our economy, we are over 24 
percent of our GDP that we are spending right now--well above our 
historical level, well above the amount of money we are bringing in. 
Yet the only fiscal plan the President brought forward would massively 
increase our debt over the next decade, so much so that not even one 
Member of his own party in the Senate voted for that budget.
  So when we talk about a real plan to get America back on track, this 
cut, cap, and balance plan has a very commonsense approach. We will cut 
spending right away, put together a responsible fiscal plan for 
America, and then make sure we have those caps in place so we don't 
continue to spend close to 24, 25 percent of our GDP. I mean, the 
President has increased our debt 35 percent since he has been in 
office.
  Finally, let's put to the States the question of whether they think 
it makes sense to balance our budget. I think we know what the answer 
will be. They will say: Yes, please balance your budget, as we have to 
do at home, as we do in State government.
  The other issue we are facing right now is, of course, what the 
rating agencies have said about our failure to handle this fiscal 
crisis. We have heard about the concerns that if we do not come up with 
a credible plan that really cuts spending right now, our credit ratings 
will be threatened. That will further impact our economy, and that is 
why we can't continue to put off the tough decisions. This cut, cap, 
and balance plan will put forward $6 trillion of cuts over the next 
decade. That will help make sure we preserve our credit ratings for 
this country. It will make sure we focus on real economic growth that 
get people back to work.

  If we raise taxes the way CBO has suggested based on the questions 
from Senator Gregg and Congressman Ryan, we know that is going to hurt 
the American taxpayer. It is going to hurt job creators in this 
country.
  I also happen to come from a small business family. I know the impact 
of raising taxes in the way that was described. If we have to raise 
taxes to address the spending problem we have in Washington, it is 
going to hurt our small businesses--those who create the jobs in this 
country--and that is the last thing we should be doing when we have 
over a 9-percent unemployment rate.
  So I hope my colleagues will pass the cut, cap, and balance plan 
right away. The House has passed it, and we can raise the debt ceiling 
with a responsible plan to cut spending right away, impose spending 
caps, and send a balanced budget amendment to the States.
  I would ask my colleague from South Dakota, when the Senator was 
first elected, before he served in the Senate, I know he had a career 
in the House of Representatives and served the people of South Dakota 
there. There was a vote on the balanced budget amendment at the time in 
the Senate, and it only failed by one vote. What does the Senator 
believe our current fiscal situation would be had the balanced budget 
amendment passed the Senate at that time?
  Mr. THUNE. What is remarkable about that is when I first got here, 
there was a vote in the Senate in 1997. We didn't have the opportunity 
to vote on it in the House of Representatives, although I think we 
could have passed it with a two-thirds majority there at the time. It 
failed in the Senate by one vote. It got 66 votes in the Senate and it 
needed 67.
  I can't help but think how different things would be today had we 
passed the balance budget amendment then and sent it to the States. I 
presume, as does the Senator--and New Hampshire is not unlike South 
Dakota--that we would certainly have ratified it. The 38 States would 
have ratified it, and it would have put us on a path that is fiscally 
sustainable. Ironically, at that time the debt was about $5 trillion. 
We are talking about $14 trillion today. Back then, it was $5 trillion. 
So that is a $9 trillion increase. If we had passed a balanced budget 
amendment, we wouldn't have run up this debt.

[[Page S4715]]

  Now, it is interesting because--and I will point this out to my 
colleague from New Hampshire too--if you go back 29 years ago this 
week, President Reagan led a rally of people--thousands of people on 
the Capitol--calling for a balanced budget amendment. He said:

       Crisis is a much abused word, but can we deny that we face 
     a crisis?

  I would say to my colleague from New Hampshire that the Federal debt 
at that time was $1 trillion, and President Reagan thought that was a 
crisis at that time. Obviously, we are in a situation now where the 
debt is 14 times that amount--$14 trillion since President Reagan 29 
years ago suggested we needed a balanced budget amendment because of 
the debt crisis we faced then.
  A lot of our Democratic colleagues say we just need to balance our 
budget; we don't need a balanced budget amendment. My response to them 
is, as the Senator from New Hampshire pointed out, where is your plan? 
We have been sitting here for 812 days since the Democrats passed a 
budget in the Senate, and even then that was a budget that didn't 
balance. The President's budget submitted earlier this year, as the 
Senator from New Hampshire pointed out, was rejected by the Senate 97 
to 0. When the President sent a budget up here, it was actually voted 
on in the Senate and didn't get a single vote, either Democrat or 
Republican. So the President took a mulligan on that budget, and he 
gave a speech outlining the framework for how he would cut the deficit. 
That didn't balance either.
  So it is clear the Democrats don't have the will to balance the 
budget now. But if we had a balanced budget amendment, they would, 
along with all of us--Republicans and Democrats because we have all 
contributed to where we are today--be required to balance the budget 
every single year, and that would have a huge impact on what our future 
is going to look like and what the future for your two children and my 
two children will be.
  The rating agencies are considering, as the Senator from New 
Hampshire mentioned, downgrading us if we don't take concrete steps to 
reduce our deficits. It would have a tremendous impact on interest 
rates if that happened. As I mentioned earlier today, 3-year government 
bond interest rates for Portugal are 19.4 percent; for Greece, they are 
28.9 percent; and for Ireland, 12.9 percent. We are already suffering 
from slower economic growth because of our debt and deficit.
  There is a study by economists Reinhart and Rogoff that found that 
debt levels above 90 percent of GDP were associated with economic 
growth that was 1 percentage point less than it would be otherwise.
  We know from the President's own economic advisers that translates 
into the loss of about 1 million jobs every year. So it is clear we 
need to cut spending now, we need to balance our budget, we need a 
discipline imposed on Congress. A balanced budget amendment would do 
that, as it has done for so many States around the country.
  But the cut, cap, and balance approach cuts spending, as the Senator 
from New Hampshire mentioned, now, today, by over $100 billion this 
year, cuts spending over the next decade by almost $6 trillion, and 
then puts in place a balanced budget amendment that would ensure that 
going forward into the future we learn to live within our means, that 
we don't continue to spend money that we don't have.
  So I appreciate the observations of my colleague from New Hampshire, 
as I said. She represents a State that has a great tradition when it 
comes to keeping spending and government under control. We need that 
tradition in Washington, DC. I would simply say to my colleague from 
New Hampshire, I hope we can find the support among our colleagues in 
the Senate when we have this vote--and it sounds like now it is going 
to be scheduled for sometime on Saturday--to get a big bipartisan vote 
in support of cut, cap, and balance.
  I know that is what my colleague from New Hampshire hopes as well. I 
do believe it is the pathway that will get us toward fiscal 
sustainability for the future of this country and put us on a 
trajectory that is good for our children and grandchildren, doesn't put 
this Nation on the verge of bankruptcy, doesn't have the adverse 
economic impacts that we are experiencing in real time both in terms of 
jobs lost, potential for much higher interest rates that would affect 
homeowners, people who are trying to get student loans, auto loans, 
people who are trying to start businesses. It would be absolutely 
devastating to this economy if that happened. If we don't get our 
fiscal house in order, that is the train wreck we are headed for.
  Ms. AYOTTE. I thank my colleague from South Dakota. And I, too, hope 
we will have bipartisan support for this cut, cap, and balance plan. It 
is so critical, and as the President's own fiscal commission said:

       Our challenge is clear and inescapable. America cannot be 
     great if we go broke. Our businesses will not be able to grow 
     and create jobs and our workers will not be able to compete 
     successfully for the jobs of the future without a plan to get 
     this crushing debt burden off our backs.

  Well, the cut, cap, and balance plan will help get this crushing debt 
burden off our backs to allow our job creators to actually create jobs.
  Also, when we think about starting from where we began this 
discussion, our children, we have to act now. I don't want my two 
children looking at me one day in the future and saying: Mom, what did 
you do about the fiscal crisis that everybody saw coming? Right now in 
the Senate, we can come together around this cut, cap, and balance 
plan. Once and for all, let's commit to passing a balanced budget 
amendment. Let's send that question to the States. Let's let the people 
of this country weigh in, because we know they will weigh in with 
common sense because they do it at the State level, they do it at a 
family level, they do it in their small businesses.
  So I, too, hope we will work with our colleagues on the other side of 
the aisle; that we will get this cut, cap, and balance plan passed. I 
look forward to working with all the Senators in this Chamber, and 
particularly the Senator from South Dakota who, I know, has been such 
an advocate and such a strong fiscal conservative, wanting to preserve 
our country and the greatness of America to make sure we get this plan 
passed now.
  Mr. THUNE. I think our colleagues in the House have shown us the way. 
They passed this last night. They have given us an opportunity now to 
have this vote, and it is long overdue. In my view--and I think the 
numbers bear this out--this is not a revenue problem. This is not a 
problem of having too little tax revenue. This is not a problem, as I 
pointed out, that can be solved by tax increases, which would devastate 
the job creators in this country and make it more difficult for our 
economy to recover and to get people back to work. But this is really 
about spending.
  This is about getting Federal spending back to a level that is 
historically normal. If we could do that, we will have done a great 
thing for the future of this country, for our children and 
grandchildren. It is so important, in my view, that we not wait any 
longer. We can't afford to wait. The time is now.
  We are going to have this vote coming up, it looks like probably on 
Saturday. I hope we will have a big bipartisan vote in support of this 
approach that would cut spending today, cap it in the future, and get a 
balanced budget amendment on the books.
  Mr. President, I yield back the remainder of our time.

                          ____________________