[Congressional Record Volume 140, Number 10 (Monday, February 7, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: February 7, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
 REPORT OF THE BUDGET OF THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 
                1995--MESSAGE FROM THE PRESIDENT--PM 84

  The PRESIDING OFFICER laid before the Senate the following message 
from the President of the United States, together with an accompanying 
report; referred jointly, pursuant to the order of January 30, 1975, to 
the Committee on the Budget, and to the Committee on Appropriations.

To the Congress of the United States:
  The Federal Year 1995 budget, which I transmit to you with this 
message, builds on the strong foundation of deficit reduction, economic 
growth, and jobs that we established together last year. By encouraging 
private investment--and undertaking public investment to produce more 
and higher-paying jobs, and to prepare today's workers and our children 
to hold these jobs--we are renewing the American dream.
  The budget continues to reverse the priorities of the past, carrying 
on in the new direction we embraced last year:
  --It keeps deficits on a downward path;
  --It continues our program of investment in long-term economic 
    growth, in fighting crime, and in the skills of our children and 
    our workers; and
  --It sets the stage for health care reform, which is critical to our 
    economical and fiscal future.
  When I took office a year ago, the budget and economic outlook for 
our country was bleak. Twelve years of borrow-and-spend budget policies 
and trickle-down economics had put deficits on a rapid upward 
trajectory, left the economy struggling to emerge from recession, and 
given middle class taxpayers the sense that their government had 
abandoned them.
  Perhaps most seriously, the enduring American dream--that each 
generation passes on a better life to its children--was under siege, 
threatened by policies and attitudes that stressed today at the expense 
of tomorrow, speculative profits at the expense of long-term growth, 
and wasteful spending at the expense of our children's future.
  A year later, the picture is brighter. The enactment of my budget 
plan in 1993, embodying the commitment we have made to invest in our 
future, has contributed to a strengthening economic recovery, a clear 
downward trend in budget deficits, and the beginnings of a renewed 
confidence among our people. We have ended drift and broken the 
gridlock of the past. A Congress and a President are finally working 
together to confront our country's problems.
  Serious challenges remain. Not all of our people are participating in 
the recovery; some regions are lagging behind the rest of the country. 
Layoffs continue as a result of the restructuring taking place in 
American business and the end of the Cold War.
  Rising health care costs remain a major threat to our families and 
businesses, to the economy, and to our progress on budget deficits. Our 
welfare system must be transformed to encourage work and 
responsibility. And our Nation, communities, and families face the 
ever-increasing threat of crime and violence in our streets, a threat 
which degrades the quality of life for Americans regardless of where 
they live.
  We will confront these challenges this year, by acting on health care 
reform, welfare reform, and the crime bill now under consideration in 
the Congress, and by continuing to build on our economic plan, with 
further progress on deficits, and investments in our people as well as 
in research, technology, and infrastructure.


                           what we inherited

  When our Administration took office, the budget deficit was high and 
headed higher--to $302 billion in 1995 and well over $400 billion by 
the end of the decade.
  When our Administration took office, the middle class was feeling the 
effects of the tax changes of the 1980s, which had radically shifted 
the Federal tax burden from the wealthy to those less well off. From 
the late 1970s to 1990, tax rates for the wealthiest Americans had 
declined, while rates for most other Americans had increased.
  When our administration took office, the economy was still struggling 
to break out of recession, with few new jobs and continuing high 
interest rates. In 1992, mortgage rates averaged well over eight 
percent. Unemployment at the end of 1992 stood at 7.3 percent, and 
barely a million jobs had been added to the economy in the previous 
four years. The outlook for the future was slow productivity growth, 
stagnant wages, and rising inequality--as sagging consumer confidence 
demonstrated.


                            a new direction

  Today, whether it is the deficit, fairness, or the status of the 
economy, the situation is much improved.
  The budget I am submitting today projects a deficit of $176 billion, 
a drop of $126 billion from where it would have been without our plan. 
If the declines we project in the deficits for 1994 and 1995 take 
place, it will be the first time deficits have declined three years 
running since Harry Truman occupied the Oval Office.
  The disciplines we have put into place are working.
  We have frozen discretionary spending. Except in emergencies, we 
cannot spend an additional dime on any program unless we cut it from 
another part of the budget. We are reducing low-priority spending to 
fulfill the promise of deficit reduction as well as to fund limited, 
targeted investments in our future. Some 340 discretionary programs 
were cut in 1994, and our new budget cuts a similar number of programs. 
These are not the kind of cuts where you end up spending more money. 
These are true cuts, where you actually spend less. Total discretionary 
spending is lower than the previous year--again, in straight dollar 
terms, with no allowance for inflation.
  As for entitlement spending, the Omnibus Budget Reconciliation Act of 
1993 achieved nearly $100 billion in savings from nearly every major 
entitlement program. Pay-as-you-go rules prevent new entitlement 
spending that is not paid for, and I have issued an executive order 
which imposes the first real discipline on unanticipated increases in 
these programs. For the future, health care reform will address the 
fastest growing entitlement programs--Medicare and Medicaid--which make 
up the bulk of spending growth in future budgets, and the Bipartisan 
Commission on Entitlement Reform, which I have established by executive 
order, will examine the possibility of additional entitlement savings.
  While we have imposed tough disciplines, there is one more needed 
tool. The modified line-item veto, which would provide Presidents with 
enhanced rescission authority, has already been adopted by the House as 
H.R. 1578. If enacted, it will enable Presidents to single out 
questionable items in appropriations bills and require that they be 
subject to an up-or-down majority vote in the Congress. I think that 
makes sense, and it preserves the ability of a majority in Congress to 
make appropriations decisions.
  In addition to budget discipline, we made dramatic changes that 
restored fairness to the tax code. We made the distribution of the 
income tax burden far more equitable by raising income tax rates on 
only the richest 1.2 percent of our people--couples with income over 
$180,000--and by substantially increasing the Earned Income Tax Credit 
for 15 million low-income working families. Thus, nearly 99 percent of 
taxpayers will find out this year that their income tax rates have not 
been increased.


                                results

  Finally, the most significant result of our commitment to changing 
how Washington does business is growing economic confidence. Investment 
is up--in businesses, in residences, and in consumer durables; real 
investment in equipment grew seven times as fast in 1993 as over the 
preceding four years. Mortgage rates are at their lowest level in 
decades. Nearly two million more Americans are working than were 
working a year ago, twice as great an increase in one year as was 
achieved in the previous four years combined; and the rate of 
unemployment at the end of 1993 was down to 6.4 percent, a drop of 
nearly a full percentage point.
  The fundamentals are solid and strong, and we are building for the 
future with a steady and sustainable expansion.


                           the economic plan

  How did all this happen? Our economic plan had three fundamental 
components:


                           deficit reduction

  First, the introduction and eventual enactment of our $500 billion 
deficit-reduction plan--the largest in history--brought the deficit 
down from 4.9 percent of GDP, where it was in 1992, to a projected 2.5 
percent of GDP in 1995 and 2.3 percent of GDP in 1999. This 
substantially eased pressure on interest rates by reducing the Federal 
Government's demand for credit and by convincing the markets of our 
resolve in reducing deficits. Those lower interest rates encouraged 
businesses to invest, and convinced families to buy new homes and 
automobiles, along with other durable goods.


                               investment

  Second, we proposed, and Congress largely provided, a set of fully 
paid-for measures to encourage private investment (beyond the 
inducement provided by deficit reduction) and commit public investment 
to our country's future. The first component was making nine out of ten 
businesses eligible for tax incentives to invest in future growth--
including a major expansion of the expensing allowance for small 
businesses and a new capital gains incentive for long-term investments 
in new businesses.
  The second component was public investment in the future: in 
infrastructure, technology, skills, and security. These investments are 
directed toward preparing today's workers and our children for the new, 
higher-paying jobs of the modern economy; repairing and expanding our 
transportation and environmental infrastructure; fighting crime; 
expanding our Nation's technological base; and increasing our health 
and scientific research.
  Among other things, we greatly expanded the very successful Head 
Start program and WIC nutrition program for pregnant women, infants, 
and young children; provided a major increase to fulfill the mandate of 
the Intermodal Surface Transportation Efficiency Act (ISTEA) 
authorization; provided initial funding for the National Service Act 
and new funding for educational reforms and other education and 
training initiatives; began the process of fulfilling my goal of 
putting another 100,000 police officers on the streets of our cities 
and towns; and provided additional resources for urban and rural 
development.


                                 trade

  Finally, our long-term economic strategy depends on the expansion of 
our international trade markets. In 1993, we did more than at any time 
in the past two generations to open world markets for American 
products. The ratification of the North America Free Trade Agreement 
(NAFTA) establishes the largest market in the world. By lowering 
tariffs on our exports to Mexico, the agreement is going to increase 
jobs in this country--and, if previous experience is a guide, they will 
mostly be high-paying jobs.
  We also completed work on the Uruguay Round of the General Agreement 
on Tariffs and Trade (GATT), a worldwide agreement to reduce tariffs 
and other trade barriers that will also create high-paying jobs and 
spur economic growth in this country.
  In addition, we established the U.S.-Japan Framework for a New 
Economic Partnership so that we can work to increase Japanese imports 
of U.S. goods and services and promote international competitiveness. 
And to relieve unnecessary burdens on U.S. businesses, we eliminated 
unneeded export controls on certain technology to encourage exports of 
U.S. high-technology products.


                             the year ahead

  In 1994, we will build on the strong foundation we laid in 1993.


                           fiscal discipline

  We continue to implement the $500 billion in deficit reduction from 
last year's reconciliation bill. To achieve the required hard freeze in 
discretionary spending and make needed investments, we propose new cuts 
in some 300 specific non-defense programs. That includes the 
termination of more than 100 programs. Many of these savings will be 
controversial, but we have little choice if we are going to meet our 
budget goals.
  On the other side of the ledger, this budget contains no new tax 
increases.


                             new investment

  The investments in this budget continue to target jobs, education, 
research, technology, infrastructure, health, and crime.


                          investing in people

  First and foremost, the goal of our economic strategy is to provide 
more and better paying jobs for our people--both today and in the 
future--and to educate and train them so that they are prepared to do 
those jobs.
  The budget contains a major workforce security initiative to promote 
job training and reemployment. In the past, government has provided 
workers who lost their jobs with temporary unemployment benefits to 
tide them over, and little else. But in this new era, when the 
fundamental restructuring of our economy is causing permanent layoffs 
and the virtual shutdown of entire industries, we need to create a 
reemployment system.
  This budget begins the process of establishing that system, which 
ultimately will give dislocated workers easier access to retraining, 
job-search, and other services designed not only to help them through a 
difficult period but also to prepare them to thrive in productive, new 
jobs.
  We also continue to invest in our most precious resource--our 
children--with proven, effective programs, as well as with new 
initiatives to confront the problems of a changing society.
  We propose to expand funding for the school-to-work program, which 
will provide apprenticeship training for high school students who do 
not plan to attend college. And our budget expands the national service 
program, which gives our young people an opportunity to serve their 
communities and earn money towards college.
  We provide strong support for the Goals 2000 program, which I hope 
Congress will enact early this year, to help local school systems 
reform themselves to educate our children for the 21st century. We must 
set high standards for all of our children, while providing them with 
the opportunity they deserve to learn.
  We also provide major increases for WIC and for Head Start, which we 
will seek to improve as well. And we significantly expand and better 
target the Title I program, which focuses on needy children to make 
sure they can take full advantage of our educational system.


                         Investing in know-how

  America has always sought to be the world's leader in science and 
technology. In some arenas in recent years, we have lost that status. 
But in the remainder of this decade and in the 21st century, we must be 
sure that the United States is on the cutting edge of research and 
technological advances.
  To that end, the 1995 budget proposes critical investments in the 
National Institute of Standards and Technology's Advanced Technology 
Program; NASA's research, space, and technology programs; the National 
Science Foundation; the information superhighway, on which the Vice 
President has worked so hard; and energy research and development.
  In addition, I am determined to continue assisting the industries and 
communities which have supported our Nation's defense as we continue 
the defense downsizing that began in the mid-1980's and accelerated in 
the early 1990's with the end of the Cold War.
  I am proposing significant investments in the Technology Reinvestment 
Project, which will work with the private sector to encourage the 
development and application of dual-use technologies. And the budget 
also includes additional resources for the Office of Economic 
Adjustment, which provides planning grants to communities as they 
convert their local economies to profitable peacetime endeavors.


                     investing in physical capital

  The Nation's capital infrastructure and the economies of too many 
urban and rural communities have suffered too long from neglect. Last 
year, we began to address these shortfalls, and in 1995, we propose to 
continue these initiatives.
  We propose, first, to continue full funding of core highway programs 
within the ISTEA transportation authorization act, as well as a 
substantial increase in Mass Transit Capital Grants. To help provide 
this level of funding, the budget proposes rescission of many highway 
demonstration projects, which frequently are an inefficient allocation 
of taxpayers' dollars.
  In addition, we propose to continue the restoration of our 
environmental infrastructure with investments in the technologies of 
the future under the Clean Water Act and other environmental programs.
  Last year, we enacted legislation to establish urban and rural 
Empowerment Zones. This year, we will designate those zones, 
as well as enterprise communities, to attract investment to neglected 
communities and provide the kinds of services needed to support 
economic development.
  In this budget, HUD outlays for housing assistance, services to the 
homeless, and development aid to distressed communities will increase 
substantially, with aid to the homeless nearly doubling from the 
previous year. Both housing aid to families and aid to the homeless 
will be restructured to support transitions to economic independence.
  I also propose to continue our rural development initiative, with 
grants and loans that represent a 35-percent increase over the previous 
year. This assistance will provide for improved rural infrastructure 
and services, such as water treatment facilities and rural health 
clinics, increase rural employment, further diversify rural economies, 
and provide rural housing opportunities by expanding assistance to 
allow low- and moderate-income residents to become homeowners.


                      investing in quality of life

  This budget continues our efforts to enhance environmental protection 
and preserve our natural resources.
  We propose both to strengthen the stewardship of these resources and 
improve environmental regulatory and management programs. We increase 
state revolving funds for clean water and drinking water, and we 
propose the establishment of four ecosystem management pilot projects. 
In addition, we are proposing significant improvements and reforms in 
the Superfund program, as well as important international environmental 
initiatives.


                           health care reform

  Enactment of health care reform, with its focus on controlling health 
care costs, is the key to making even greater progress on deficits. 
Indeed, if the Congress adopts the Health Security Act in 1994, we 
believe that deficits will fall to 2.1 percent of GDP in fiscal year 
1999, the lowest since 1979.
  Of course, deficit reduction is only one reason for health care 
reform. Providing health security to every American, with a package of 
comprehensive benefits through private health insurance that can never 
be taken away, is critical not only to long-term budget restraint but 
also to long-term economic growth, to the productivity of our workers 
and businesses, and to the health and peace of mind of all Americans.
  With some 58 million Americans lacking insurance at some time during 
the year, with the estimated 81 million Americans with preexisting 
conditions paying more, unable to get insurance, or not changing jobs 
for fear of losing their insurance; with the small businesses that 
cover their workers--and a majority do--burdened by the skyrocketing 
cost of insurance, which is 35 percent higher for them than it is for 
big business and government; and with 76 percent of Americans carrying 
policies that contain life-time limits, which can leave them without 
coverage when they need it most--this country is facing a health care 
crisis. And we must confront it now.
  In addition to our health care reform effort, the 1995 budget 
contains key investments in health care and research. We propose the 
largest increase ever requested in research funds for the National 
Institutes of Health. This national treasure not only keeps our Nation 
in the forefront of health research but has demonstrably saved millions 
of lives and improved the quality of millions more. The additional 
investment we propose will help NIH with its research in many areas, 
from AIDS to heart problems, from mental health to breast cancer.


                             welfare reform

  A major initiative for my Administration has been and will continue 
to be overhauling our welfare system. We must reward work, we must give 
people the wherewithal to work, and we must demand responsibility.
  Welfare reform has already begun. The first step was the expansion of 
the Earned Income Tax Credit last year. That expansion rewards work by 
ensuring that families with a full-time worker will not live in 
poverty.
  The second stage of welfare reform is health care reform. Our current 
health care system often encourages those on welfare to stay there in 
order to receive health insurance through Medicaid. When we require 
that every worker be insured, that disincentive to work will disappear.
  The next element of welfare reform is personal responsibility. Our 
welfare reform plan will include initiatives to prevent teen pregnancy, 
ensure that parents fulfill their child support obligations, and try to 
keep people from going on welfare in the first place. We must remember 
this: governments do not raise children, parents do.
  The ultimate goal of our reforms is to have our people rely on work, 
not on welfare. Our plan will build on the Family Support Act by 
providing education, training, and job search and placement for those 
who need it; it will require people who can work to do so within two 
years, either in the private sector or community service; it will 
restore the basic social contract of providing opportunity and 
demanding responsibility in return.


                                 crime

  Enactment of the crime bill now being considered in the Congress is 
also essential, and it should happen quickly. We simply cannot tolerate 
what is happening in the streets of our cities and towns today. Crime 
and violence, the proliferation of handguns and assault weapons, the 
fear that millions of Americans feel when they emerge from their homes 
at night--and even in the daytime--must be confronted head-on.
  We need to toughen enforcement, and we need to provide our local 
governments with the resources they need to take on the epidemic of 
violent crime. The crime bill will provide substantial resources, 
enough to fulfill my commitment to put 100,000 additional police on our 
streets. This budget funds major pieces of the crime bill, and I urge 
the Congress not only to approve the authorizing legislation but to 
provide the financial resources to back it up.


                   Defense and International Affairs

  Profound shifts are taking place in America's foreign relations and 
defense requirements. When we came into office, we faced dramatically 
changed international conditions and problems, but we inherited foreign 
and defense policies and institutions still geared, in many ways, to 
the conditions and needs of the Cold War.
  This budget reflects the major changes we are carrying out in the 
content, direction, and institutions which ensure that our interests 
are defended abroad. We are committed to remaining engaged in a world 
inextricably linked by trade and global communications. The nature of 
that engagement is changing, however.
  We remain committed to maintaining the best trained, best equipped 
and best prepared fighting force in the world. Thanks to our 1993 
Bottom-Up Review of defense, this force is being reshaped to meet the 
new challenges of the post-Cold War era. We can maintain our national 
security with the forces approved in the Bottom-Up Review, but we must 
hold the line against further defense cuts, in order to protect fully 
the readiness and quality of our forces.
  We have put our economic competitiveness at the heart of our foreign 
policy, as we must in a global economy. We are following the success of 
NAFTA and GATT with further market-opening negotiations and intensified 
focus on the promotion of U.S. exports. We are paying particular 
attention to the Asian and Pacific markets, which have the most dynamic 
growth of any region in the world.
  We are dedicated to the enlargement of the community of free market 
democracies, both as a way of ensuring greater security and as a way of 
expanding economic opportunity. Our programs for the New Independent 
States of Europe and Central Asia are the centerpiece of this effort.
  We are responding aggressively to the new international security 
challenges that face us: regional conflicts, the proliferation of 
weapons of mass destruction, the movement of refugees, and the 
international flow of illegal narcotics. And we are addressing threats 
to the global environment and rapid population growth with a program to 
promote sustainable development.
  Finally, we are fundamentally reforming and restructuring our 
international cooperation programs, giving an entirely new post-Cold 
War structure to our efforts by rewriting the basic legislation that 
has guided such programs for more than thirty years.


                      national performances review

  The Vice President's National Performance Review (NPR) has paved the 
way for major reforms of how our government works, which are essential 
to making government more efficient and responsive. Last year, we began 
implementing its recommendations. With this budget, that effort shifts 
into high gear.
  First, this budget implements the reduction by 100,000 of Federal 
positions required by my Executive Order of last year. Indeed, because 
of discretionary spending constraints, our proposals actually exceed 
that total by 18,000. In addition, planning has begun on the further 
downsizing that will be required to implement the remaining portion of 
the 252,000-position personnel reduction recommended by the NPR. With 
this downsizing, we will bring the number of Federal employees to the 
lowest level in thirty years.
  To reach these goals, we need to be able to offer incentive packages 
to those whose positions will be eliminated. This is one of our highest 
legislative priorities, and it requires attention now. These ``buy-
out'' packages will minimize the need for more costly reductions in 
force, are less disruptive since they are voluntary, and save the 
government money in the long run.
  The time also has come for swift passage of procurement reform, 
another of our highest priorities. Streamlining procurement is 
essential to meeting our personnel downsizing targets. And overhaul of 
the current, wasteful system can give us significant savings, as well 
as improved performance by government suppliers.
  Further, this budget contains many of the specific programmatic 
savings proposed by the NPR. These savings have been used in large part 
to help us meet the discretionary spending freeze.
  With my executive order last year, we also began the process of 
reforming one of the basic functions of government--the regulatory 
process. Regulations are often necessary to improve the health, safety, 
environment, and well-being of the American people. Our goal is a more 
open, more fair, and more honest process that produces smart 
regulation: rules that impose the least burden and provide the most 
cost-effective solutions possible.
  Finally, all of our departments and agencies have begun to reform 
their basic operations, including their financial and other 
administrative practices.
  The goal of the NPR is to make government work better and cost less--
and to make it more convenient and responsive to those it serves. That 
is not something that can be completed in one year, in four, or even 
eight. But we have a responsibility to begin, and that we have done.


                               conclusion

  These are the priorities I seek to pursue in the coming year. Last 
year, we succeeded in breaking the gridlock that had gripped Washington 
for far too long. In contrast to past budgets, which lacked 
credibility, we made sure to use cautious estimates, and we shot 
straight with the American people.
  The results are evident.
  We said we would bring the deficit down, and we did. We said we would 
revitalize the economy, and we did. We said that we would help the 
private sector to create jobs, and we did. We said that we would reduce 
the size of the bureaucracy, and we did.
  Last year, my Administration and the Congress worked side by side to 
move our country forward. Let us extend that record of achievement in 
1994.
                                                  William J. Clinton.  
  The White House, February 7, 1994.

                          ____________________