Debate Night: Congress &
The Economy
October 15, 2000

GWEN IFILL: The Republicans get the first question this time and we turn to the subject of the economy. Let's follow our noses. Follow the money for a moment. We'll start with you Senator Reid. The congress is in the middle of what even your own members call a spending spree, trying to get out to adjournment. You saw some of that in Kwame Holman's piece -- double digit increases in many departments. Is that responsible? Are we suffering from surplus excitement here?

SENATOR REID: Gwen, what we're suffering from is a congress that will not allow public debate. Last Monday we had three out of the 13 appropriations that had passed. We have not been able to debate. We hope the next congress that we control will be one where there will be debate. For 200 years and more, this country got along just fine by having extended debate. That's where bipartisanship develops is being able to talk about issues.

We have not been able to debate education in the Senate. We've not been able to debate simple things like whether we should have school safety. We haven't been able to debate the environment. We haven't been able to talk about minimum wage, campaign finance reform. We believe that we should be able to talk about these things. Regarding the economy, I'll be happy to answer your question, Gwen. For example, we have now with the bills we passed so far, we are over $10 billion more than what the president's even requested. The Republican congress is doing anything to not allow us debate, just to get us out of town. And as Tom Delay, who is number two or three in the house indicated in his conversation with the Washington Post last Friday, he said we are not going to let the president get anything he wants on education. We cherish that debate. We hope Tom Delay gets his Republican friends to not allow us to have a debate on education this next week.

GWEN IFILL: Senator Hagel, why don't you give a crack at responding to what he said about Republicans in the Senate and a little bit about all the spending in the congress.

SENATOR HAGEL: Did you have a question on the economy?

GWEN IFILL: I did, actually.

SENATOR HAGEL: you don't mind if i answer that and then I'll gladly respond to Harry or anyone else. Let's go back and see where we were when the Republicans took control of congress in January of 1995. We had deficits as far as the eye could see, and no prospect for surpluses, getting control of our spending until the Republicans got there. What happened in 1997, working with the Democrats and the president, we passed the Balanced Budget Act. That produced a couple years later, a balanced budget for the first time since 1969. That then produced surpluses which we are continuing to see, give us more flexibility to do more and pay down the national debt: it is important that the American people know that because of this Republican Congress over the past six years, working with the president and the Democratic friends and good strong monetary policy and the tough hard choices made by business and labor in the 80s, we have a strong enough economy now that we have been able to pay down $350 billion of the national debt.

We want to keep going in that direction. Something else happened in 1997. A significant tax cut, capital gains tax cut. I hear my friends on the Democratic side talk about the big tax increase in 1993 that they like to point to as the real reason we've done so well. I don't think so. When you look at the productivity gains and some of the other issues that have put this economy in the strong position it has, and that capital gains tax cut, that's what really did it all those things together. Not just Clinton, not just the Republicans, and I think it goes back to your original question. Why should the Republicans stay in charge? Well, we've been pretty good stewards of the government the last six years.

GWEN IFILL: Congressman Bonior, Senator Hagel talks about the money and the reason why. The question I'm curious about is your own congressional budget office says at the current rate of spending, these appropriations bill which are nowworking their way through the house and Senate, two-thirds of the surplus will have been eaten up in ten years. Is this responsible?

CONGRESSMAN BONIOR: all of the surplus will be eaten up under the tax proposal. Certainly the surplus should not be eaten up over spending or tax proposals. But what Chuck forgets -- he has a four-year amnesia piece missing in terms of the history of the deficit spending discussion we're having today. People need to look back to the 80s and early 90s when under Bush and Reagan we were running $300 billion deficits annually. In 1993, we passed controversial budget that cut 200 programs, slashed many of the spending items that people have raised here this evening. And we got our house in order. And you started to see, after 1993, coming down gradually of the deficits until we have a surplus.

We have no guarantee that the surplus is going to be there ten years down the road. The economy could go haywire in seven, eight, five, four, three, two years from now. We don't know that. So why are we spending the way we are? Why are we proposing tax cuts that will eat up those surpluses? Do we want to find ourselves in a situation that we were in the 80s? I don't think so. What we're proposing is putting aside $300 billion to reduce that national debt. That was the Democratic idea. We believe we need to bring that national debt down and use the interest that pays for that debt about $250 billion a year, and invest that in the things we're talking about. The investment would be from bringing down the interest on the national debt.

GWEN IFILL: Tax cuts or debt reduction, Congressman Watts?

CONGRESSMAN WATTS: Gwen, the tax increase of 1993 that not one Republican voted for, you raised taxes to get money into the appropriations process so you can spend it. That was the objective, to get more money into the system to spend it. Now you look at the CBO numbers, Congressional Budget Office, agency that scores everything that we do to determine how much is going to cost. You look at what the Democrats offered in 1995 when we became the majority, and what we offered. They said our budget would balance in 2002. They said the Democrats budget even with the large increase of '93, they said beyond 2002, you would have deficits of $200 billion plus as far as the eye can see. So that tax increase, look at the data. Look at the statistics. Look at the numbers. Look at the facts. Their tax increase of 1993 still would have kept us, had they been in the majority, would have kept us in a deficit position as far as the eye can see. So I want to take that '93 tax increase off the table because that did not reduce our deficit.

The spending spree, you know, the president has said time and time again on seven of the 13 appropriations bills that we passed, he has threatened veto on all of these appropriations bills because he said there's not enough spending in them. So we passed 13 bills out of the House of Representatives that was all 13 appropriations bill that was under the budget cap. And the president said I'm going to veto the bills because there's not enough spending and it kind of baffles me that all of a sudden it's Republicans that want to spend money.

GWEN IFILL: Is that what the president's been say?

SENATOR REID: Gwen, I know that J.C. would like to forget the 1993 Budget Deficit Reduction Act -- that was what it was called. It wasn't a tax increase because the only people who got the tax increase would be the top 1% of the earners in America -- the rest of the people got a tax decrease. What did that do? Lowest inflation, lowest unemployment in 45 years. We had a deficit as David said that was over $300 billion a year, we now have a surplus. We have created 22 million jobs, most of those high-wage jobs. We have a federal government today as a result of that 1993 act that is the same size as when President Kennedy was president. That's why they want to forget about it. That was a very tough vote and in fact some of our colleagues lost elections as a result of that very tough vote. But it paid off. People like Phil Gramm, Pete Domenici, they prophesized doom as a result of that budget passing and they have been proven wrong. I carry that in my desk in the Senate and whenever they come in to talk about money, I pull out their quotes. The fact is that we need to make sure we do something about deficit reduction. The debt that we have, $5 trillion, we will rue the day if we have bad times and we have not significantly paid down the debt.

GWEN IFILL: This surplus, Senator, does it exist?

SENATOR HAGEL: Well, the last two years, it has existed. It's real. What we project for 2001, we anticipate it will be real, but Congressman Bonior is exactly right. We don't know what the next ten years brings. We do know, for example, that within that ten-year period, we are going to start to see the 77 million baby boomers start to come on to the entitlement rolls. We'll see this huge obligation out there that we are now committed to, which also brings up the question of prescription drugs and all these other programs that we're talking about we're promising the American public.

GWEN IFILL: Social Security and Medicare.

SENATOR HAGEL: All the new obligations we want to add on to the obligations we now have and what's coming have to be factors into the assumptions that give us these projected budget surpluses. Now a couple of things that is important as well when we talk about what we are doing here with this. The deficit reduction is very important. And you ask about what's real. What is real that we've been able to pay is $350 billion of that down. And also I want to add for the record, it was the Republicans who said last year that we should take 100% of the Social Security surpluses and 100% of the Medicare surpluses, lock them up in a lock box, which our Democratic friends in the Senate won't allow us to get to, and pass it. Now the House has done that. It was a Republican idea. The president said, no, let's take 62% of the Social Security surpluses, not 100%. It is the Republicans who are the responsible stewards about debt reduction.

GWEN IFILL: what is your answer to that, Congressman Bonior?

CONGRESSMAN BONIOR: well, all I know is that before Bill Clinton came here we had huge deficit on an annual basis. And with his stewardship as Harry eloquently stated, we have created an atmosphere, together with the private sector, obviously which has provided jobs, which has provided surplus which has lowered interest rates. We have turned the economy around. It was through the economic stewardship of this president and Democratic congress, that we have been able to do that. Of course we have had some cooperation with some of the Republicans on these issues. But I must tell you every time we get into the last three weeks of the congress, and we are in the last week, I hope, of this congress, it is the president who has gotten his way on the budget and it has been the president's budget that has prevailed.

J.C. mentioned that we are, I don't know how many, six or seven of the 13 appropriations bill. We've only passed two appropriations bills and we're two weeks into the new year already. So they're not doing their work. And in addition to not doing their work, they're insinuating that they take responsibility and credit for this reduction.

GWEN IFILL: we have one subject area we want to touch on. I hate to cut you off, Margaret.