Speeches & Floor Statements

Floor Remarks of Senator Lamar Alexander (R-Tenn.) -- State Bailouts

Posted on August 2, 2010

    Thank you very much. The Presiding Officer is a distinguished former Governor, and I am a former Governor. I suggested during the health care debate that anyone who voted for the new health care law ought to be sentenced to go home and serve as Governor for 8 years under the new law and try to make it work. People thought I was kidding. I was serious. The vote we are about to have this afternoon is another symptom of the same problem. Here is what the vote today, which is characterized as being about teachers and Medicaid, actually does. It is a $10 billion bailout to help States pay teachers, but it ties the Governors' hands so a Governor can't change education funding levels if their State budgets are in trouble, which almost every State is.

     Second, there is $16 billion for States to pay for Medicaid -- the Federal program that is a combination of Federal money and State money -- but, again, this ties the Governors' hands so Governors can't adjust the State Medicaid programs in a way that will make it possible for them to afford to continue to run the program. In other words, if you are the Governor of Tennessee, because of receiving this money or the stimulus money earlier, your ability to change benefits is limited and, in some cases, taken away.

     Third, what we are about to vote on this afternoon raises taxes by about $10 billion to help pay for these proposals. This $10 billion in permanent tax hikes is on American multinational companies. That sounds like: Well, let's stick it to the company. But these are companies which employ 22 million Americans, according to the National Association of Manufacturers. This makes it harder for those companies to continue to employ people in the United States and it gives them more incentive to send jobs overseas. Then there is the additional offset to this bill of $3 billion in military and veterans funding cuts and, as the Senator from Kentucky has pointed out, these are very broad cuts, and there is nothing to keep these cuts from being made from the operation and maintenance of the fighting men and women in Iraq and Afghanistan.

     Then the fourth problem with this vote this afternoon is it adds to the debt nearly $5 billion.

     The fifth problem is we are already spending -- 41 cents out of every dollar we spend today is borrowed from someone, creating a serious deficit problem. There is sometimes back and forth about who caused the problem, but the solution to a boat with a hole in it is not to shoot another hole in the boat and have two holes or three holes, and that is what we would be doing with this bill.

     We would be extending the so-called fiscal cliff in the States by tying the Governors' hands so they don't do what they normally would do in down times such as this, which is reduce spending so they can make their way through it. We are raising taxes on companies in a way that could send jobs overseas. We are adding to the debt. Those are all the things we are being asked to vote on this afternoon.

    One might say that is a partisan comment I am making in describing the situation. I don't think so. I think it is the comment of someone with a background as Governor of a State who has consistently struggled with Washington's irresistible impulse to impose on States rules from Washington that may not fit States.

     For example, the education money -- the $10 billion -- has five strings on it. No. 1, we have to keep spending on K-12 education at least as high as last year's money.

     Again, that sounds good, but if you are a State that is reducing and has less revenue, you have to reduce costs or you will have fiscal cliff after fiscal cliff. The same with Medicaid -- $16 billion more for Medicaid but, again, with restrictions on what States can do to change benefits. So, as a result, Governors and legislatures that have less State revenues continue to increase their spending on Medicaid. But guess what. Not on other programs such as public colleges and universities.

     I am absolutely convinced the health care law and the new costs being tacked onto States to pay for an expansion of Medicaid is going to irreparably damage our public colleges and universities. It is going to hurt their quality because the money that should be going to colleges and universities is going to go to help pay for Medicaid requirements imposed from Washington.

    Who else is going to be hurt? The students. I am sure the students protesting at the University of California the over 32 percent tuition hikes have no idea the reason they are having the hikes is because Washington keeps imposing new costs on State Medicaid Programs, causing Governor Schwarzenegger and the California Legislature to take money that otherwise most likely would have gone to the University of California and spend it instead on Medicaid.            

    Let me give a bipartisan twist to what I just said. There was a Wall Street editorial, written by Richard Ravitch in January of this year. He is the Democratic Lieutenant Governor of New York State. This is the way he describes this scenario we are being asked to vote on this year:

     The Federal stimulus has provided significant budget relief to the states --Mr. President, that was the money that was passed in the beginning of 2009 to try to create new jobs, which apparently hasn't worked so well since unemployment is still very high. He says: But this relief is temporary and makes it harder for states to cut expenditures. Just as this vote this afternoon will do so. In major areas, such as transportation, education, and health care, stimulus funds come with strings attached. These strings prevent states from substituting federal money for state funds, require states to spend minimum amounts of their own funds, and prevent states from tightening eligibility standards for benefits.

   The Lieutenant Governor of New York continues: Because of these requirements, states, instead of cutting spending in transportation, education, and health care, have been forced to keep most of their expenditures at previous levels and use federal funds only as supplements. The net result is this: The federal stimulus has led states to increase overall spending in these core areas, which in effect has only raised the height of the cliff from which state spending will fall if stimulus funds evaporate.

    If we do it again this afternoon -- the same thing done with the stimulus fund -- we will be extending this fiscal cliff for New York, Tennessee, and States all over the country and making it more difficult for them to make the cuts they need to make the innovations they need to make, to try the different things they need to do, so they can afford their education programs, so they can afford their Medicaid Program.

    I ask unanimous consent to have printed in the Record Lieutenant Governor Richard Ravitch's column in the Wall Street Journal.

    Not long ago, the State of Tennessee was one of two winners in the race to the top in education funding. I was very proud of the State. This was not my doing. This was their doing -- the teachers, the Governor, and the legislature. Both parties worked hard. I came to the Senate floor last week and praised President Obama and his Secretary of Education, Arne Duncan, for their courage and vision on their K-12 education agenda, pushing for the holy grail of education, which is finding ways to award outstanding teaching and tying it to students' effectiveness and charter schools and higher standards, even common standards, and the race to the top itself, in terms of encouraging excellence. These are not easy things to do.

    President Obama is not the first Democrat, or even the first Democratic President, who has pushed these changes. But he is the first President of either party who may have a chance to actually get them done. It may just be easier for a Democratic President to do this than a Republican President. When he does these things, it is important for Republican Senators to give him credit for it. I genuinely do.

    Mr. President, it does not help for us now to come along and say, OK, we are going to make it harder to be the Governor of Tennessee and Virginia and Michigan and California and all these States because we are going to give them money, with more strings attached, and say when they take the money and spend it, they have to keep the same level of spending they had before. Just as Governor Ravitch says, it stops States from doing what they already need to do.

    Mr. President, I wish every State had done what Tennessee has done. We have a Democratic Governor, Phil Bredesen, who is completing his time. This is what he said in his State address in 2009: Please let me make it clear that no proposed version of the stimulus is any panacea or silver bullet; substantial cuts are still needed under any circumstances. He meant in the State budget.

    Furthermore, it is vital to remember that this stimulus money is one-time funds. The Governor is saying we are going to have to cut the budget. In fact, our State has little debt. It has among the lowest taxes in the country. It has a solid pension fund that has survived this as well as anybody. But when we say to any Governor that here is some money, and here are some rules to keep you from doing what you need to do, I think we are doing no service there.

    I wanted to say that before we have this vote today, and to say that there are four or five reasons I hope we don't go forward with it. The first reason, both in terms of education and Medicaid, is it ties the Governors' hands to keep them from doing what they should be doing. The next reason is there is $10 billion in permanent taxes on multinational corporations which will make it more likely that American jobs would go overseas. Another reason is there is $3 billion in spending cuts in defense that likely could come out of the operation and maintenance budget of soldiers fighting in Iraq and Afghanistan. The next reason is it adds to the debt $5 billion at a time when we don't have the money any more than the States do. We are spending 41 cents out of every dollar, which is borrowed.

    Mr. President, I am going to oppose this measure this afternoon. I will support efforts to rein in spending, to give States more freedom to do what they need to do, to try to create a more limited government, to try to create less debt, and to try to create an economy that can focus its attention for the foreseeable future on a progrowth environment that creates jobs in the private sector, which is the real challenge for our country today.

I yield the floor and suggest the absence of a quorum.