WASHINGTON – Amid reports of a tentative, short-term deal to extend the debt ceiling and government spending until mid-December, U.S. Sen. Mark R. Warner (D-VA), a member of the Senate Budget and Finance committees, delivered a floor speech today about the longer-term fiscal challenges which still face the nation. Warner, a former business executive and Virginia governor, urged his colleagues to avoid fiscal gimmicks we’ve seen before and to work for comprehensive, bipartisan solutions.

“Fiscal discipline should not depend on who sits in the White House. Fiscal discipline also should not depend on who controls the Congress,” said Sen. Warner in a speech on the Senate floor. “And the longer we wait to address our fiscal issues, the problem only gets worse, and we become more limited in the tools available to solve the problem.”

Video of Sen. Warner’s speech on the Senate floor can be found here and a transcript follows.

 

 

Transcript (as prepared for delivery):

Mr. President, as a member of the Budget Committee and the Finance Committee, I wanted an opportunity to speak about the looming convergence of several important fiscal deadlines.

The government’s ability to continue borrowing money – the debt ceiling – must be raised this fall. And the budget year runs out on September 30^th.

Meanwhile, the White House continues to talk about working on comprehensive tax reform this fall, even though Senate Republicans are making it pretty clear they’re going to rely on a more modest approach – or at least one that will only require 51 votes. That sounds like it may end up being more of a tax cut rather than tax reform.   

In mid-July, President Trump told an interviewer – quote -- “After health care, taxes are going to be so easy.” Well, we’ll see… Making the numbers work, getting the incentives right, making the appropriate tradeoffs: rather than being easy, as the President says, comprehensive tax reform actually is more like solving a Rubik’s Cube.

How this body chooses to act in the face of these deadlines – the debt ceiling, budget expiration, and tax reform - will tell us a lot about the fiscal priorities of the House and Senate leadership -- and the priorities of the current Administration – in responsibly addressing America’s long-standing challenges.

 

Here are some hard truths:

Non-defense discretionary spending made up only 16 percent of our budget in 2016.  By contrast, Social Security and Medicare make up 39 percent, and will account for 51 percent of spending growth over the next ten years.   

We cannot dramatically boost military spending, cut taxes, invest in infrastructure, AND leave our two largest spending programs -- Social Security and Medicare – untouched.  That just means that programs for people who work for low wages or otherwise struggle to get by are cut. For example, in his FY2018 budget blueprint the President proposed eliminating all funding for the Appalachian Regional Commission, an economic development organization that has invested millions in communities throughout Appalachia. The President also zeroed-out funding for a program that helps struggling families heat their homes during the coldest months of winter. 

 

 

Here are some additional facts:

• Our national debt is approaching $20 trillion, and debt held by the public as a percentage of GDP is the highest it has been since we emerged from World War Two.
• The federal government spends more money than it collects in revenue. By 2029, every dollar of tax revenue will go to auto-pilot spending – mandatory programs like Social Security, Medicare, and Medicaid. That means by 2029, every dollar we spend on roads, education, research and defense will be borrowed money.

 

 

• We have an inefficient and outdated tax structure. It hasn’t been updated in more than three decades. There is a bipartisan agreement that our tax code needs to be fixed.
• I think we can all agree that we have a backwards tax system.

We have the highest statutory rate, but the United States is one of the lowest taxed nations. The United States ranks 31st out of 34 industrialized nations when it comes to revenue collection as a percentage of GDP. 

 

 

• The federal government must pay interest on our $20 trillion debt.  Since 2009, we’ve had the advantage of record-low interest rates -- but those rates are starting to creep up. 

• Even a one-percentage point increase in interest rates will cost the federal government an additional $160 billion in annual interest payments on the debt. $160 billion: that’s more than we currently spend each year on the Departments of Education and Homeland Security -- combined.

 

 

And here’s a final truth: Fiscal discipline should not depend on who sits in the White House. Fiscal discipline also should not depend on who controls the Congress.  And the longer we wait to address our fiscal issues, the problem only gets worse, and we become more limited in the tools available to solve the problem.

Neither party comes to the issues of deficit and debt with entirely clean hands, and I know memories conveniently tend to be short in this town. So in the coming weeks, as we head toward the possible convergence of the debt ceiling, government funding, and tax reform,  here’s what I urge my colleagues to pay close attention to: 

First: The White House and my Senate colleagues should avoid using rosy scenarios, just to make their proposals look fiscally responsible when they aren’t.

Over the next decade, the Congressional Budget Office – Congress’s official scorekeeper – projects real GDP growth to average a little bit above 1.8 percent per year. The Trump Administration budget is based on seven straight years of three-percent growth: achieving that level of growth is very, very unlikely. These rosy – and unrealistic -- economic assumptions allow the Administration to claim a fictional $3 trillion in tax revenue over ten years .The Administration then uses this fake revenue to cloak additional tax and spending cuts under the banner of fiscal responsibility. That’s wrong.

Second: The Administration cannot shift costs to others and then claim it as a savings.  Look no further than what the Trump budget does with federal programs for the poor:  over the next decade, it calls for slashing more than $600 billion from Medicaid -- and this doesn’t even include the dramatic cuts that were included in some versions of the Senate’s healthcare bill. Medicaid is a partnership between the federal government and states, so a $600 billion cut at the federal level has a direct impact on state Medicaid responsibilities: it simply “squeezes the balloon,” forcing states to either make up that difference, or by cutting health care, or by making cuts to other priorities.

Third: The Administration claims that their tax reform plan will pay for itself and stimulate so much economic growth that it won’t add to the deficit.

Here’s a basic problem with that: the Trump tax plan is not comprehensive tax reform at all. It’s actually a two-page wish list of tax cuts. A grocery store receipt has more details. 

Every time we have promised tax cuts will pay for themselves – it hasn’t worked out that way.

Let’s remember that Ronald Reagan’s 1981 tax cut provided a short-term stimulus – but then deficits ballooned and President Reagan had to raise taxes in 1982 and 1984. Likewise, George W. Bush’s tax cuts in 2001 and 2003 provided a quick “sugar high” but ultimately had little impact on economic growth. The Bush tax cuts also produced large deficits instead of the budget surpluses that he inherited.

Fourth: Paying for tax cuts through deficit spending is a really, really bad idea. It will make reaching any responsible fiscal goal that much more difficult. Also, studies show that tax cuts that add to deficits are worse for growth over the long run than those that are paid for – and can reduce growth over time. So any lawmaker who says they support not paying for tax cuts should also have to explain why they think adding to our national debt is a good idea.

And fifth: It would be foolish to try to balance the budget by short-changing investments that actually strengthen our economy and our competitiveness over the long run. The budget proposals we’ve seen from the administration and the House Republican leadership takes a meat cleaver to R&D, education and workforce training, and infrastructure. As a former business person, I would never spend less than 10% of revenues on these critical investments in the future. That is not the way for our country to make responsible investments, either.

Finally, Mr. President, we can achieve fiscally responsible and bipartisan tax reform, and I look forward to working with my colleagues from across the aisle to achieve these reforms.

I also would strongly suggest that nothing could help our economy more than bipartisan agreement on a responsible roadmap that begins to return our nation to fiscal health.

Thank you Mr. President, and I yield the floor.

 

###