[Congressional Record Volume 140, Number 15 (Tuesday, February 22, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: February 22, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
BALANCED BUDGET AMENDMENT
The PRESIDING OFFICER. The clerk will report the joint resolution.
The legislative clerk read as follows:
A joint resolution (S.J. Res. 41) proposing an amendment to
the Constitution of the United States to require a balanced
budget.
The PRESIDING OFFICER. The Senator from Illinois.
Mr. SIMON. Madam President, if we can have some order here?
The PRESIDING OFFICER. The Senator from Illinois is correct. The
Senate is about to begin a debate on a constitutional amendment. It is
a serious event, serious debate. We would like the Senate to be in
order so we may hear the distinguished Senator from Illinois, a
proponent of the amendment.
Mr. SIMON. Madam President, ordinarily the chief sponsor speaks
first, but my colleague and major cosponsor, Senator Hatch, has a
schedule conflict. I am pleased to yield to him to speak first on the
debate.
The PRESIDING OFFICER. The Senator from Utah is recognized.
Mr. HATCH. Madam President, I thank my colleague. Please charge this
to my time on this debate this evening.
The PRESIDING OFFICER. Does the Senator from Utah wish to speak as a
proponent?
Mr. HATCH. As a proponent. The time for proponents is divided 45
minutes to Senator Simon, 45 minutes to me. I will do this on my time.
Madam President, I want to personally thank my dear colleague from
Illinois. He deserves so much credit for leading the fight to bring
this amendment to the floor and for leading it throughout these last
number of years. I have great affection for him and appreciate his
leadership in this area. He has done this as a courtesy to me so I can
meet the commitments that I made before this evening. So I am really
very grateful to him. Ordinarily he should lead off and I appreciate
him showing this kind of deference to me.
Madam President, the Senate is once again considering a
constitutional amendment to balance the budget, Senate Joint Resolution
41, the Simon-Hatch consensus balanced budget amendment. I wish an
amendment to the Constitution were not necessary. But it is. Statutory
measures have been tried; but, for one reason or another, they have not
worked.
If we had passed the balanced budget amendment before now, we would
not be spending precious time debating the ends, but rather the means
of balancing the budget. But we have not heretofore been able to agree
on the end of a balanced Federal budget requirement. Sadly, I believe
we must get this amendment in place to ensure there will be an end to
the long spending binge of Congress.
Once a constitutional rule is in place, we will all be forced to be
serious about getting the deficit under control within a definite
period of time.
Madam President, a national debt of over $4.5 trillion is slowly but
surely killing businesses and individuals by soaking up capital that
could be used to create jobs and wealth for Americans.
Our national debt is now over $18,000 for each man, woman, and child
in this country. Each man, woman, and child as of 1994 owes $18,000.
So our fellow Utahn's, each one of you owes $18,000 because of the
profligacy of Congress.
In 1975 it was only $2,500. A year ago it was $1,300 less. In just 1
year we have gone up 1,300 more dollars for every man, woman, and child
in America, to be in debt.
As I have said, the problem is getting worse exponentially. In 1975
our per capita debt was $2,500. Now it is $18,000. Our debt has
increased more than sevenfold in the last 19 years. In fact, the per
capita debt when we introduced our balanced budget amendment last
February was $16,700. That means every American's debt burden has
increased $1,300 in just 1 year.
This uncontrollable debt burden will be the legacy that this
generation leaves our children and grandchildren.
We are taxing the future of our children and grandchildren. This is
the lifetime net tax burden per generation.
Congress' uncontrolled spending is the real problem. Even after the
1990 budget deal, record-setting tax hikes led to record deficits. Why?
Because Congress spent $1.83 for every $1 raised. No amount of tax
increases will reduce our debt as long as spending continues to
increase faster.
President Clinton's much touted deficit reduction plan only slows the
increase in the national debt. Even the President's own most recent,
rosy forecasts indicate that we will add over $200 billion to our debt
this year. Congressional Budget Office estimates suggest that the
President's deficit reduction plan, will add nearly $1 trillion to our
national debt in the next 5 years. Our current deficit reduction
efforts are wholly inadequate.
I would like to say a few words about interest costs. Frankly on this
chart, No. 3, this shows the deficit outlook through the year 2004.
Yes, in 1994 we will come down because of the President's plan. They
hope it will be only $171 billion deficit this next year, 1994. But
actually as you can see it takes off and goes up to better than $359
billion by 2004. So they are just slowing the increase in the national
debt.
As anyone who has borrowed money knows, compounding interest can eat
up a budget and a person's options faster than any other type of
expense. It is no different with the Federal Government. Interest on
the Federal debt in 1993 amounted to nearly $293 billion. That is more
than total Federal revenues in 1975. Interest alone cost us 26 percent
of all Federal revenues and 57 percent of all individual income tax
revenues.
OMB projects that interest on the debt will rise substantially over
the next 5 years. It will pass the $300 billion mark in 1995 and reach
$373 billion in 1999. That is if their estimates are right. CBO's
estimates are even higher, with $311 billion in interest in 1995 and
$382 billion in 1999.
Opponents of the balanced budget amendment have suggested we cannot
afford to cut the deficit more than the Clinton plan does because
decreased social spending will have severe, adverse effects. But think
how much we could do in crime control, defense, disaster relief, or
programs like Medicare and Medicaid if we had $300 billion more
available every year?
I do not understand the logic of continuing to waste over 20 percent
of our entire budget on interest payments on the rationale that we
cannot afford to cut spending. We simply cannot afford to continue to
throw away one-fifth of our budget on interest payments. The biggest
risk to any or all of the spending programs of the Federal Government
is mounting debt and spiraling interest costs.
Just by way of comparison, Madam President, in the 1993 budget, gross
interest on the debt was more than the entire defense budget, $292.4
billion; 97 percent of Social Security claimants, which is $302
billion. Gross interest was 55 percent of all discretionary outlays
which are $542.5 billion and 44 percent of all mandatory programs which
are $667 billion. In fact, the nearly $293 billion cost of gross
interest on the national debt could have covered our entire health
spending, including Medicare and Medicaid which are $207.6 billion, all
veterans' benefits and services which are $19.3 billion, unemployment
compensation, $35.5 billion, our entire international discretionary
spending, $21.6 billion and the costs of the earned income tax credit
of $8.8 billion.
Without the gross income on the debt, we would not even had a deficit
last year. In fact, we would have run a budget surplus of $38 billion.
Interest on the debt is wasted money. It is money we could have used
but cannot. Over the next 5 years of ``deficit reduction,'' the Office
of Management and Budget's own calculation is that interest on the
public debt will total really about $1.7 trillion; that is, in the next
5 years, interest will go up $1.7 trillion. That amount of money would
fully fund the entire 1994 budget with money left over to take care of
other things.
We can only begin to get interest costs under control, after we get
the budget deficits under control. That is why whether you want to
spend more money on programs or save money for the taxpayer, you should
support Senate Joint Resolution 41, the balanced budget amendment. It
will give us the constitutional support we need to stop going deeper
into debt.
Deficit spending is the worst kind of spending, Madam President. It
is easy. Members of Congress, special interest groups and constituents
like spending increases, and they are certainly more popular than tax
hikes. Our balanced budget amendment, Senate Joint Resolution 41, has a
three-fifths majority requirement to make deficit spending more
difficult. If you want to spend, then you are going to have to get
three-fifths of a vote to do so beyond balancing the budget. And you
are going to have to stand up and vote to do so, which we do not do
now.
This is an absolutely critical provision because it will require 60
votes in the Senate to do what would otherwise be the easier and more
popular course; that is, spending on the Government credit card.
Senate Joint Resolution 41 also has a tax limitation provision. A
constitutional majority rollcall vote is required to raise taxes. This
is higher than the current requirements. A constitutional majority
means at least no less than 51 votes in the Senate, rather than just a
majority of the voting Senators. And those 51 Senators must go on
record as voting for those tax hikes if they want to do that. We could
vote anything through the Senate normally on a 26-to-25 vote because 51
people would make a majority. In this case, if you want to raise taxes
under this amendment, you are going to have to have at least 51. No
longer can you have less than 51.
We need the balanced budget amendment now to reverse the deficit
trends that are cutting off the lifeblood of the United States economy.
Perhaps more importantly, Senate Joint Resolution 41 will create an
additional constitutional process that will bring back legislative
accountability to the constitutional system. The balanced budget
amendment process accomplishes this by making Federal deficit spending
significantly more difficult.
Under the proposed amendment, Congress will have to prioritize its
legislative agenda to determine which spending measures are most
important and fund only those that the people are willing to pay for.
It would then be much harder to shift the economic costs of less
justifiable spending projects to the whole Nation through legislation
that is adverse to the good of our commonwealth. In other words,
Congress will become again a deliberative assembly fulfilling its
intended function with its encroaching appetite curtailed and liberty,
as a consequence, furthered. We have to pass Senate Joint Resolution
41, the Simon-Hatch-Thurmond-Craig balanced budget amendment. It is the
right thing to do for the American economy, for the American
constitutional system, and the right thing to do for our American
families.
Madam President, we are in trouble in this country. We have to do
something. I heard all of these hysterical bits of testimony last week
from the administration. Why, they act like you cannot do anything
unless you continue to spend. Frankly, they act like you have to cut
this budget in 1 year when, in fact, we are going to allow until 2001
to actually get on this glide path to get our budget balanced.
I am tired of the hysteria. I am tired of these people saying we
ought to do it ourselves. We have not done it ourselves for 33 of the
last 34 years, and we have not done it ourselves for most of the last
56 years. So we need the discipline that this balanced budget amendment
would bring to the Congress, that would force the Members of Congress
to live within their means, to make priority choices among competing
programs, and to do what is right for this country.
Once again, Madam President, I want to thank my dear colleague from
Illinois for giving me this opportunity to speak this evening. I will
have more to say tomorrow.
But it is important I make these remarks before I leave. I just want
to thank him again for his kind courtesy to me and for his great
leadership on this particular amendment. I thank him, and I yield the
floor.
I reserve the remainder of my time.
The PRESIDING OFFICER. The Senator from Illinois.
Mr. SIMON. Madam President, I yield myself as much time as I may
consume.
The PRESIDING OFFICER. The Senator from Illinois may proceed.
Mr. SIMON. Madam President, I thank the many people who have played a
role in bringing this to this point. That includes my colleagues on
both sides of the aisle, 54 cosponsors of this legislation, staff
people who have worked very hard on this, and I am grateful to all of
them, as well as to organizations and people around the country who
have expressed their concern. This is one where the people around the
country have to express an interest.
Senator Byrd has been quoted as saying it is the most important vote
in 40 years in the U.S. Senate. Our former colleague, Paul Tsongas, who
testified in behalf of this legislation last week, said it is the most
important vote in the 20 years that he has been observing Congress.
The reason it is more important, for example, than the 1986 vote when
this lost by 1 vote is then there was the probability the House would
defeat it. Today, this body remains the stumbling block, if there is a
stumbling block. It is going to be a close vote. We all know that. But
the House is ready to pass it and it will pass the House very, very
quickly. My sense is, from talking with Governors and others, is that
it will be ratified by the States very quickly.
I think a very fundamental question is: What is the purpose of a
constitutional amendment? The purpose of a constitutional amendment is,
No. 1, to express philosophy and, No. 2, to prevent Government abuse.
We have had Government abuse in abundance. We are celebrating--I should
not use the word celebrating--but this is the 25th anniversary of the
United States Congress and our Presidents together spending more money
than we take in. We celebrate various anniversaries. We have celebrated
the 25th anniversary recently of the Peace Corps, and we celebrate
various anniversaries. I doubt that there is anyone anywhere who is
planning a celebration for the 25th anniversary of spending more money
than we take in because we know it is hurting us. It is hurting these
pages and their future. It is hurting all of us.
The idea is not a new idea. Thomas Jefferson was not in the United
States when the Constitution was written. He was over in France
negotiating for us. When he came back, Thomas Jefferson said, ``If I
could add one amendment to the Constitution, it would be to prohibit
the Federal Government from borrowing money.''
Now, we do not go as far as Thomas Jefferson wanted. He wanted an
absolute prohibition. We believe that there are times when you should
have a deficit--when you have a recession or if, for example, you have
an earthquake in California or something else. There may be a time when
you should spend money that you do not have in terms of revenue. So we
permit with a 60-percent vote that you can have a deficit.
The other point that was made by our Founding Fathers in the
Federalist Papers was this:
The eagerness to spend should be matched by the reluctance
to tax.
And that historically has been where we have been, Madam President--
up until recently. In the past, during a war, yes, we went into debt.
But after the war, we immediately paid for it and we went on a pay-as-
you-go basis.
Right here, Madam President, on this chart is the history since 1946
of where we have been, and you can see these red figures coming down.
This is where we have been. If we were to add 1994, it would go up, and
then as we go down the later years, the deficit grows and grows and
grows ad infinitum, and that will continue unless we do something about
it.
There are those who say, well, this was just one letter Thomas
Jefferson wrote. Thomas Jefferson expressed himself in this field a
number of times. At one point Thomas Jefferson said:
To preserve our independence we must not let our rulers
load us with perpetual debt.
Another point. In 1813--this is after he was President. People say,
well, once Thomas Jefferson became President he realized what was
needed. In 1813 he wrote:
Ought not then the right of each successive generation to
be guaranteed against the dissipations and corruptions of
those preceding by a fundamental provision in our
Constitution?
And then a few years later he said:
It is incumbent on every generation to pay its own debts as
it goes.
He believed that it was. And again quoting Jefferson:
It is of such importance--
The principle of paying as you go:
As to place it among the fundamental principles of
Government. We should consider ourselves unauthorized to
saddle posterity with our debts and morally bound to pay them
ourselves.
I see my colleague from Illinois standing and would be pleased to
yield to her for a question.
Ms. MOSELEY-BRAUN. Will the Senator yield for a question, yes.
I say to the Senator, this morning I had the singular privilege of
reading George Washington's Farewell Address which was delivered in
1789, and I was taken in reading it by the fact that he makes
reference, a very direct reference, frankly, to the amendment for the
balanced budget.
And if I may, just to quote, he says--and this speech, by the way,
that George Washington delivered to our country, he never actually
wrote. As a testament for his administration, it was written in concert
with James Madison and Alexander Hamilton. And so it says on this very
subject, and I quote:
As a very important source of strength and security,
cherish public credit. One method of preserving it is to use
it as sparingly as possible, avoiding occasions of expense by
cultivating peace, but remembering, also, that timely
disbursements, to prepare for danger, frequently prevent much
greater disbursements to repel it; avoiding likewise the
accumulation of debt, not only by shunning occasions of
expense, but by vigorous exertions, in time of peace, to
discharge the debts which unavoidable wars may have
occasioned, not ungenerously throwing upon posterity the
burden which we ourselves ought to bear. The execution of
these maxims belongs to your representatives, but it is
necessary that public opinion should cooperate. To facilitate
to them the performance of their duty, it is essential that
you should practically bear in mind, that towards the payment
of debts there must be revenue; that to have revenue there
must be taxes; that no taxes can be devised which are not
more or less inconvenient and unpleasant; that the intrinsic
embarrassment inseparable from the selection of the proper
object . . . ought to be a decisive motive for a candid
construction of the conduct of the Government in making it,
and for a spirit of acquiescence in the measures for
obtaining revenue, which the public exigencies may at any
time dictate.
So in Washington's Farewell Address, I wanted to bring to the
Senator's attention, because he referenced Thomas Jefferson, the
encouragement and exhortations that the Father of our Country gave in
his farewell address on this very subject; that we have an obligation
to keep the public credit and not pass on the burden to posterity.
Mr. SIMON. I thank my colleague from Illinois for that observation. I
wish I could say George Washington has endorsed my amendment. We cannot
quite say that.
Mr. GRAMM. If he were here, he would.
Mr. SIMON. Certainly in principle what he said is accurate and is in
line with this. I thank my colleague very much.
I would also like to have printed in the Record a statement by
Alexander Hamilton. Alexander Hamilton and Thomas Jefferson did not
agree on much but this is one of the areas where they strongly agreed.
I ask unanimous consent, Madam President, to have that printed in the
Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Demagogy and Debt
(In the course of his research, Donald Stabile, professor of economics
at St. Mary's College of Maryland, came upon Alexander Hamilton's
``Report on a Plan for the Further Support of Public Credit,'' dated
Jan. 16, 1795, from which this is taken)
To extinguish a Debt which exists and to avoid contracting
more are ideas almost always favored by public feeling and
opinion; but to pay Taxes for the one or the other purpose,
which are the only means of avoiding the evil, is always more
or less unpopular. These contradictions are in human nature.
And the lot of a Country would be enviable indeed, in which
there were not always men ready to turn them to the account
of their own popularity or to make other sinister account.
Hence it is no uncommon spectacle to see the same men
Clamouring for Occasions of expense, when they happen to be
in unison with the present humour of the community, whether
well or ill directed, declaiming against a Public Debt, and
for the reduction of it as an abstract thesis; yet vehement
against any plan of taxation which is proposed to discharge
old debts, or to avoid new by defraying the expense of
exigencies as they emerge.
The consequence is, that the Public Debt swells 'til its
magnitude becomes enormous, and the Burthens of the people
gradually increase 'till their weight becomes intolerable. Of
such a state of things great disorders in the whole political
economy, convulsions & revolutions of Government are a
Natural offspring.
[My previous report] suggests the Idea of ``incorporating
as a fundamental maximum in the System of Public Credit of
the United States, that the creation of Debt should always be
accompanied with the means of extinguishment--that this is
the true secret for rendering public credit immortal, and
that it is difficult to conceive a situation in which there
may not be an adherence to the Maxim'' and it expressed an
unfeigned solicitude that this may be attempted by the United
States.--Alexander Hamilton, Treasury Department, Scy. of the
Treasury.
Mr. SIMON. It is interesting that even the lead witness in opposition
to the balanced budget amendment last year, Prof. Laurence Tribe of
Harvard--I do not want to mislead anyone. He is still opposed to the
balanced budget amendment, but he said this:
Despite the misgivings I expressed on this score a decade
ago, I no longer think that a balanced budget amendment is at
a conceptual level an unsuited kind of provision to include
in the Constitution. The Jeffersonian notion that today's
populace should not be able to burden future generations with
excessive debt does seem to be the kind of fundamental value
that is worthy of enshrinement in the Constitution. In a
sense, it represents a structural protection for the rights
of our children and grandchildren.
Madam President, the last time we voted on this in the Senate after
significant debate was 1986. It failed to carry the Senate by one vote.
The argument used then was we can balance the budget without a
constitutional amendment. It is very interesting that we are hearing
the same arguments today. At that point we had, with the approval of a
Republican President of the United States, taken some steps to reduce
the deficit a little, and now we have taken steps to the great credit
of President Clinton to reduce the deficit. But in 1986, the deficit
was $2 trillion. Now the deficit is $4.5 trillion. And we are hearing
the same arguments.
This bill was reported out of the Judiciary Committee by a 15-to-3
vote, the largest vote ever for a constitutional amendment for the
balanced budget. But can we do it without a constitutional amendment?
Well, let us take the Gramm-Rudman-Hollings provision that did have
some effect. In theory Gramm-Rudman-Hollings was supposed to balance
the budget by the year 1991. And look, here we are, 1991--$269 billion,
the next largest line on this deficit chart.
The reality is that statutory changes are too easily avoided. As soon
as it becomes awkward, we change the statute.
Then there are those who say, well, Congress just will not pay any
attention to it. I do not believe that. I did not hear a single Member
of the Senate get up in the Chamber and say let us not pay attention to
Gramm-Rudman-Hollings. I did not hear a single Member of the Senate say
let us not pay attention to the budgetary agreement we had.
We just changed the law when it became too awkward.
Each of us has taken an oath to uphold the Constitution. It is the
one oath we take to protect that Constitution. I really believe the
Members of this body take that oath seriously, and would not just
ignore the Constitution.
I might add, for those who say it is a gimmick, our House colleague,
Representative Olympia Snowe, had a great line. She said, ``If it were
just a gimmick, Congress would have passed it a long time ago.''
I think there is some truth to that. And for those who say it is just
a gimmick, that Congress will evade it, there is no word ``budget'' in
the amendment. What we do to lock this in to make sure receipts and
revenues match, we say, so you do not play games with off-budget, on-
budget, and that sort of thing, we say it takes a three-fifths majority
to increase the national debt.
We ought to be encouraging pay-as-you-go Government.
It is very interesting that back some years ago, President
Eisenhower, to his great credit, suggested an interstate highway
system. It was the largest single public works project in the history
of humanity, not just of our country. And President Eisenhower
suggested that we issue bonds to pay for the interstate highway system.
A Senator by the name of Albert Gore, Sr. said we should not issue
bonds on this. We should pay for it on a pay-as-you-go basis.
Fortunately he prevailed, and we have saved over $800 billion that
would have gone for interest, and harm to the economy.
This has flexibility. People say, well, you cannot have a capital
budget. First of all, I do not know of any reason for having a capital
budget at the Federal level. When people say, well, a home-owner has to
have a mortgage, we ought to have the same flexibility, or a local
school district. They do that because they have no option. If you have
money in the bank, you do not borrow. We ought to be balancing things
on a pay-as-you-go basis.
The biggest single project we have, Madam President, in the Federal
Government right now, is the nuclear carrier. We pay for that. We could
pay for that over 6 years. The most we would pay for would be $1
billion in 1 year. There is no reason for issuing bonds on that.
And under this provision we could have some flexibility for something
like the new judicial center that is near Union Station. Senator Pat
Moynihan used some creative financing on that. I am not sure as a
matter of precedent that it is wise. But for the new judicial center we
have a 20-year lease. We pay each year, and at the end of 20 years the
Federal Government will own it. I think most Members are not aware that
is how that is financed.
I do not recommend that. But that would be possible under this
Constitution.
Those who say that it has no flexibility are wrong. But it does not
have complete flexibility.
I had the experience about a year ago, a year and a half ago, of
introducing a bill for long-term care with a half percent increase in
Social Security to pay for it. Two of my colleagues in the Senate, who
shall remain nameless, came to me, and said that they really liked my
long-term care bill. If I would just drop the half percent increase in
Social Security to pay for it, they would like to be cosponsors. We can
do that now. We have a blank check.
What we are saying here is we should not have a blank check; that if
we want a long-term care bill, we have to have the taxes to pay for it.
And if we do not have the courage to vote for the taxes, we cannot have
the long-term care bill. That is the reality that we have to face.
My colleague from Idaho, Senator Craig, who has been so helpful on
this--we might differ on a long-term care bill, but we are in agreement
that if we have a program we have to have the taxes and the revenue to
pay for it, that you cannot simply constantly go into debt.
The question of a recession has also been brought up. There is
concern on this. I thought Fred Bergsten, former Assistant Secretary of
the Treasury under Jimmy Carter, who testified, ``If you had asked me 5
years ago, would I be for a balanced budget,'' he said, ``absolutely
not.'' But he said, ``Now I think it is essential for the country.''
He pointed out that a balanced budget amendment will give us greater
flexibility if we do it wisely and build in a 1- or 2-percent surplus
so that we have the flexibility if there is a recession to spend money
for these kinds of needs. Now, because we are so strapped we cannot
pass $11 billion for a jobs program in this recession.
Professor David Calleo from your State of Maryland, Madam President,
from Johns Hopkins University, recently wrote:
Financially, the United States is fast growing into a giant
banana republic. Our national debt has risen from less than
$1 trillion in 1980 to over $4 trillion in 1993. High
interest payments squeeze out the Federal funds needed not
only for those humanitarian needs that make us a better and
happier society, but also for the educational and
infrastructural spending required to keep us competitive with
other nations.
Why would a constitutional amendment work when Gramm-Rudman and other
statutory attempts have failed? He goes into that, and then he says:
Without some structural restraint on borrowing, the present
strong bias towards spending without revenues will continue,
and the Nation's balance sheet will fall deeper and deeper
into the red. Structural restraints on wayward power are
presumably what a Constitution is for.
He is absolutely correct.
Our former colleague, Senator Paul Tsongas, said in testimony last
week in behalf of this, that we have a debt addiction. I think that is
correct. Like a drug addiction or an alcohol addiction, to get rid of
the addiction will require some pain. But it is infinitely better to
get rid of the addiction than to keep the addiction.
I would also like to put up another chart because we have heard a
great deal about the deficits coming down. They are coming down for a
variety of reasons, including the bill that we passed last August.
Here you see them coming down. What is not said is that under CBO's
calculations they start going up again. Here you have in the last year
of CBO's estimate, a deficit of $365 billion, a record deficit. We can
do much, much better than that.
We are spending right now $800 million a day for interest. What do we
get for that $800 million a day for interest? Nothing other than higher
interest rates and deeper debt for our children.
What harm is done with this huge deficit? All kinds of illustrations
can be used. But it was interesting that last week there was a report
on the front page of the New York Times about the homeless, an area
that I know the Senator from Maryland is very interested in along with
others of us. A major reason for the problems of homelessness is we
have not built enough housing in our country. One of the major reasons
for not building enough housing in our country is that interest rates
are too high. That has discouraged the building of private housing.
So when you do not have enough housing, who gets housing? Well, those
of us who can afford it. Who gets squeezed out? Those who cannot afford
it.
We are hurting ourselves fiscally. The New York Federal Reserve Bank
says that from 1978 to 1988 we lost 5-percent growth in GNP and
national income because of the deficit.
I cannot tell you what that means practically in terms of each of our
States. CBO says 1 percent is 650,000 jobs.
On that basis, that is 3.75 million jobs lost because of the deficit.
How many of those are in Maryland, Idaho, or Illinois? I do not know.
But there are a lot. The GAO says we are headed toward an economic
catastrophe--that is their phrase, not mine--if we do not get ahold of
this thing. We have to get ahold of this thing. They also say if we
continue muddling along, we are going to hurt the people of our
country. But if by the year 2001--and that is the date we have in our
amendment--we balance the budget, by the year 2020, the average
American will have an increase in standard of living of 36 percent.
It is also interesting that the Concord coalition put together a
statement and analysis of where we would be if we did not have this
deficit, and they suggest, on the basis of history, that our
productivity would have been significantly higher and that the average
family in America today, instead of having an average family income of
$35,000, would have an average family income of $50,000. Well, that is
a huge, huge difference.
What about the trade deficit? I asked CBO and the Congressional
Research Service to provide me studies, and the studies varied from 37
percent to 56 percent of the trade deficit is caused by the budget
deficit.
Then we have a distribution problem, a fiscal problem. In inflation-
adjusted terms, this is what happened between fiscal years 1981 and
1993. Some of the items are down. For example, transportation, down 6
percent; education, down 8 percent. Yes, we have increased the
appropriations, but not as much as inflation. And then defense--and a
lot of people think that is the big growth item--was 16 percent.
Entitlements, because of health care and number growth, up 32 percent.
What is the big growth item? This one here: interest. What do we get
for it? Zero, nothing, other than harm to our economy. This is $293
billion spent last year. Who pays that $293 billion? People of limited
means. Who collects it? Those who are more fortunate in our society.
What is happening is that this is squeezing out our ability to respond
on education and health care and things that are important to our
country.
This past year we spent twice as much on interest as all the poverty
programs combined, eight times as much on interest as on all of our
education. The biggest welfare program we have in this country, my
friends, is the interest program. It is welfare for the rich. We ought
to change that. It is eating at the heart and soul of this country.
A very interesting article appeared in the magazine called
International Economy--and I confess I am not a regular reader of the
magazine--by a writer named Richard Coo, and the heading on it really
tells a story: ``America's Budget Deficits; They Redistribute Income To
The Rich.'' That is what we are doing.
Plus, one of the things that happens when we redistribute income to
those who are more fortunate is we take away a stabilizing factor in
our society. You see that people at the lower income level get money,
and they will spend it, because they have no alternative. You give
money to those who are more fortunate economically and a lot of them
will save it, invest it in other countries, and do things like that.
Some of you will remember Senator Paul Douglas. I have his seat in
the U.S. Senate, and I am proud to have it. He was my political mentor.
He was an economist. A lot of people do not know that. Some will
remember the Cobb-Douglas theory of wages. The Douglas of that was Paul
Douglas. Back in 1950, he warned against the dangers that we are moving
down toward greater deficits, and he said with that will be higher
interest rates. It is very interesting that that year the deficit was
$3 billion, and the prime rate that year was 2 percent. What a great
thing that would be if we were there today.
But it is not only that we redistribute money to the wealthy; 17
percent of what we redistribute through interest now goes to other
countries. And the real figure is higher than 17 percent. The 17
percent is the public figure, held by individuals and corporations and
other countries. The reason the figure is higher is that some people,
because of laws in their country, do not want it known. But the 17
percent is a matter of some trouble.
Let us just say that the distinguished Senator from Maryland was the
president of the First National Bank in Carbondale, IL, and I came to
him and I said, ``I would like to spend more money than I take in this
year. Will you make me a loan?'' You look at my balance sheet and you
would agree to do that for 1 year. And I came in a second year, and you
would agree to do it a second year, and maybe the third year. But at
some point, a prudent banker is going to say: I think I better put my
money somewhere else. And at some point, some indefinable point,
prudent international bankers are going to say the same.
Lester Thurow, a very distinguished economist, has warned us that the
question is not if foreign holdings are at some point going to be
withdrawn; the question is when they are going to be withdrawn. The
only way we can prevent that from happening, in my opinion, is with a
balanced budget amendment.
I serve as chairman of the subcommittee on Africa, and that troubled
continent has major problems. One of the problems is, as the IMF and
the World Bank will tell you, that their debt exceeds their national
income. Their debt is 109 percent of their national income. But where
are we headed? In 1980, our debt relative to national income was 24.9
percent. Today, it is 70.5 percent. We are headed down the same road.
The GAO, in June of 1992, made a report suggesting that we are headed
toward major problems--again they use the term ``economic
catastrophe''--and suggested that we are headed toward 20 percent of
deficit relative to national income. That is modified because of the
action taken last August, and I wish I had up-to-date figures. The
initial indication is that figure may be down by about 3.7 percent.
But the significant fact is that no nation, no industrial nation, has
come anywhere near that figure without monetizing the debt, without
just printing money to get around it, and without having
hyperinflation. The closest example that we have near us is Mexico,
who, in 1988, reached the point of a 12.5-percent deficit relative to
their national income, and inflation there was 114 percent. That 114
percent would mean just cutting in half their Social Security
retirement fund; 114 percent inflation would mean cutting in half
pension benefits of people; 114 percent means cutting family savings in
half, and there are others that are much worse than that.
But let us just say you do not want to believe GAO on this. Let us
take a look at OMB. Here we have what they say--this is from the budget
documents, those four huge documents we got the other day--``Lifetime
Net Tax Rates Under Alternative Policies.''
Well, I was born in 1928. Here they had 130. You will see I will
spend an average of 30 percent of my lifetime income on taxation.
Let us get down here to the bottom where they say future generations.
Future generations was, before we passed reconciliation, believe it or
not, 93 percent; after that, 82 percent. And then they say with health
care reform and with their economic assumptions--and their economic
assumptions are not only that health care reform is going to save a lot
of money; and I am a cosponsor of the Clinton health care plan; I am a
believer in it--but they also assume you are going to have 10 years of
steady economic progress.
What about future generations? They say future generations will have
66 to 75 percent of their net lifetime earnings going for taxes.
Now that just is not going to happen, my friends. Do you know what we
will do before we do that? We will start printing money. We will start
the printing presses rolling. We will have funny money that is out
there. That is the experience of a great many nations.
I read a book recently about ancient Florence. That is what happened
there.
Adam Smith wrote ``The Wealth of Nations'' in 1776. He said:
When national debts have once been accumulated to a certain
degree, there is scarce, I believe, a single instance of
their having been fairly and completely paid. The liberation
of the public revenue, if it has ever been brought about at
all, has always been brought about by a bankruptcy; sometimes
by an avowed one, but always by a real one, though frequently
by a pretended payment.
So, by phony money.
Again I want to commend President Clinton for his leadership on what
he has done in the deficit.
According to CBO, what we voted on last August has saved us $433
billion. What CBO says we have to do between now and 2001 is save $600
billion, roughly the same amount. And there are other factors that even
suggest that the CBO figure is an underestimate in terms of the $433
billion. We are talking about a gradual decline in deficit, less than
the decline in the last 2 years. We are talking about something that is
not impossible.
It is interesting that the Wharton School last Thursday--and I have
not had a chance to discuss this with my colleague from Idaho--the
Wharton School last Thursday released a study saying that, yes, if we
were to move on this deficit, it could cause a little pain. They were
assuming across-the-board cuts, which I do not think we would provide.
But they also said, 30-year bonds, if we pass this, they predict will
drop from 6.5 percent to 2.5 percent.
Well, do you know what would happen to the economy in this country if
we dropped 30-year bonds from 6.5 percent to 2.5 percent, as they say
we will if we pass this? Housing construction would boom; industrial
investment would boom. It would be a great, great plus for this Nation.
I ask unanimous consent to have printed in the Record a column by
George Will and one by Michael Kinsley. George Will is a conservative
writer. Michael Kinsley is a liberal writer. Both of them are saying
why they are for the balanced budget amendment.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the Washington Post, Apr. 30, 1992]
It Ought To Be A Crime
(By George F. Will)
What House Speaker Tom Foley recently said would have sent
shivers down Washington's spine, if it had one. He predicted
the end of civilization, as Washington has known it. He
predicted Congress this year will pass a constitutional
amendment to require the federal government to balance its
budget.
The unlikely Robespierre of this revolution is Illinois'
mild-mannered Sen. Paul Simon, who calls himself a ``pay-as-
you-go'' Democrat. With the patience learned in nearly four
decades in politics, he has been visiting colleagues one at a
time, warning that the federal government's gross interest
costs, which were just $74 billion in fiscal 1980, are
projected to be $315 billion in fiscal 1993, when interest--
the rental of money--will be the largest federal expenditure.
Discerning conservatives know that huge deficits make big
government cheap for current consumers of its services,
thereby reducing resistance to the growth of government.
Sentient liberals recognize that huge deficits involve
regressive transfer payments: We are transferring $315
billion from taxpayers to buyers of Treasury bills--generally
rich individuals and institutions--in America and places like
Tokyo and Riyadh.
These are among the reasons why in 1986 the Senate cast 66
votes--just one short of the two-thirds needed--for a
balanced budget amendment. And in 1990 the House fell just
seven votes short. Today Congress is battered by scandal, by
anti-incumbent fever and by the term-limits movement, and is
bracing to be the villain in President Bush's campaign
rhetoric. So a balanced budget amendment is indeed likely to
be sent to the states.
Will the necessary three-fourths of the states ratify it?
Forty-nine of them--all but Vermont--operate under similar
requirements. And a vote against the amendment looks like a
vote for big government.
A balanced budget amendment would serve Congress's
institutional interests by requiring the president to propose
a balanced budget, something neither Reagan nor Bush has come
close to doing. Thus the amendment would end the tiresome
presidential posturing--``Only Congress can spend money''--
that places on Congress exclusive blame for deficits. In
fact, in states as well as in Washington, executive branches
generally determine the level of spending, and legislatures
merely modify--and not very much--spending patterns.
Some people predict that a balanced budget amendment would
be used as an excuse for large tax increases. That is
possible but, given today's taxaphobia, not likely.
Other people predict that an amendment would result in cuts
in program X, Y or Z. Such predictions are implicit
confessions that if Congress is forced to enforce priorities,
then X, Y or Z will be deemed dispensable. When $400 billion
deficits are permitted, marginal, even frivolous programs get
funded because costs can be shoved onto future generations.
Anyway, it is wrong to make support for a constitutional
change contingent on guesses about particular short-term
policy consequences. A sufficient reason for a balanced
budget amendment is to impose, on both the legislative and
executive branches, a regime of constitutionally compelled
choices.
Simon's amendment has a clause permitting escape from
restraint by vote of a super majority. Sixty percent of the
full membership of both Houses can vote an imbalanced budget
for, say, countercyclical purposes.
An unsolved and perhaps ultimately insoluble problem for
any balanced budget amendment is enforcement. What will be
the penalties for noncompliance? An unenforceable amendment
is less a law than an expression of intention. No one, least
of all conservatives, can equably contemplate involving
courts in enforcement of such an amendment, and evasion of it
would deepen public cynicism.
But at certain points, and this is one, the governed must
simply presuppose a sufficiency of honor among the governors.
Furthermore, elevating fiscal responsibility to the rank of a
constitutional duty will heighten public scrutiny of
budgeting behavior and will intensify public indignation
about any disregard of the duty.
I have hitherto (July 25, 1982) argued against a balanced
budget amendment on the ground that it is wrong to
constitutionalize economic policy. Since then there have been
2.9 trillion reasons for reconsidering--the 2.9 trillion
dollars added to the nation's debt. My mistake was in
considering deficits merely economic rather than political
events. In fact, a balanced budget amendment will do
something of constitutional significance: It will protect
important rights of an unrepresented group, the unborn
generations that must bear the burden of the debts. The
amendment blocks a form of confiscation of property--taxation
without representation.
The Constitution is fundamental law that should indeed deal
only with fundamental questions. But as the third president
said, ``The question whether one generation has the right to
bind another by the deficit it imposes is a question of such
consequence as to place it among the fundamental principles
of government. We should consider ourselves unauthorized to
saddle posterity with our debts, and morally bound to pay
them ourselves.'' Simon's amendment is, in Jefferson's
language, an emphatic withdrawal of an authorization
government has wrongly assumed.
____
[From the Washington Post, May 14, 1992]
The Liberal Case for a Budget Amendment
(By Michael Kinsley)
``It is the Congress that tells the executive how to spend
every dime,'' said President Bush, attacking ``the spending
habits of the Congress'' at a Bush-Quayle fund-raiser the
other day.
To call this hoary Republican bluff is one reason I'm for
Sen. Paul Simon's balanced budget constitutional amendment.
Each year, it declares, ``the President shall transmit to the
Congress a proposed budget * * * in which total outlays do
not exceed total receipts.'' Neither Ronald Reagan nor George
Bush has ever come close.
The amendment also would require Congress to enact a
deficit-free budget, unless a three-fifths majority in both
houses voted not to. Congress, terrified of the sour public
mood, is near-certain to pass some kind of balanced budget
amendment next month. But voting for a balanced budget
amendment is not just a desperate short-term political
expedient. For Democrats, it is good long-term politics.
The voters are hypocrites about federal spending: hating it
in general, cherishing it in the particular. The deficit is
the concrete expression of this voter hypocrisy. Politicians
of both parties cater to it. But by and large, it is
Republicans who since 1980 have made this hypocrisy the
central feature of American politics and Republicans who have
benefited politically from it.
A balanced budget amendment, if it worked, might lead to
lower spending or higher taxes or some combination. But at
least it would lead to an honest debate. That would not just
be hygienic. It would be helpful to the party that's been
losing the dishonest debate of the past decade.
Of course, mere partisan advantage is not a good enough
reason to amend the Constitution. There are those who think
that the goal of a balanced budget is neither necessary nor
wise. And there are those who support the goal but doubt the
means.
The argument against the desirability of a balanced budget
has many byways, but the main point is the traditional
Keynesian one that the stimulus of a deficit should be
available during recessions: The proper goal is balance over
the course of an economic cycle. Simon's three-fifths escape
clause is intended to allow for deficits during bad times. If
exercised promiscuously, this escape clause could make the
amendment worthless. But the medicine is there if needed.
What's driven some liberals to support a balanced budget
amendment, however, is the realization that deficit spending
has become a medicine we Americans can't be trusted with. We
use it when we're sick, then when we're healthy we just
increase the dosage. When, inevitably, we get sick again,
even gargantuan doses don't have their usual therapeutic
effect. Even to use this drug properly in the future, we
first will have to clear it out of our system.
The deficit also makes new forms of government activism
nearly impossible. If liberal politics is to be anything more
than a holding action (``reactionary liberalism,'' in Kevin
Phillips's devastating phrase), the nation's deficit
addiction must first be cured.
As a general rule the Constitution ought to dictate the
procedures of democracy and the protection of individual
rights, not specific policy outcomes. As Justice Holmes
famously put it, ``a constitution is not intended to embody a
particular economic theory. * * * It is made for people of
fundamentally differing views.
But have you read the Constitution lately? Many of its
clauses address concerns that now seem trivial. See the Third
Amendment, about quartering soldiers. We should only be so
lucky that fiscal responsibility seems a passe issue in
future years. And the balanced budget amendment, despite its
name, is arguably procedural, not substantive. It doesn't
mandate a balanced budget, but amends the legislative process
to counteract the current bias against one.
Robert Reischauer, head of the Congressional Budget Office,
calls the balanced budget amendment a ``cruel hoax'' on the
public because--like Gramm-Rudman before it--it substitutes
procedure for substance. It allows politicians to pretend
they're addressing the deficit while actually putting off the
painful slicing for later. (The amendment takes effect two
years after ratification by the states, which also could take
years.)
Reischauer is right that the amendment is a hoax on the
public, which is not being told what a balanced budget would
actually entail. But is it a cruel hoax? It would be if the
three-fifths escape clause became a routine exercise. But if
the amendment actually produced genuine fiscal discipline,
even four or five years down the road, it would be a kind
hoax, not a cruel one--sort of like enticing a beloved
relative into a drug treatment program.
It is cowardly, to be sure, for today's politicians to
support a balanced budget amendment instead of actually
taking action toward a balanced budget. But that cowardice
will catch up with them one way or another. They'll either
have to face the music in four or five years or retire in
order to avoid it. In fact, the balanced budget amendment
could make that other constitutional cure-all--term limits--
superfluous.
Mr. SIMON. The Concord Coalition says that we have to move in this
direction to get the kind of budget balance kind of help to our Nation
that we need.
I ask unanimous consent to have portions of this item printed in the
Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Concord Coalition Zero Deficit Plan
INTRODUCTION
Why Balance the Federal Budget?
The Zero Deficit Plan is a plan for our economic future.
The goal is to assure a more secure, prosperous future for us
and our children.
We are not seeking to balance the budget for its own sake.
Reducing government spending and increasing taxes means
short-term sacrifice. This can only be justified by the long-
term economic benefits that will flow from putting our fiscal
house in order.
Eliminating the deficit will help put the nation back on
the path to lasting prosperity and a rising standard of
living in the next century. That larger goal cannot be
achieved as long as the nation continues to run large,
chronic budget deficit.
Balancing the budget and the nation's economic future are
directly linked. There is a tie between budget deficits today
and what we can enjoy tomorrow:
Because there are only so many hours in each day, the
principal way Americans can increase their standard of living
is if each worker becomes more productive: produces more and
better goods and services for each hour worked.
For workers to become more productive, investments must be
made in better-educated and better-trained workers; in
modernized plants, equipment, and productive techniques; in
new discoveries and innovations; and in transportation,
communications, and other infrastructure.
To make these investments, there must be a pool of savings
that can be used for this purpose. Historically, the United
States has had a particularly low rate of private savings
but, what is worse, the federal government's deficit is
financed by soaking up most of the savings we manage to put
away. When the government spends more money that it has, it
borrows the rest. Most of the money borrowed comes from
private savings.
Only if the government stops using up private savings will
the money be freed for investment. Balancing the federal
budget will mean that the nation's savings could be used to
increase our productivity, create good jobs, and raise the
standard of living.
The declining trend in what Americans produce for each hour
worked illustrates how serious a problem this has become.
From 1946 to 1973, what Americans produced for each hour of
work increased 2.9 percent each year. From 1974 to 1993, the
increase was only 1 percent a year. If productivity had
improved as rapidly in the past two decades as it had in the
previous three, the median annual family income today would
be $50,500, instead of the $35,000 it is.
That $15,500-a-year gap is related to our large federal
deficit. But because we never had the $15,500, we don't miss
it in the same way we would if we had first enjoyed the
income and then given it up. As long as incomes continue to
creep up even slightly from one year to the next, the
cumulative shortfall in income remains largely hidden from
public indignation.
Solving the deficit problem does not automatically
guarantee a rosy economic future. Other developments are
needed to complement a balanced budget: reduced consumption,
increased savings and investment, improved productivity,
education, inflation and interest rates at desirable levels,
and a favorable worldwide economic climate. But unless we get
our deficit problem behind us, we will remain unable to take
advantage of these other necessary economic ingredients.
We cannot ignore the consequences of deficits much longer.
Growing commitments from one generation to the next cannot be
honored on empty pocketbooks. A stagnant long-term economy
cannot support retirement payments, medical care, and all the
other benefits and services we would like. And it cannot
support economic opportunity for today's youth to live as
well as their parents did.
Our massive federal budget deficits threaten our economy in
other ways as well. They increase the likelihood of
reigniting inflation by putting pressure on the government
simply to print more money to pay off its debt. The more
dollars are printed, the less each dollar in your wallet is
worth.
As foreign ownership of our resources has grown, so has our
dependence on the actions of foreign investors and
governments. These entities have come to own more and more of
our productive capacity. In addition, foreign investors have
bought up almost 20 percent of our government's recently
issued debt. As foreign holding of U.S. debt grows, so will
U.S. interest payments to foreign nationals.
Huge, continual deficits strangle the ability of even a
nation as rich as ours to respond when emergencies arise or
when new opportunities or problems emerge, including
recession. With our government deep in debt and continuing to
run huge deficits, we remain unable to shoulder new
responsibilities unless we shuck off existing ones.
How Large are our Annual Deficits and Accumulated National Debt?
In 1992, our government spent $290 billion more than it
raised in taxes. That deficit amounts to $1,150 for every
single American, or $4,600 for each family of four. That is
the sum your government borrowed on your behalf last year,
whether you wanted it to or not.
The $290 billion deficit was equal to 21 percent to federal
spending. For every dollar the government spent, 21 cents was
borrowed.
Our national debt, the net accumulation of all the annual
deficits we have run, stood at $4.4 trillion in August 1993.
That is $17,413 for every single American, or $69,651 for
each family of four.
The $4.4 trillion debt is equal to 74 percent of our
national economic output in 1992 (called the gross domestic
product or GDP). If every American worked from January 1 to
September 20 and paid all of his or her earnings to the
federal government and spent nothing on food, clothing,
shelter, or anything else, the public debt would still not
quite be paid off.
Some people say there is no line-item in the federal budget
labeled ``waste, fraud, and abuse.'' But there is. It is
called interest on the national debt, and last year it cost
our government $292 billion. That is more than we spent on
the entire U.S. military and almost as much as we spent on
Social Security. What did we get for it? Nothing--not a
single mile of highway, Social Security check, or military
aircraft--not even a single school lunch.
Because annual interest payments on the debt are now as
large as the entire annual deficit, our government is
actually borrowing just to pay interest. It is as if we were
running up our MasterCard to pay off our debt to Visa,
knowing that next year we will have to borrow even more from
American Express to keep the game going.
How Did We Accumulate a $4 Trillion National Debt?
Our nation was born in debt, a consequence of the high cost
of fighting the Revolutionary War. Our first president,
George Washington, adopted the practice of running generally
balanced budgets. President Thomas Jefferson went one step
further, pledging the nation to the goal of paying off its
debt within one generation. All subsequent administrations
for more than the next century and a half followed the
founders' lead: running infrequent deficits during most wars
and deep recessions and building surpluses to pay down the
national debt in times of peace and relative prosperity.
The Great Depression of the 1930s led to large deficits
when government revenues fell dramatically due to the high
number of people out of work and no longer paying income
taxes. Following on the heels of the depression, World War II
required still greater borrowing to mobilize 16 million
American troops to fight in Europe and Asia.
In the early postwar period, the Truman and Eisenhower
administrations and the Congresses with which they worked
roughly balanced the budget. Each president presided over
three surpluses and five deficits. As the economy boomed, the
national debt fell as a percentage of GDP.
However, during the 1960s and 1970s, the government began
to run deficits continuously. The debt grew slowly and
steadily and by 1980 it was almost $1 trillion. During the
past 12 years, it quadrupled to more than $4 trillion and is
projected to rise another $1 trillion by 1997. Since 1980,
our debt has grown far more quickly than our economy, so that
the debt is a much greater percentage of GDP than it has been
since the 1950s. The 1980s marked the first peace time
economic expansion during which the debt grew faster than the
economy.
Who is to blame for amassing such debt in times of peace
and relative prosperity, a debt that would have shamed our
nation's founders? All of us. Republican Presidents Reagan
and Bush and the Democrats controlling Congress resisted the
spending cuts and tax increases needed to balance the
budget. And voters supported candidates of both parties
who kept telling us what we wanted to hear instead of what
we needed to hear.
two visions of the future
What Will Happen if We Do Nothing
If we ignore our mounting debt, if we just wish it would go
away and so nothing about it, it will grow and grow like a
cancer that will eventually overwhelm our economy and our
society. The interest we owe on the debt will skyrocket. We
will continue our vicious cycle of having to raise taxes, cut
spending, and borrow more and more and more to pay interest
upon interest. Our productivity growth will remain stagnant;
more of our workers will have to settle for low-paying jobs;
and our economy will continue its anemic growth. America will
decline as a world power.
Sometime early in the next century, we will have to
confront the fundamental truth that low productivity and slow
economic growth have failed to generate enough goods and
services to satisfy all of our demands. Working people will
be required to pay an ever-larger share of their earnings to
support a growing retired population and to pay the exploding
interest on the debt that the older generation accumulated.
Eventually, working people will refuse to submit to the
crushing burden forced upon them by their elders. They will
vote for leaders who will slash entitlement programs, even on
the truly needy, rather than raise taxes still further.
Millions of elderly who thought that they could count on
their retirement benefits will find that the resources are
not there to meet their needs. There will be a generational
conflict pitting American against American, child against
parent, in a way that our nation has not seen before.
What Will Happen if Instead We Balance the Budget?
We could, on the other hand do the right thing: we could
refuse to let our leaders continually borrow and spend and
borrow and spend: insist that they stop wasting our money and
our children's money on programs that do not work and on
entitlement payments for the well-off who do not need them;
insist that what spending is done is paid for now out of
current taxation. If we do this, our deficits will disappear;
our debt will shrink; our interest payments will become more
and more manageable; our businesses will invest; our economy
will renew its rapid growth of earlier years; and more of our
people will find employment in higher-paying jobs; our
society will continue to flourish; and the American Dream
will be restored to our children and to our children's
children.
Do We Have To Start Now?
Yes. Every year we delay deficit elimination, the problem
gets worse. And every year we muddle through with halfway
measures, we slip deeper into debt. Even a smaller deficit
adds to our mounting national debt and pushes up interest
payments.
Some argue that the economy is too weak right now to launch
a serious deficit elimination campaign, but the truth is that
the economy is weak largely because we have such a massive
national debt. Until we get control over our deficits and our
debt, we will not control our economic destiny.
Why Have Other Attempts To Balance the Budget Failed?
Before considering what sort of deficit elimination plan we
should adopt, we ought to consider why previous plans have
failed to eliminate the deficit. Several reasons can be
identified.
Some did not even try to eliminate the deficit. They
settled for the lesser goal of reducing the deficit by only a
certain amount over a specified number of years.
Most were highly partisan and kept large parts of the
budget off the table. They excluded entitlement spending
reductions or tax increases, and were calculated more for
political than for economic effect.
Most plans employed gimmicks such as assuming
unrealistically high economic growth forecasts, pledging
savings in unspecified spending cuts, or using accounting
loopholes to claim savings where none existed. Deficits grew
larger when spectacular economic growth and cuts failed to
happen.
Some plans actually started with spending increases and put
off deficit reduction until tomorrow. That ``tomorrow'' never
arrived.
Some had too many conflicting priorities. They allowed less
important goals to supersede balancing the budget.
Most did not have reliable enforcement provisions. Without
them, they escaped the discipline required for deficit
reduction.
None of these efforts won adequate levels of grass-roots
support. Without the public behind them, the plans never
realized their potential because elected officials never felt
that hard choices were politically acceptable.
To maximize the chances that our plan will succeed, we must
avoid these pitfalls.
How Do Members of the Concord Coalition Think We Should Eliminate the
Deficit?
The Concord Coalition is a grass-roots organization with
members in every congressional district across the country.
To guide the formulation of The Zero Deficit Plan, The
Coalition surveyed its members, soliciting their views on the
deficit and how to reduce it. More than half responded.
The following points summarize the member input obtained
through the survey:
Virtually all Concord Coalition members are willing to
accept short-term sacrifice to enable long-term economic
growth and think that the budget should be balanced. A
majority want it balanced within five years.
Large majorities favor employing tax increases, defense
reductions, entitlement reductions, and domestic
discretionary cuts in deficit elimination.
A strong majority advocates more spending reductions than
tax increases. Almost all other responses advocate equal
spending cuts and tax hikes.
If taxes must be increased, Concord Coalition members
strongly prefer higher alcohol and tobacco, luxury, and
energy taxes over increases in corporate, income, and sales
taxes.
Mr. SIMON. Madam President, what we are talking about is something
that is achievable.
Some people come to me and say, ``Well, why don't you present a
plan?''
There are a half dozen plans out there; one of them by a group called
Families First, which says if you exclude Social Security and you were
to limit growth for this 5-year period to 2 percent, you would have
$542 billion of the $600 billion needed.
I am not wedded to any plan. What I am saying is we have to get here.
But if our opposition says, ``Why don't you present a specific plan of
getting there,'' and they say we can balance the budget without a
constitutional amendment, I think we ought to hear from them. Where is
their plan if they say we can do it without a balanced budget
amendment?
If this passes--and I think I speak for my colleagues who are
cosponsors--we want to start to work right away putting something
together.
Social Security has been raised as an issue; that we are going to
harm Social Security. First of all, politically, it will be the last
thing we start cutting. But it is interesting, Madam President, that
Robert Myers, who was the actuary for Social Security for 23 years, has
written me a letter in which he says the only way to protect Social
Security is through a balanced budget amendment.
I ask unanimous consent that Robert Myers' letter be printed in the
Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
Silver Spring, MD,
February 15, 1994.
Hon. Paul Simon,
U.S. Senate,
Washington, DC.
Dear Senator Simon: I am pleased to have this opportunity
to express my support for the Balanced Budget Amendment.
For 37 years I worked for the Social Security
Administration, serving as Chief Actuary in 1947-70, and as
Deputy Commissioner in 1981-82. In 1982-83, I served as
Executive Director of the National Commission on Social
Security Reform. And I continue to do all that I can to
assure that Social Security continues to fulfill its
promises.
The Social Security trust funds are one of the great social
successes of this century. The program is fully self-
sustaining, and is currently running significant excesses of
income over outgo. The trust funds will continue to help the
elderly for generations to come--so long as the rest of the
federal government acts with fiscal prudence. Unfortunately,
that is a big ``if.''
In my opinion, the most serious threat to Social Security
is the federal government's fiscal irresponsibility. If we
continue to run federal deficits year after year, and if
interest payments continue to rise at an alarming rate, we
will face two dangerous possibilities. Either we will raid
the trust funds to pay for our current profligacy, or we will
print money, dishonestly inflating our way out of
indebtedness. Both cases would devastate the value of the
Social Security trust funds.
Regaining control of our fiscal affairs is the most
important step that we can take to protect the soundness of
the Social Security trust funds. I urge the Congress to make
that goal a reality--and to pass the Balanced Budget
Amendment without delay.
Sincerely,
Robert J. Myers.
Mr. SIMON. And then the argument, ``Well, doesn't the Federal
Government have to issue bonds just to take care of things?''
The GAO has made it very clear that would be an unwise policy.
I ask unanimous consent to have printed in the Record a statement by
the GAO on this.
There being no objection, the material was ordered to be printed in
the Record, as follows:
GAO Statement
* * * the creation of explicit categories for government
capital and investment expenditures should not be viewed as a
license to run deficits to finance those categories * * *.
The choice between spending for investment and spending for
consumption should be seen as setting of priorities within an
overall fiscal constraint, not as a reason for relaxing that
constraint and permitting a large deficit.--GAO, Prompt
Action Necessary to Avert Long Term Damage to the Economy.
(Mrs. BOXER assumed the chair.)
Mr. SIMON. Then people say, ``Well, with the balanced budget
amendment, we can't have the kind of investment that we ought to
have.''
It is very interesting that in 1966 when we had a deficit of $3.7
billion, we had long-term investments of 2.6 percent out of our budget.
In 1991, with a $268 billion deficit, we had 1.8 percent. The deficit
has not increased investment.
What we need right now, finally, Madam President, is an outpouring of
people contacting their Senators saying: ``We want pay-as-you-go
Government.''
We simply are not going to stop the abuses. You see what is happening
in the future in terms of the deficit, even with what happened last
year. We are going to have to get ahold of this thing. The American
people have to let the Members of the U.S. Senate know that they want
this.
There is an old saw that there were so many heroes at the Alamo
because there was no back door. We need something without a back door.
Politicians do not like to do unpopular things. There is no popular
way of balancing the budget. But we are going to have to do some
unpopular things.
Every generation of Americans, Madam President, has taken care of
themselves and invested in the future, up until this generation. We
have partially taken care of ourselves and borrowed from the future.
That has to change.
I mentioned at the caucus this noon--and you were at the Democratic
caucus, Madam President--that while I have one grandchild now, this
year I am going to have two more. And I am looking forward to becoming
a grandfather twice more.
What this amendment suggests is that I ought to take a little pain on
myself, rather than borrow from those grandchildren who are not yet
born.
Am I willing to do that? Of course. Are the American people willing
to do that? Of course. We are ready. We have to do the right thing. But
we need the discipline of a constitutional amendment, and I hope we get
it.
Madam President, I reserve the remainder of my time.
The PRESIDING OFFICER. The Senator from Idaho.
Mr. CRAIG. Madam President, once again let me compliment my colleague
from Illinois for the tremendous work he has done over the last good
number of months and years to ultimately bring this resolution to the
floor of the U.S. Senate. I have served 14 years in the U.S. Congress.
Ten of those years were in the House. From 1982 on, it became obvious
to me that unless this kind of change, as proposed in Senate Joint
Resolution 41, was brought to the American people that we would never
gain control of the Federal budget.
So, when I came to the U.S. Senate I was so privileged, I felt, to
join Senator Simon, Senator Orrin Hatch who spoke just a few moments
ago, Senator Strom Thurmond who, for over 30 years, has stood on the
floor of the U.S. Senate and spoken to this issue, and of course
Senator DeConcini of Arizona, another outstanding leader on this issue.
So we are here this evening to begin what I believe is a momentous
debate on legislation that this generation will not only feel the
impact of, but generations to come will feel the tremendous benefit of.
I would like to pause for a moment and do something that I very
seldom do in the debate on legislation. I would like to read into the
Record this very simple, straightforward and relatively brief amendment
that we are proposing to send to the United States for its
consideration and ratification. You will hear, in the course of this
debate over the next days and possibly weeks, Senate Joint Resolution
41 referred to. As my colleague from Illinois has mentioned, it now has
54 cosponsors, both from the Democrat and Republican sides of this
body. So let me read.
Senate joint resolution 41, proposing an amendment to the
Constitution of the United States to require a balanced
budget.
Resolved by the Senate and House of Representatives of the
United States of America in Congress assembled, (two-thirds
of each House concurring therein), That the following article
is proposed as an amendment to the Constitution, which shall
be valid to all intents and purposes as part of the
Constitution when ratified by the legislatures of three-
fourths of the several States within seven years after the
date of its submission to the States for ratification:
``Article--
``Section 1. Total outlays for any fiscal year shall not
exceed total receipts for that fiscal year, unless three-
fifths of the whole number of each House of Congress shall
provide by law for a specific excess of outlays over receipts
by a rollcall vote.
``Section 2. The limit on the debt of the United States
held by the public shall not be increased, unless three-
fifths of the whole number of each House shall provide by law
for such an increase by a rollcall vote.
``Section 3. Prior to each fiscal year, the President shall
transmit to the Congress a proposed budget for the United
States Government for that fiscal year, in which total
outlays do not exceed total receipts.
``Section 4. No bill to increase revenue shall become law
unless approved by a majority of the whole number of each
House by a rollcall vote.
``Section 5. The Congress may waive the provisions of this
article for any fiscal year in which a declaration of war is
in effect. The provisions of this article may be waived for
any fiscal year in which the United States is engaged in
military conflict which causes an imminent and serious
military threat to national security and is so declared by a
joint resolution, adopted by a majority of the whole number
of each House, which becomes law.
``Section 6. The Congress shall enforce and implement this
article by appropriate legislation, which may rely on
estimates of outlays and receipts.
``Section 7. Total receipts shall include all receipts of
the United States Government except those derived from
borrowing. Total outlays shall include all outlays of the
United States Government except for those for repayment of
debt principal.
``Section 8. This article shall take effect beginning with
fiscal year 1999 or with the second fiscal year beginning
after its ratification, whichever is later.''.
Eight very clear and very simple sections to what could easily become
the 28th amendment of the Constitution of the United States.
Madam President, I have read this amendment. You have heard it. And I
do not see any portion of that amendment that threatens to dismantle
the vital Government programs. I do not see any portion of this
amendment that threatens to dismantle the military. I do not see
anything in this that would disenfranchise our elderly, especially our
children, and I do not see ruinous taxes or a downward spiral in the
economy. In other words, and you have heard the amendment tonight, I
think all can agree that there is not a ``sky is falling'' scenario
wrapped within the words of the 28th amendment to the Constitution as
it has been proposed by the 54 Senators that now cosponsor it. It is
without question a clear and straightforward document of the nature
that anyone would want to see placed within the Constitution of the
United States that believes in a constitutional charge to this Congress
for the purpose of remaining fiscally responsible.
I see a restoration of that compact in which Government again begins
to practice responsible stewardship of the people's economic resource.
Far more than codifying a fiscal rule or an economic principle, this
amendment would make the Government more responsive to and more
representative of the people, and of course we know that is what the
Constitution is all about.
When I look at a balanced budget amendment I see a constitutional
class resolution to a constitutional class crisis, and I see a
constitutionally appropriate mechanism for restoring a part of the
democratic process that has been broken beyond our ability to repair it
for well over a decade. When I spoke to this amendment on the floor in
recent weeks, I began to outline what I believe is the fundamental
right that we seek to protect. That right is offered in this amendment.
What is that right? It is the appropriate right that our Framers meant
when they formed the Constitution, and that was to protect citizens
from a large or growing government.
So, first I want to reiterate the single compelling principle that I
think leads us to Senate Joint Resolution 41 before the Senate now and
for several days to come. And I believe that compelling principle is
simply this: The ability of the Federal Government to borrow money from
future generations involves decisions of such magnitude that they
should not be left to the judgments of a transient majority. Let me
repeat that. The ability of the Federal Government to borrow, borrow
money from future generations, involves decisions of such great
magnitude that they should not be left to the judgments of a transient
majority.
I believe that to be a fundamental constitutional principle. My
colleague from Illinois spoke to it this evening in referencing Thomas
Jefferson and his great fear that a government would grow beyond its
ability to pay for itself and the political environment would allow
that to happen.
We are not coming to the floor to try to amend the Constitution
merely because the Federal Government has been fiscally irresponsible,
though. The stakes are much higher than that, Madam President.
Sometimes we lose sight of the fact amid all of the deficit projections
and the budget numbers and the economic models, we are coming to the
floor tonight with Senate Joint Resolution 41 because at a systemic
structural level, our system has become locked on a course of violating
the fundamental right of our people: The right to be free from the
harms caused by massive indebtedness from a profligate Government. We
know that is a right, but we have not been willing to stand up and
speak to it.
Tonight, we are standing, speaking to that very principle and what I
believe must become a constitutional right, as insightful thinkers like
Thomas Jefferson to the chief sponsor of our resolution, Senator Simon,
have pointed out. There is a moral imperative that the Government
restrain itself or be restrained by the Constitution. He spoke of his
grandchildren softly and kindly tonight. He speaks of the moral
imperative that you and I and every Senator must face today and
tomorrow and through the week of this very important debate. When we
look at the provisions in the Constitution and the kind of rights
protected and processes described, we see a balanced budget amendment
would be constant alongside all of those provisions.
First, we noted our Constitution generally protects the rights of all
individuals by restraining the powers of Government, the very things I
talked to this evening. The Government is restrained from infringing on
the right of free speech and of the press, on the exercise of religion.
It is restrained from taking life and liberty and property without due
process of law and from taking private property without making just
compensation. It is constrained from abridging the right to vote on the
basis of race and sex. It may not impose excessive bail, fines or cruel
and unusual punishment. It may not infringe upon the right of the
people to keep and bear arms.
Like these other provisions, I believes the balanced budget amendment
would limit the power of Government. It prohibits Government from
allowing its outlays to exceed its receipts, except in certain and very
exceptional circumstances. It limits Government's ability to incur
debt. Like so many other provisions of the Constitution, its central
function is simply to prevent the Government from committing to very
harmful excesses. Like those other provisions of the Constitution, a
balanced budget amendment limits the power of Government for the
purpose of protecting a fundamental right of the people. This right has
both political and economic dimensions.
In terms of the political process, Madam President, the balanced
budget amendment goes right to the heart of how effective the
democratic process actually works. In poll after poll, and election
after election, the American people have shown that they want a
balanced budget amendment because, after all, they want their
Government to live within its means and they speak to us every year and
every day through the means that they can focus on. The public has a
general, if diffused, interest in Government that spends no more than
they are willing to pay in taxes and restrain its appetite in growth
and the intrusion upon the lives of the free citizen.
On the other hand, though, the interests that want and benefit from
much Federal spending are narrower and much better organized than the
average citizen. They mobilize to fund, to promote and to reelect those
who fund them and to defeat those who, for one reason or another, say
no to them. In other words, very large and very powerful interest
groups have grown up over the last 40 years who speak to the issue of
Federal spending and defend what they believe is their right to gain
accession to the largess of the public Treasury, while the average
citizen who pays his or her taxes and goes along and only asks
Government to stay out of their lives now begins to speak up because
the recognize, as so many do, that Government, in its profligate
spending, is beginning to take away their right, their freedom to live
in the best way they can, based on their ability to earn.
Saying no, Madam President, is never pleasant. That is simply human
nature. But the Congress and the President found it easier to say no
when it was necessary to do so because of a common view that the size
and the scope of Government was strictly limited by the expressed,
literal declaration of the powers in the Constitution and the ability
to accommodate deficit spending was severely restricted by the monetary
policy tethered by an anchor of gold. Well, then, during the Great
Depression of the 1930's, the desperation of the American people and
the willingness to experiment by elected officials changed America's
view of its central Government.
While deficits were expected to exist only in a temporary way, for
the purpose of combating economic downturn, the role of Government
became not only more expansive but also much less defined. It was
assumed the Government would manage the economy--sort of, that is--
provide for a modest social safety net and eventually turn to the
practice of balancing its budget once again. It did not happen. During
the 1960's, the American people were told by a new generation of
economists and politicians, courting various groups without having to
worry about fiscal restraint, that deficits did not matter anymore.
After all, we only owe this money to ourselves, a modern, enlightened,
scientific view; well, if we work this altogether and somehow mix it
up, we will balance the budget, someday, and anyway, it is just an old
dogma. You know, we do really owe this money to ourselves.
We know the rest of the story. After all, Government did not feel any
need to go on a diet as long as they could borrow enough to buy newer
and bigger suits of clothes for all Americans. As a result, the dynamic
of spend and spend and borrow and borrow and elect and elect became
ingrained in our political system at the Federal level. And you will
hear hour after hour over the next few days the repetition of that
dogma. Oh, it will come in different forms and it will be expressed
with different styles, but the bottom line is that a Congress bound now
to this appetite of spending and spending and borrowing and borrowing
cannot get off it.
The accumulation of these trends was ``stagflation'' of the 1970's. A
new term; we had to create it. We did not understand where we were.
Some of us did not understand how we got there, but we found out what
the results were: Thousands of Americans out of work, a budget that was
in runaway, and inflation that had to be grabbed and corralled with
great severity on the economy and, therefore, the people of our
country.
But what happened, with all of those efforts, the deficit continued
to grow and a sluggish economy resulted in the economy now of the
1990's. In short, the old constraints that tended to balance the
Government's appetite to grow with the people's appetite to have our
Government grow was there. The people's view of their Government can
change and this Nation can remain strong, but there needs to be some
process to constrain the ability of our Government to spend, and we
step forward tonight with the beginning of that process.
Senate Joint Resolution 41 sets forth, as I have read to you, a very
simple requirement that brings this Congress together, like it has
never been brought together before, for us to make the tough decisions
that will lead us to a balanced budget.
We are not just talking about future dangers or present harms. The
Senator from Illinois knows so well and pointed out at last week's
Appropriations Committee hearing, the Federal debt that occurred in the
1980's has already lowered our standard of living by 5 percent or more.
If the national debt had been paid off during the prosperous times
after World War II, if we had no Federal debt to serve today, the
Government would actually be running a $286 billion surplus over the
next 5 years. That is $286 billion that is not available for some to
spend on their favorite social programs, if they wanted to. That is not
$286 billion that would be available for national defense, if that is
where we wanted to spend it. And that is not $286 billion that this
Senator would be more inclined to give to his citizens of Idaho and to
other Americans in the form of tax relief.
Spending on interest not only crowds out our fiscal priorities, it is
blatantly regressive. Interest payments represent a transfer of funds
from the working middle class who pay the bulk of the Federal taxes to
the large bankers, the corporations, the wealthy individuals who have
the money to invest in U.S. Treasury securities.
About 15 percent of these payments now go overseas. Already, at $201
billion in fiscal 1994, net interest is the third largest item in
Federal spending behind Social Security. A $298 billion gross interest
is the second largest spending item in the Federal budget. We are now
having to pay for all of that money we borrowed and spent over the last
decades, and yet we have not even touched the principal. I am talking
about interest and interest alone on the debt.
Today, Federal budget deficits are the single largest threat to our
economic security and therefore our national security. The Government
has spent more than it has taken in for 56 out of the last 64 years.
The budget was last balanced in 1969. The result is a Federal deficit
totaling $4.5 trillion. As many of us stood on the lawn of the Capitol
today in a press conference and showed the national debt clock running,
that represents over $18,000 for every man, woman, and child in America
that they now owe as a part of their citizenship in this country to the
Federal debt. And that figure continues to grow. This Congress has
demonstrated no ability to contain it.
Americans are paying now not only with the debt burden they have but,
with a sluggish economy, for Government's past debt addiction. We must
stop that.
``Muddling through'' is the term that I think the CBO baseline
represents today. We cannot talk about a dynamic economy that employs
the unemployed. We can only talk about getting through, making ends
barely meet. Muddling through should not be the economic policy of this
country. But when we have an annual Federal deficit of the kind we
have, without any means of showing its reduction, without any means of
referencing to the American people that we are headed on a downhill
slide toward a balanced budget in the positive and responsible sense,
then muddling through is what we will get.
After 1996, although there are glowing reports about the current
budget, what is quietly being whispered by this administration is that
the budget begins to balloon in the sense of a deficit, and by the year
2020 that Federal deficit again hits the $500- to $600-billion-a-year
mark. So for the moment, muddling through is a scenario of literally no
action at what is most importantly a very critical time in our country.
In the recent statements I have made, I have outlined what I believe
is the essence of the balanced budget amendment to deal with what I
think is a fundamental American right, a right of the citizen, a right
of the people. The nature and importance of this right has made it the
kind of right traditionally, and what we believe to be appropriately,
protected in the Constitution because somehow, as much as we all
believe in it, we have not yet in the history of this country been able
to secure and then maintain that right for our free citizens. This
right has been seriously and repeatedly violated. The American people
have been harmed, and absent what we think is a fundamental structural
change in our system, our children will be harmed even more.
As the debate over the balanced budget amendment is now joined in
earnest by all of our colleagues, I will demonstrate, as will others,
what I believe to be the importance of this constitutional restraint;
that it does not harm nor does it infringe, but in fact it begins to
unleash the dynamics and the energy of the marvelous experiment known
as America and our Republic.
We will also see, through a proposed amendment, other ways of
protecting that I do not believe will be valid. We will stand before
you and say that no amendment is appropriate if it is to stray away
from, to set aside, to move off budget any portion of the consideration
of our Federal Government expenditures.
I am even more eager to move this amendment to the many State
legislatures which will ultimately debate it once the Congress has
ratified it, because I think for the first time across America and in
the chambers of every State legislature will be one of the most
exciting debates in the history of our country, or since the
ratification of the Constitution, or the debate on the Bill of Rights,
or the first 10 amendments, because Americans will understand more than
they ever have what our budget is all about and what we are talking
about, and what they ought to expect of their Federal Government's
budget and, more importantly, what they ought not expect because that
will be the debate that will follow.
While we will be engaged here but a few days or a week, this debate
will go on for months in the 50 legislatures of this country. I think
that to be in the end the most exciting proposition that brings us to
changing the Constitution and adding the 28th amendment;
So, Madam President, let the debate begin. It is historic and I
believe fundamentally important to the future of our country.
I retain the remainder of my time.
The PRESIDING OFFICER. The Senator retains 5 minutes, the Senator
from Illinois has 1 minute and 51 seconds remaining, and the Senator
from West Virginia has 90 minutes.
Mr. BYRD addressed the Chair.
The PRESIDING OFFICER (Mr. Levin). The Senator from West Virginia.
Mr. BYRD. Mr. President, this will undoubtedly be, in my estimation,
the most important issue that will come before this Congress, and as
far as I am personally concerned it will be one of the most, if not the
most, important votes that I shall have cast in 41 years on Capitol
Hill. This is my 41st year. I have cast in the Senate 13,381 votes as
of this moment, and including my votes in the House of Representatives
during 6 years there I have cast 13,812 votes--13,813, as a matter of
fact.
Now, why do I consider this vote to be of that importance?
I shall, by and by, before the evening is over get back to that
point. For the moment, let me begin by saying that I agree with my
friends and colleagues, the distinguished Senator from Illinois [Mr.
Simon], the distinguished Senator from Idaho [Mr. Craig], the
distinguished Senator from Utah [Mr. Hatch], and all those who speak of
the seriousness of the deficits and the seriousness of the debt.
I agree that we have a mountain of debt. That debt has increased from
a little under $1 trillion during the first 39 administrations and the
first 182 years of our country's history, that debt has increased from
a little under $1 trillion up to what it is today now, almost $4.5
trillion. In other words, as I was going to say, it took 39
administrations and 102 years in our Republic to reach just under $1
trillion. And that meant that we went through several wars, panics,
recessions, and depressions. But during the past 13 years, 12\1/2\, 13
years, that debt has increased to four times--certainly increased by
three times what it was--so that today it is $4.5 trillion. That is
sufficient to cause anyone concern.
So I do not disagree with my friends on that point at all. We are in
agreement. We will stipulate that.
I went to a budget summit in 1990. I voted for the budget deficit-
reduction package on that occasion. I voted for the budget deficit-
reduction package last year. So I am on record as having supported both
those budget deficit-reduction packages. My friend from Illinois voted
for the one last year, but he did not vote for the 1990 budget deficit-
reduction package.
So I think we are on the right track insofar as the budget deficit-
reduction packages are concerned. So to begin with, as I say, we agree.
There is no argument, no debate with respect to the seriousness of the
debt, the deficits, and the interest we pay on the debt. That is not
what we are debating. So we shake hands on that right at the beginning.
But let us go from there.
I do not hear my friends describing their amendment, explaining their
amendment, debating the amendment. They have been debating only that we
are in tougher times and we have to make headway with the debt and the
deficit. Of course, that is true. Everybody out there will agree with
that, everyone who is watching and listening to the proceedings here
this evening.
Now let me deal with a few of the points that have been suggested
here this evening. My friend from Illinois, Mr. Simon, said that our
Constitution serves two purposes. I am trying to paraphrase him. If I
am in error, he is here on the floor, he will correct me, of course.
But as I understood him, he said that the Constitution serves two
purposes. One, it is an expression of philosophy, and, two, it prevents
abuses. The Senator is nodding his head in the affirmative.
Now, I do not agree that the Constitution is an expression of
philosophy. I hope that we are not contending that this is not a
republic but that it is a philosophocracy. A philosophocracy is a
government by philosophers, a government by philosophy.
Our Constitution is far from being an expression of philosophy. The
fundamental purposes and principles that are written into our
Constitution do these things: First, they create the branches of the
government. The first article creates the legislative branch. The
second article creates the executive branch. The third article creates
the judiciary, and so on. So the Constitution creates the various
branches of power, the branches of government.
Then it distributes the powers. It distributes the powers between the
Nation and the States. It also distributes the powers between and among
the three branches of government, the legislative, the executive, and
the judicial.
Finally, it distributes the powers within the legislative branch
itself, the powers between the two Houses. It gives the House certain
powers. Revenue bills shall start in the House. The House has the power
of impeaching a President. The Senate conducts the trial of a President
or any other Government officer who is impeached. So it distributes the
powers between the two Houses.
What else does it do? It protects certain liberties and freedoms for
the individual--life, liberty, property, the right of freedom of
speech, the right of freedom of religion.
So that basically is what this organic instrument does. It does not
express philosophy. It sets up the various branches of government. It
creates the structure of government. It distributes the powers between
and among these various branches. And it delineates the rights of
individuals. That is what it does. It is the basic organic law of our
country.
That Constitution does not set forth budget or fiscal policy. This
amendment would place in the Constitution of our country an element
that is foreign to it as of now, an element that was foreign to it when
the Framers wrote that Constitution.
What else does this amendment do to the Constitution? It violates the
basic principle of the Constitution. And that principle is the basic
undergirding element in a representative democracy, the element of
majority rule. Take the element of majority rule away and this no
longer is a democracy. It is no longer a representative
democracy. Throughout that Constitution--except in five instances in
that Constitution--we see that majoritarian principle pervasive; it
pervades all four corners of the Constitution. That is fundamental.
Take away that and this is no longer a republic.
Thirdly, this amendment will prove to be illusory. It is an empty
promise, and we are about to write into the Constitution a promise that
cannot be kept in this way and will not be kept. And if it is kept, as
I will discuss, it will prove very destructive to the constitutional
system of checks and balances and separation of powers.
Additionally, it may increase the deficit instead of reducing the
deficit. Why do I say that? Because once this amendment is adopted in
both Houses, God forbid, then it goes to the States for ratification.
Then, contrary to what my friends here say, there will be a letdown in
the vigor, the determination, and the serious efforts to balance the
budget. And the people back home will think the problem is all taken
care of. We have an amendment that says the budget will be balanced. So
we will let down our efforts and, come 1999 or the year 2001, whichever
is the later according to the amendment, we will find ourselves with
greater deficits than we have now.
There are other reasons why the deficits, I think, would probably be
greater than they will be without this amendment, and I shall touch
upon those later.
Now, my friend Mr. Simon again refers to Thomas Jefferson. Well,
Thomas Jefferson was one of my favorites, also. He was the town
fiddler; he played the violin, and he was a great President. By my
book, he is one of my favorite Presidents of all time, the sage of
Monticello. But the Senator from Illinois continues to talk about Mr.
Jefferson. I want to talk a little about Mr. Jefferson, also. Thomas
Jefferson wrote a letter to John Taylor, who was a Senator from the
State of Virginia. Jefferson wrote a letter to John Taylor on November
26, 1798, in which Jefferson said:
I wish it were possible to obtain a single amendment to our
Constitution. I mean an additional article taking from the
Federal Government the power of borrowing.
And then in 1789, September, he wrote the celebrated ``The Earth
Belongs To The Living'' letter to James Madison. In that letter, he
argued that no generation can contract debts greater than may be paid
during the course of its own existence. Jefferson calculated that
period of about 19 years.
So Jefferson's quotations have been made the underpinnings, to a very
considerable extent, of the arguments that are propounded by my very
able and lovable friend, Paul Simon, and others.
Jefferson was not at the convention. He was in Paris during the
convention in 1787, and I wish at this point to quote James Madison.
Madison is generally recognized to be the ``Father of the
Constitution.'' I do not know how many of my friends have read his
notes from one end to the other. I have. James Madison, who is the
father of the Constitution, believed differently on this subject.
One question that I would ask rhetorically of my friends is: If
Jefferson believed that a nation should not incur debt; if he said, as
he did say, ``I wish it were possible to obtain a single amendment to
our Constitution, taking from the Federal Government the power of
borrowing,'' why did he not promote such an amendment to the
Constitution? He was President from 1801 to 1809. Why did Jefferson not
promote a constitutional amendment to carry out what he said in his
letter to Senator John Taylor? Why did he not do it? He was President
of the United States. He had the opportunity to press for such an
amendment then.
Well, Jefferson had the unique opportunity to add to the territory of
this Nation the Louisiana territory, out of which all or part of 15
States of this Nation eventually were formed. He hoped to purchase the
Floridas, east and west Florida, and the Port of New Orleans. So he
asked his Ambassador, Robert Livingston, to propose the purchase of the
Floridas and New Orleans. Jefferson also sent James Monroe as an envoy
to Paris to work with Livingston. Talleyrand suddenly, in essence,
asked: How would you like to purchase all of the Louisiana territory,
all of Louisiana? Well, our two envoys there were not sure that they
were constitutionally authorized to do that. But they felt that the
Congress and the President would certainly approve it, because this was
a magnificent opportunity to add to the length and breadth of the
United States.
And so, there was an agreement that they pay $11\1/4\ million, plus
assuming $3\3/4\ million of claims against France, making a total of
$15 million. And so the Louisiana territory was purchased for $15
million.
Did Jefferson pay it cash on the barrel head? No. They went into debt
for it. And the Congress authorized the borrowing of that money from
English and Dutch banks. So here we are with this President, whom we
all honor and would love to emulate, borrowing the money. So he went
into debt. So he said one thing and did another. And I am glad that he
did.
Now, how big a debt was that $15 million? Well, in that day and time,
the total Federal budget was $7.852 million. That was the total Federal
budget, $7.852 million. That was the total Federal budget. But he went
into debt $15 million, which was 1.9 times the Federal budget.
Now, how would that budget and that debt equate as compared with
today's budget and today's deficit?
Well, $7.852 million being the total budgetary expenditures that year
as compared with the budget of this year, which is $1.474 trillion.
That is the total budget for this year.
Well, how much would the additional deficit be to add to our mountain
of debt if a similar purchase were made today?
The purchase in that instance was 1.9 times the Federal budget. A
like purchase today being 1.9 times the Federal budget of $1.474
trillion would amount to $2.815 trillion.
Now how would that be to suddenly add to the debt and to the deficit
if this year in one transaction we added $2.815 trillion? That would be
a whopper, would it not?
Well, that is what Jefferson took on. He made a purchase. He went
into debt for the territory, the purchase amounting to 1.9 times the
total Federal budget. Well, that would perhaps lend a little
perspective to the view.
Well, let us see what Madison says about this business of going into
debt. Madison, as Father of the Constitution, said: ``The improvements
made by the dead form a charge against the living who take the benefit
of them.'' Meaning the improvements made by the people of today form a
charge against the living of the next generation or the next several
generations--``form a charge against the living who take the benefit of
them.'' The living, the future generations, take the benefit of the
improvements made by the leaders and the people of today.
Madison went on to say: ``Debts may be incurred for purposes which
interest the unborn''--Jefferson must have thought that--``interest the
unborn as well as the living.'' ``Debt may be incurred for purposes
which interest the unborn as well as the living; such are debts for
repelling a conquest, the evils of which may descend through many
generations.''
So we should give greater weight to Madison's view. Why? One, because
he is recognized as the Father of the Constitution; and, two, because
Jefferson did exactly what he said he did not believe we ought to do.
So he said one thing and did another. And I am glad he did. And I am
sure that he was glad that he did.
So we should give greater weight to Madison's view that debts will be
incurred principally for the principle of posterity. Jefferson's view
was an abstract idea that was written in a letter from European shores.
And particularly compelling is Madison's salient observation of the
year of 1790 that ``the present debt of the United States . . . far
exceeds any burden which the present generation could well apprehend
for itself.''
Now, Jefferson grappled with this contradiction. Elected in later
years, he grappled with this contradiction. He referred to the
question. He said, ``The question was easy of solution in principle but
somewhat embarrassing in practice.''
So Jefferson was embarrassed when he was confronted with this
statement or these statements of his with reference to debt and saying
that we should not go into debt beyond our own ability to pay and our
own generation and all that. He was confronted with that statement and
also in the light of his actions in purchasing the Louisiana territory
and going into debt for that territory.
So he suggested that the laws of necessity were sometimes higher than
the written laws of Government and concluded that it would be absurd--
now this is Jefferson talking--he concluded that it would be absurd to
sacrifice the end to the means.
Well, so much for Jefferson on that point.
Next, my friend from Illinois and his colleagues who are supporting
the amendment state that statutory changes are too easily avoided; we
change the statute.
But, let me first, however, take a look at the amendment.
So, let us read the amendment and then we will get back to this.
Section 1 of the amendment, ``Total outlays''--here it is. Two pages.
Two pages. Not very voluminous. But in this large print it reads:
``Section 1. Total outlays for any fiscal year shall not. . . .'' It
does not say, ``may not.'' There is no room to wiggle. ``. . . shall
not exceed total receipts for that fiscal year, unless three-fifths of
the whole number of each House of Congress shall provide by law for a
specific excess of outlays over receipts by a rollcall vote.''
``Section 2.''
Mr. CRAIG. Mr. President, may I ask the Chairman a question before we
leave that section?
Mr. BYRD. I would like not right at this point. I will be glad to
yield later.
Mr. CRAIG. All right.
Mr. BYRD. ``Section 2. The limit on the debt of the United States
held by the public shall not be increased, unless three-fifths of the
whole number of each House shall provide by law for such an increase by
a rollcall vote.''
So here we have the supermajority, another supermajority written into
the Constitution. There are only 5 of those, only 5 supermajority votes
written into the Constitution: One, the supermajority that
is required to override Presidential veto; two, the supermajority that
is required in article V to amend the Constitution, two-thirds of each
House. And one, the supermajority required to approve the ratification
of a treaty. One, the supermajority required to convict a President or
other officer of the United States who has been impeached. And the
other is the supermajority that is required in either body to expel a
Member.
Now, those are the 5 supermajorities. Those are the 5
supermajorities. This amendment would add another, a requirement for a
supermajority and, thus, it invades the basic principle of a democracy,
majority rule.
``Section 3. Prior to each fiscal year, the President shall transmit
to the Congress a proposed budget for the United States Government for
that fiscal year, in which total outlays do not exceed total
receipts.''
Well, I will simply say in passing here that this section seriously
impinges upon the powers of the President. The President is required in
the Constitution to present a message on the State of the Union and to
give an accounting from time to time. But this section would say to the
President: You cannot present an honest budget for the U.S. Government
for a particular fiscal year. If you believe that outlays exceed
receipts, that is not the budget--that is not the budget you are to
present. You are to present a balanced budget. So against his better
judgment, depending upon the circumstances of the time, it may be
during a recession--when the President would want to exercise
countercyclical economic tools--he may feel that, indeed, the budget--
the outlays should exceed the receipts in order to keep the country
from going from a recession into a depression. But he, nevertheless, is
required by this section to present a balanced budget. That impinges
not only on his powers, it impinges on his responsibility to present
facts and to send an honest and realistic budget up to the Congress.
And so we see that the executive branch will be impinged upon and
damaged in this respect.
``Section 4. No bill to increase revenue shall become law unless
approved by a majority of the whole number of each House by a rollcall
vote.''
At the present time a majority of Members present may enact
legislation to increase revenue. But now, contrary to the Constitution
which provides at the present time that bills may be passed by majority
vote of those present, this section would say: No. There is required to
be a majority of the whole number in each House in order to pass a
revenue bill. That kind of a majority is not being required of any
other legislation, only in the case of revenue bills.
So this amendment would institute an imbalance into the Constitution.
All other bills may be passed by a majority of the Members present but
not so with revenue bills. Now, there is not any--there is no
distinction in the Constitution between the number of votes required
for revenue bills and those required for other bills.
``Section 6. The Congress shall enforce and implement this article by
appropriate legislation, which may rely on estimates of outlays and
receipts.''
All right; let us take a look at section 1 again just for a moment.
``Section 1. Total outlays for any fiscal year shall not exceed total
receipts for that fiscal year, unless three-fifths of the whole number
of each House of Congress shall provide by law for a specific excess. .
. .'' It does not say a general excess. It has to state precisely what
excess is going to be needed for outlays over receipts.
Now, when the people vote on this amendment that is what they are
going to see. They are going to see that the budget is going to be
balanced every year, and to the nickel. There is no wiggle room. Total
outlays shall not exceed total receipts.
Now, let us take a look at section 6. It says something different to
what section 1 says.
It says:
The Congress shall enforce and implement this article by
appropriate legislation, which may rely on estimates of
outlays and receipts.
So we have two directives in this one amendment: Outlays shall not
exceed receipts in any year, unless this is waived by three-fifths
majority.
Section 6 says, ``Well, we do not really mean that. We do not really
mean that the outlays shall not exceed receipts. What we mean is that
the Congress shall enforce the article by legislation which may rely on
estimates of outlays and receipts.''
Now that is a horse of a far different color. So here in the same
amendment that is going to be presented to the legislatures throughout
this country, we are saying two different things: It must be balanced,
it shall be balanced to the penny--that is what section 1 says, unless
you can get three-fifths votes in both Houses, three-fifths of the
whole membership of both Houses. So unless you can get three-fifths,
you have to balance to the penny. Here it says, ``Well, we really do
not mean that; Congress will enforce this article, and it may rely on
estimates of outlays and receipts.''
Let us see how dependable the estimates of outlays and receipts are.
This chart to my left shows the differences between actual budget
totals and first budget resolution estimates for the fiscal years 1980
to 1993 in billions of dollars. It shows that during these years, if
the revenues received had been exactly as they had been estimated, then
it would be represented by a straight line. But in each of those years,
the estimates were off and in most of the years, as the viewers can
see, the revenues were under what they were estimated to be. In 1 year,
1983, for example, revenues were $65 billion below what they were
estimated to be. In the year 1992, they were $77.5 billion below what
they were estimated to be. In the year 1989, they were $26.4 billion
above what they were estimated to be.
So the average for these years, 1980 to 1993, the average by which
the revenues were off was $24.7 billion annually.
The point is that the estimates not once were accurate.
Let us take a look now at the outlays. This chart shows the
differences between the actual budget totals and the first budget
resolution estimates for fiscal years 1980 to 1993. Here, again, if the
outlays had been exactly in accordance with what the estimates said
they would be, then the straight line would represent that kind of
accuracy, right on the dime. But, again, we see that in no year were
the estimates accurate.
In 1980, the outlays were $47.6 billion greater than was estimated.
In the year 1990, the outlays were $85 billion more than they were
estimated. In the year 1993, the outlays were $91.9 billion below what
they were estimated to be.
The charts show that we cannot depend on estimates of either outlays
or receipts. So back to section 6.
The two charts I have just talked about, the estimates with respect
to outlays and the estimates with respect to receipts, demonstrate how
foolhardy it is to say that we can depend on those estimates. But
section 6 says, ``The Congress shall enforce and implement this article
by appropriate legislation, which may rely on estimates of outlays and
receipts.''
What kind of a balanced budget is that going to be? In section 1 we
say outlays shall not exceed receipts, and that is what the American
people out there are going to understand. If there is anything about
that amendment they will understand, they will understand that. They
say, ``Boy, that's got 'em. That means business. That means they can't
spend a nickel more than they take in.''
But look at the fine print of section 6, how shall this be enforced?
It says: The Congress shall enforce and implement it by appropriate
legislation which may rely on estimates of outlays and receipts. Now
what kind of reliance is that? The charts have shown how far off we can
be in estimating our outlays and in estimating our receipts.
So the American people are being taken for a ride right there and
they ought to know it.
Let us talk a little more about this section 6 that we just looked
at. In the committee report which the Judiciary Committee sent to the
floor along with the resolution--by the way, this resolution has been
on the calendar since October 21 of last year. Now I understand they
want to change the resolution. They want to change it. It has been on
the calendar since October the 21st, I believe, of last year. Hearings
were conducted on it in the Judiciary Committee. It was discussed in
the committee, reported out by the committee and has been on the
calendar since last October 21, and now I understand they want to
change it. But anyhow, so much for that.
What does the report say about section 6 of this amendment? The
report says--here in this little report, with reference to section 6,
what does section 6 mean--it says:
This provision gives Congress an appropriate degree of
flexibility----
Section 1 did not say anything about flexibility. It says outlays
shall not exceed receipts. Shall not. But the report says:
This provision gives Congress an appropriate degree of
flexibility in fashioning necessary implementing legislation.
For example, Congress could use estimates of receipts or
outlays at the beginning of the fiscal year----
And we saw where that took us.
to determine whether the balanced budget requirement of
section 1 would be satisfied, so long as the estimates were
reasonable and made in good faith.
Who knows? Who knows whether they are reasonable? Who will know
whether they were made in good faith? Only God. Only God will know
whether they were made in good faith.
In addition, Congress could decide that a deficit caused by
a temporary, self-correcting drop in receipts or increase in
outlays during the fiscal year would not violate the article.
Who is going to determine what is meant by ``temporary,'' what is
meant by ``self-correcting drop in receipts,'' what is meant by
``temporary, self-correcting . . . increase in outlays during the
fiscal year?''
But Congress could decide that a deficit caused by a
temporary self-correcting drop in receipts or increase in
outlays during the fiscal year would not violate the article.
Similarly, Congress could state that very small or negligible
deviations from a balanced budget would not represent a
violation of section 1.
There you have it. Congress can say that a violation is not a
violation. Let us read it again:
Similarly, Congress could state that very small or
negligible deviations from a balanced budget would not
represent a violation of section 1.
Now, section 1 does not say anything about any deviation. Section 1
does not say that, well, outlays do not really need to match receipts,
or receipts do not have to match outlays. Section 1 says outlays shall
not exceed receipts.
But here we read in a committee report:
Congress could state that very small or negligible
deviations from a balanced budget would not represent a
violation of section 1.
How much is small? How much is negligible? Is $50 billion small? We
are talking about a $1.474 trillion budget. What is small? Is $50
billion small? Well, $50 billion would only represent about 3.3 percent
of the total budget. The total budget is $1.474 trillion. So if you are
off $50 billion, that is only 3.3 percent of the total budget. Is that
small? Is that negligible? Well, Congress can state that it is very
small and that it does not represent a violation.
If an excess of outlays over receipts were to occur,
Congress can require that any shortfall must be made up
during the following fiscal year.
Now, there you have it. There is the final wrinkle. If there is an
excess of outlays over receipts, which the amendment in section 1 says
there shall not be, well, you can just yawn and say it does not really
mean what it says because Congress can require that any shortfall must
be made up during the following fiscal year.
Well, what if in the following fiscal year there is another
shortfall? Then carrying over the initial shortfall will compound the
problems in the subsequent year.
I asked my friend, Senator Simon, during the hearings about this:
What is small? How much is small? How small is small? He testified that
a 2 percent budget deficit was small.
That is not what the amendment says. The amendment says there will be
no deficit. The budget must come into balance. Outlays shall not exceed
receipts. The amendment does not say outlays shall not exceed receipts
except when there is no greater than a 2 percent deficit in a given
year. Up to 2 percent is OK. One percent is OK. Two percent is OK. The
American people are not going to be told that when they vote on the
amendment in their legislatures.
What we see here, Mr. President, is a committee report which says
that Congress may declare a violation is not a violation. What are the
American people going to believe? What are they going to think? Are we
not saying to them you cannot believe us?
Section 1 says that outlays in any given year shall not exceed the
receipts in that same year. But the report says they can if the excess
is negligible or very small, or you could even roll it over until the
next year.
Are the proponents of the amendment anticipating that the deficits
really will not be balanced in those years? The deficits really will
not be balanced?
And so in the report we are being told we can maneuver around these
requirements. We can cut the corners; we can cut the edges a little.
That is not being fair with the American people. That is not being
straightforward with the American people.
How much time do I have remaining, Mr. President?
The PRESIDING OFFICER. Thirty-two and a half minutes.
Mr. BYRD. I thank the Chair.
The chief proponent of the amendment says we have to have this
constitutional amendment. We simply have to force ourselves to balance
this budget. We need something that will force us. We need something
that will give Members of both bodies the courage to make hard choices.
So this little piece of paper here is what we need to give us the
courage, something that will force us to balance the budget.
Now, why? Why? Why do we need that? Well, we will not be able to do
it by statute because Senators get around statutes. They amend
statutes. We saw that in the Gramm-Rudman years. We saw that under
Gramm-Rudman. We set targets and then we amend those statutory targets
with new ones. So we cannot depend on Senators to balance the budget
unless we have a constitutional amendment that forces them to--forces
them to.
Do not depend upon them to pass statutes and balance that budget.
They will amend those statutes. They will get around the statutes. But
a constitutional amendment will force us.
How does the constitutional amendment say that this mandate in
section 1 will be enforced? Section 6 of the amendment says:
Congress shall enforce----
So the Congress is going to enforce it.
Congress shall enforce and implement this article by
appropriate legislation.
``Appropriate legislation.'' So my friend, Senator Simon, is saying
you have to have a constitutional amendment to force us to do these
things. You cannot depend on our standing up and balancing the budget
by statute because we will get around the statute. We pass a statute
one year, and the next year we will amend it.
So section 6 dumps it right back into the laps of those Senators who
will amend the statutes and who will find a way around the statutes.
So we have not gotten anywhere after all, have we? We say give us a
constitutional amendment to make us pure, to make us balance the
budget. And how are you going to enforce it? Well, it comes right back
home, right back here to this Senate.
The Congress shall enforce and implement this article by
appropriate legislation.
So I say rhetorically, my friends, what makes you think that Senators
whose feet are made of clay today and who get around statutes which
they craft themselves and on tomorrow will amend the statutes that we
craft today, what makes you believe that those same Senators will not
have feet of clay when that constitutional amendment sends the matter
right back here? And how do we do it? We implement it by legislation.
So why do we have to have a constitutional amendment to put it in our
laps? That is where it is now.
I think we are kidding the American people. I do not hear these
Senators talking about the sections of the amendment word for word.
Surely, they must have seen these loopholes before I saw them.
I did not see this monstrosity. I say that with all respect to my
friends and in deference to them. I did not see it until it was on the
Senate calendar. But somebody saw it before it got to the Senate
calendar--members of the Judiciary. Surely they must have thought that
was a loophole. But apparently not.
So my friend, Senator Simon, says you cannot play games under this
constitutional amendment. Why can you not play games? Oh, three-fifths
of the majority can stop us from playing games--the three-fifths
majority.
Mr. President, this is a recipe for minority rule. It is a recipe for
gridlock. The majority leader will tell you that it is easier to get 60
votes for cloture in many instances than it is to get 51 votes to pass
a law extending the debt limit. He will tell you that it is easier to
get 60 votes for cloture than it is to get 50 votes for a bill that
reduces the deficit over a 5-year period. If you do not believe that,
look at last year.
We had a deficit enforcement package here that reduced the deficit
over the next 5 years by $500 billion--some say a few dollars less,
some say a few dollars more. How many of the supporters of this
amendment voted against that budget deficit reduction package? I will
bet my friend from Idaho, Mr. Craig, voted against that budget deficit
reduction package because it had an increase in taxes in it for one
reason, an increase in taxes on the wealthy. Not one of my dear friends
on that side of the aisle, not one, voted for that budget deficit
reduction package last year.
Do you know how close we came to not being able to pass it? We had to
have the Vice President's vote. The vote was 50 to 50. And that was
tough. Getting the 50 votes was tough. It was hard for the majority
leader to get 50 votes. That is half the membership here, 50 votes. He
could not get a majority of the whole membership here.
So it was 50-50. We had to pull in the Vice President. He is not a
Member of the Senate. So we finally got 51 percent of 101 votes. We
only got 50 percent of 100 votes. That is how hard it is to get a
majority on something that causes some pain on a budget deficit
reduction package amounting to $500 billion over 5 years, and it
includes some cuts in discretionary spending. Boy, it really cuts
discretionary spending. We are operating under a freeze over the next 4
years after this one. We are actually under a freeze this year.
So discretionary spending has been cut, some entitlements have been
cut, and some taxes have been increased on the wealthy. Not one of my
friends on the other side of the aisle supported that package in this
body or in the other body, and then come in here and say, well, we can
waive this requirement in this amendment by three-fifths majority. That
is the escape valve. You can waive it. All you have to do is get 60
votes.
And the same Senators--I could not say all the same Senators. That
would be unfair to say that. But, generally speaking, the same Members
who are supporting this amendment and who would not vote to give us the
majority in the Senate last year on the budget deficit reduction
package will not vote to give us three-fifths when we need it to raise
the debt limit. If we do not raise the debt limit, what happens? The
Social Security checks will not go out. Government stops. What happens
to the stock markets and the bond markets? What happens to America's
credibility overseas?
This minority of two-fifths plus one in one body can put this country
into gridlock. And they can exact anything they want from the majority
when we have our backs to the wall.
All right. The time has come when we have to raise the debt limit,
and there is a recession on. Because there is a recession, we need to
spend more money for unemployment compensation, food stamps, job
training, and so on. Our receipts are down because a lot of people are
out of work. So here we have the outlays exceeding receipts. And
recession, it is just exactly the reverse of what we ought to do in a
recession to keep it from becoming a depression. We will be required to
raise taxes in a recession, and cut programs in a recession. As I say,
it is just exactly counter to the countercyclical fiscal measures that
we have been accustomed to using.
Oh, do not worry about that. We have provided for that. That is where
the three-fifths majority comes in. They did not step up to the plate
and help us to get a bare majority in the Senate or in the House last
year with that budget deficit reduction package. So it ``ain't'' that
easy.
Now, put that kind of a weapon into the hands of a minority. We would
have minority rule--and minority rule is something that is pretty
messy. We have not had a minority rule under this Republic ever. It has
always been majority rule. That is minority rule.
Oh, they say, well, you ought to be able to get three-fifths vote.
Let us take a look at what the big States can do if they were of a mind
to do it in the other body. Now in this body--this is the forum of the
States where the Senator from Idaho represents a State that is equal to
the State of Illinois, equal to the State of California, and my little
State of West Virginia with three votes in the House. That is a little
bit like putting my little dog, Billy, up against a big bulldog--my
little dog, Billy.
Well, my little State of West Virginia has three votes over there.
Look at these six States. In the House, in order to waive this
requirement in section I that outlays shall not exceed receipts in a
given year, three-fifths of this body--if we could get 60 votes, they
would all be equal. West Virginia's votes would be equal to
California's, but not in the other body. In the other body, it would
only take 175 votes to block the waiver of that section.
So if we were in a recession, for example, or in circumstances in
which we had, for the good of the Nation, to exceed receipts with the
outlays, you go over in the other body and ask the Members to give you
three-fifths so as to waive that requirement. Theoretically, six States
in the Union could block that in the other body. 175 votes constitutes
two-fifths plus one over there. But you have the States of California,
with 52 votes over there; New York with 31; Texas with 30; Florida with
23; Pennsylvania with 21, and Illinois with 20. Six States, with a
total of 177 votes.
Let us take a look at the six States. They are all seacoast States,
either on the seacoast or the coast of the Great Lakes. California with
52; Texas with 30; Florida with 23; New York with 31; Pennsylvania with
21; and Illinois with 20. So you have 177 votes. We could exchange Ohio
for Illinois and you would still have 176 votes. Theoretically, six
votes could block the waiver. Well, I say that there are some interests
that would be in common to all those States. Shipping interests would
be in common. Suppose those six States got together and said: We will
not give you a vote until you give us thus and so. So a minority can
extract from the rest of the Congress--the minority in either body. Let
us say the Senate voted 100 percent to waive section I and 206--well,
all except 175 or 176 votes on the other side would vote to waive it.
That puts a very potent tool, very potent power in the hands of a small
minority. I do not think we want to do that. That is minority rule, and
that is anticonstitutional. That is antidemocratic.
Well, I shall close tonight by referring to this concern about our
grandchildren. Before I do that, however, it has been called to my
attention that President Eisenhower was mentioned a little earlier in
connection with the building of our Interstate Highway System. I was in
the House during the first Eisenhower administration, and it is with a
sense of great pride that I refer to that legislation, the legislation
that formed the foundation of the Interstate Highway System. President
Eisenhower was our Chief Executive, and he led the way. It has been
called to my attention that in the 1957-1958 recession--I was in the
House--the Eisenhower administration purposefully switched from a $3
billion surplus to a $9.9 billion deficit. In other words, $140 billion
in today's economy. And this switch occurred in just four quarters.
That was President Eisenhower. His administration purposefully switched
and for good reason: We were in a serious recession. If they had not
switched, that would have been another Great Depression. I lived in
that Great Depression.
I say this to my friend from Illinois. I believe he said the other
day he was born in 1928. I was 11 years old in 1928. I remember the
stock market crash. I remember President Hoover. President Hoover
sought to balance the budget, even in the face of that depression. You
see where that got us. The memories of that depression are forever
etched upon the minds and hearts of millions of men and women in this
country, and mine, too. The utter foolheartedness of attempting to
balance the budget in that recession did not make sense; it was crazy.
That is what this amendment is going to perpetrate on the American
people today in our time. It is going to say that in a recession you
have to balance the budget, unless you get a three-fifths vote, and we
have gone over that already. We have talked about how difficult that
would be.
Finally, let me say to my friends--and they are my friends; we shake
hands, we smile, talk with each other and try to help one another in
many instances--I congratulate them on the tenacity with which they
continue to press for this amendment. I do not believe that anything I
have said or will say will change their minds one iota.
James Russell Lowell said, ``Only the foolish and the dead never
change their opinion.'' Well, neither of these Senators is foolish, and
they are not dead. So James Russell Lowell would have to amend his
statement slightly. They will not change their opinion; I am sure of
it. And they will not discuss this amendment. They will not tell us
where to cut. They will not tell us how much to cut, and they will not
tell us what taxes will have to be increased.
Regarding Senator Simon, I will have to take a little bit back
immediately of what I just said. He will tell you he favors increasing
taxes. I believe I heard him suggest it on television that he would
increase the tax on gasoline.
But how much would you cut Social Security? How much would you cut
veterans' compensation? How much would you cut veterans' pensions? How
many veterans hospitals would you close down?
``Oh,'' they say, ``it is a bugaboo, this business about cutting
Social Security,'' and they cite Robert Myers. I was around when Robert
Myers was an actuary--and he was a good one. He testified before my
committee the other day.
But, Robert Ball, who was the Social Security Commissioner under
Kennedy, Johnson, and part of Nixon's administration, I believe, tells
a different story, the former Commissioner of Social Security.
Inasmuch as my friend, Mr. Simon, inserted in the Record a letter, I
believe, that Senator Simon said had been written to him by Mr. Myers,
I ask unanimous consent that the testimony by Mr. Ball before my
Appropriations Committee on February 18 be printed in the Record.
There being no objection, the testimony was ordered to be printed in
the Record, as follows:
Testimony by Robert M. Ball. Before the Senate Appropriations
Committee, February 18, 1994
Mr. Chairman and members of the Committee:
My name is Robert Ball, I was Commissioner of Social
Security from 1962 to 1973. Prior to my appointment by
President Kennedy, I was the top civil servant at Social
Security for about ten years and had a total of some thirty
years of service at the Social Security Administration. Since
leaving the government, I have continued to write and speak
about Social Security, health insurance and related programs.
I was staff Director to an Advisory Council on Social
Security to the Senate Finance Committee in 1948, which
council recommended the major changes that became the
amendments of 1950.
I was a member of the Statutory Advisory Councils in 1965,
1979, and 1991. I was also a member of the National
Commission on Social Security Reform in 1982-83, the
Greenspan Commission. This was the commission whose members
included Senators Moynihan, Dole, Armstrong, and Heinz and
whose recommendations served as the basis for the important
1983 Amendments. I am currently Chair of the Board at the
National Academy of Social Insurance.
I am pleased to testify in strong opposition to the
Balanced Budget Amendment to the Constitution. On the other
hand, I fully support moving to an actual balanced budget in
the years ahead as the economy and other goals of our society
permit.
Large deficits in good times are bad policy and have led to
the huge build-up in the debt, with its crushing load of
interest payments. Borrow and spend is much less responsible
than carefully choosing what we want to spend money on and
paying for it as we go; tax and spend if you will. We are at
last on the right road, only the out-of-control increases in
health care costs and our unwillingness to tax ourselves
enough to pay for the services we want stand in the way of
achieving our goal. But forcing cuts through the Constitution
would deprive the government of the flexibility it needs as
it continues progress toward a balanced budget. In my
opinion, it would force actions contrary to the best
interests of the nation.
You have heard eloquent testimony on these general points
from many highly competent witnesses. Let me therefore
confine my testimony to the effect of the Amendment on Social
Security, a program, to which along with Medicare, I have
devoted most of my adult life.
Simply put, Mr. Chairman, although I am not easily
frightened by the proposal, it puts at great risk the monthly
benefits of 42 million people currently receiving benefits
and the benefits of millions more who are working and
building credits for future benefits.
In 1993 alone, 134 million earners worked under Social
Security. Practically every American family has a major stake
in Social Security. Hardly a special interest group. The
program today keeps 15 million people out of poverty and
millions more from falling into near poverty, but it is much
more than a poverty program. It is the only retirement system
for 6 out of 10 workers in private industry and the base on
which private pensions are built for the other 4 out of 10.
Social Security is family insurance as well as a retirement
plan. Life insurance protection under Social Security in 1992
was worth $11.2 trillion, $800 billion more than the $10.4
trillion for all private life insurance in force. It pays
nearly 3 million children each month. And, of course, there
is also protection against loss of income because of
disability.
The protection of young families is very significant. A
family made up of a husband, 32, earning average wages, and a
wife, 28, with two children ages 3 and 5 has survivors
protection of $250,000. (It would be the same if the wife
were the wage earner or the same if both earned average
wages.) Disability protection for the same family amounts to
$221,000. All of this protection, retirement, survivors, and
disability insurance, would be put at risk by a
Constitutional Amendment forcing a balanced budget. The
Amendment provides a great opportunity for those who favor
cutting Social Security and radically restructuring it. The
Concord Coalition with its proposal to means-test Social
Security would have a heyday.
And the Concord Coalition representatives are speaking and
organizing all over the country today. They are a threat even
now. With this Amendment, they would be much more of a
threat. Social Security is self-financed and responsibly
financed. It has had no part in creating the deficit and the
staggering debt. It has always paid its own way. From 1937,
when payments started, through 1992, it collected $3,900.7
trillion and paid out $3,569.2 trillion, leaving $331.5
billion in assets. But no matter, even though its benefits
are modest, since everyone is covered, its numbers are huge
and will make a tempting target when budgets are forced to
balance under a constitutional amendment.
The Concord Coalition's proposal for means-testing Social
Security is the worst proposal--I believe it might well
destroy the system--but there are others who, even without a
Constitutional imperative, would cut the COLA on the benefit
formula. Not because it makes sense from the standpoint of
the Social Security system, but in order to reduce the
deficit in the consolidated budget of the United States. I
hardly see how with a Constitutional Amendment to balance the
budget how the Congress could avoid cutting Social Security.
Some will cheer but almost all Americans will feel betrayed.
Not because Social Security would never be changed. Changes
have been made in the past and will be again, but changes in
the past have been made with long lead times so that people
can adjust, and because Social Security itself needed change
to adjust to new conditions. But to cut back on the rights
that people have contributed to an worked for because of a
year by year requirement for balancing all the receipts and
expenditures in the compensated budget will not be
understood by either contributing workers or
beneficiaries. Yet, under this Amendment, I believe large
cuts are the most likely outcome and I think that would be
terrible.
After more than 55 years of experience, we have developed
in this country a four-layer approach to retirement income
that is working well. The basic layer is the compulsory
contributing, way-related Social Security program. The second
layer is our private pension system, encouraged by government
through favorable tax treatment. The third layer, also
encouraged by government through favorable tax treatment, is
made up of the savings people made on their own, particularly
through home-ownership. Both pensions and savings are built
on Social Security so that cuts in Social Security affects
the other two.
The fourth layer is the Supplemental Security Income (SSI)
that makes grants on a mean-tested basis to the poorest of
the elderly and those with disabilities.
Social Security is the key element in all this--the base
for everything else. In my judgment, the Amendment threatens
what has been so carefully built up over the last half
century. Mr. Chairman and members of the committee, don't let
this happen.
Mr. BYRD. Mr. President, I close with a reference to my
grandchildren. I have five beautiful, wonderful, intelligent
grandchildren. Erma and I had six. The oldest one was killed. He was
taken by the Father of us all to be in God's garden. Now we have five
remaining. And they are wonderful grandchildren. We are distinctly
proud of our grandchildren. I would bet my right arm--my right arm--
that not one of those grandchildren has ever resorted to drugs. I would
bet my left arm that not one of those grandchildren has ever used God's
name in vain. So I love my grandchildren. All grandparents do, or
should.
Now, my good friend, Mr. Simon, says we should think of our
grandchildren and not pass the debt on to them. Well, I have tried at
the summit in 1990 and last year in connection with the budget deficit-
reduction package to assume the payments on that debt in this
generation. We started the process. President Clinton and the Congress
working together have begun to move in that direction. And Mr. Bush and
the Congress, as I say, in 1990 worked out a package, too.
But that is the way it ought to be done. That way we do not bring on
cataclysmic reverberations in the economy. We do it in an orderly way.
And we ought to continue to do that.
I do not like to pass on debt, either. But from the beginning, this
country has had debts. There have been some years in which we have been
in surplus, but throughout the two centuries we have depended upon the
constitutional powers to incur indebtedness. And so I, too, want us to
assume that burden.
But I will tell you something else. I want to pass on to my
grandchildren the same Constitution that the Framers crafted and that
our forefathers passed on to me. If this amendment is incorporated into
that Constitution, we will not be passing on to our children the
Constitution that we know. We will be passing on to our children a
Constitution in which the system of checks and balances and separation
of powers has been eroded and ruptured. And that is key.
I will have more to say about that in the days to come, a lot more to
say, because that basically is the heart of my opposition to this
amendment; what it does to our Constitution, our organic document, the
basic instrument which assures us of our freedoms and liberties, which
provides for the separation of powers, the checks and balances, the
structure of this Government.
Put this into the Constitution and we tear that all down, and then
where are we? Where are our liberties then?
Section 1 would be violated. As a matter of fact, the amendment
provides for the violation of it, and the committee report provides for
the violation of it and tells us all the ifs, ands, and buts about it
and how we can get around it.
Now we are about to fool the American people. They are being misled.
I am not saying that all the supporters of this amendment knowingly are
misleading people. There are supporters of this amendment who
undoubtedly are very sincere about it.
But I am telling you why we should vote against this amendment and
what we are doing to our future generations, to our grandchildren, mine
and yours, and their grandchildren. We are acting like Samson, taking
the pillars of the Constitution in our arms and pulling down the whole
structure upon us.
What greater disservice can we do to our grandchildren than to rend
that Constitution into pieces and create dissatisfaction and distrust
on the part of the people of this country toward that basic organic
document that has helped to steer this ship of state over these 200
years, to avoid the shoals and the rocks, and has been the basis of
this country's prosperity and its strength and its growth and the
freedoms and the liberties that are ours?
This is a serious question. And, believe you me, I will have some
more to say on the business of what we are doing for our grandchildren,
what we are sending to them, and what we are doing with this
Constitution.
I thank my friends for their patience in sitting and listening. My
friend from Idaho had wanted me to yield. My time is up.
If our time has expired, I will be glad to yield to him for any
question he has.
Mr. President, I yield the floor.
The PRESIDING OFFICER (Mr. Wofford). The Senator's time has expired.
Mr. SIMON addressed the Chair.
The PRESIDING OFFICER. The Senator from Illinois.
Mr. SIMON. Mr. President, my friend from West Virginia, the
distinguished Senator from West Virginia, will not be surprised that I
differ with him. And, let me add, he is my friend.
One of the things I think that will come out of this is this is going
to be a civil debate. We are going to look at some very, very basic
questions in this country.
I do not have the time remaining to respond this evening. I will be
responding to his remarks tomorrow and I look forward to continuing
this discourse.
I think we have the chance to really make a change for the positive
for this country. And I hope we take advantage of that.
Mr. President, I yield back the remainder of my time.
The PRESIDING OFFICER. The Senator from Idaho.
Mr. CRAIG. Mr. President, it looks like I will have the opportunity
to close out the evening's debate. Let me echo the comments of my
colleague from Illinois as it relates to the remarks of the chairman
from West Virginia. It will be a civil debate but it is a very profound
and fundamental debate. So, tonight for the Record, let me add, and I
ask unanimous consent that I might add into the Record, Thomas
Jefferson's constitutional dilemma, as laid out tonight by the
chairman.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. CRAIG. He did have a fundamental dilemma. He had inherited a
budget that was not balanced and he did not want to borrow money and
inflict a new debt. So he provided and got the necessary supermajority,
the three-fifths in this instance as required in our proposed
constitutional amendment from both Houses, the necessary go-ahead to
project a note--in those days they called it a stock--that would come
due 15 years out, so that during that time he would have a balanced
budget and then the note would come due at 6 percent interest.
That is exactly what happened. The note was offered at 6 percent
interest due in 15 years to the French, and the French immediately sold
it to the Dutch to finance it. So, from 1803 to 1818 there was nothing
paid on it and from 1818 to 1823 the debt was paid off.
So let the Record show that the amendment that the Senator from
Illinois and I have offered is very consistent with the philosophy of
Jefferson in the three-fifths required as he sought from the
legislatures of the Congress, both Houses, and got it; and then in the
out years, paid it off. Because it was, as the Senator from West
Virginia said, an exceptional opportunity to acquire property equal to
that of the continental United States at that time. The Congress with a
three-fifths--or 60 percent I believe at that point--agreed with
Jefferson. I will argue that the Jefferson principle was not violated,
that he paid off the debt, he brought the budget into balance, and he
provided a unique financing opportunity that would fall under section 1
and under section 2 of our amendment to deal with this issue.
Let me close the evening by saying I referenced in my opening remarks
that indebtedness--or more importantly the lack thereof--inflicted on
the citizens was a right, a right that ought to be in the Constitution.
And if it is a right--and I believe it is a right--I do not have
grandchildren yet but I hope someday to have them, and I do not want
one of my votes to force them into an indebted posture that they cannot
live with. I will argue that every right that is in the Constitution
today is guarded by that three-fifths vote. That is constitutional.
So, when we talk about a majoritarian principle, as my colleague from
West Virginia talked about tonight, we walk the constitutional line. We
maintain the constitutional tightrope, because the Congressman--the
Senator from Illinois--I used to know my colleague as a Congressman in
the House--will argue with me that it is a fundamental right that we do
not indebt future generations; that we pay as we go.
If it is a right, and we believe our amendment says it is, then
article 1 and article 2 of our amendment are absolutely consistent with
the right of free speech, the second amendment rights, all of the other
rights that I delineated tonight.
We are within the concept of the element of the majority and most
assuredly we have not violated, nor will this amendment violate, the
Constitution. I believe it will strengthen it. I believe it fits into
the concept of Jefferson. It certainly adheres to his principles and
the arguments he placed before the Congress when he was provided with a
unique and unbelievable opportunity. If this Congress, and its budget
were balanced, came under tremendously difficult times and the citizens
cried out--or if it in fact stumbled upon a unique opportunity, as did
Thomas Jefferson at a time when he began to close Government down and
tighten it up to balance the budget--he went to the Congress and they
gave him that supermajority, that three-fifths necessary.
He stayed within his principles. He stayed within his belief of the
Constitution. He provided for this country a phenomenal legacy, and out
of that legacy came the Idaho Territories, and out of that territory
came the State of Idaho that I represent today. But it was done in a
balanced approach, with a debt that was paid off in 5 years after it
came due, in the responsible fashion that was of the day, and of the
human principle of that day.
So when he talked about an amendment that said this Nation should not
borrow and it should not be allowed to indebt, what he was talking
about was the belief of a principle that was embodied in the human
element of the day. If you read, as I know my colleague from West
Virginia has, the history of the Constitutional Convention, they did
not even think you had to put the first 10 amendments down; that they
were fundamental, that they were already embodied there.
But to sell it to the States, they had to do more. They had to
specify. They had to guarantee. And it was that --that was what Thomas
Jefferson meant, that we had failed to guarantee what was fundamentally
a belief of the time. His practices as a President demonstrated it.
What he brought forth to the House and the Senate demonstrated it.
So I will argue, and I think the paper that I presented, which is a
compilation of the Jefferson argument and the Jefferson concern, will
suggest to all of us that we are not revising history, that we are
extending history. Thomas Jefferson was, as his comments in letters so
profoundly said, fundamentally one who believed in balanced budgets and
fiscal responsibility and not passing forth debt to future generations,
and his Presidency did not do that.
I yield the remainder of my time.
Exhibit 1
Jefferson's Constitutional Dilemma With the Louisiana Purchase--
(Summary)
It is widely thought that Thomas Jefferson ignored his own
principles of a strict interpretation of the Constitution
when the United States was given the opportunity to purchase
the Louisiana Territory in 1803. On the contrary however, the
purchase raised no question of unconstitutionality in his
mind. It was the admission into the Union of new states which
might be created from the territory that caused him great
concern. Creating additional debt for the country also seems
to be contrary to traditional Jeffersonian principles, but
Jefferson was hopeful the Congress could finance the purchase
without raising taxes.
The Treaty of 30 April 1803 set the terms for the purchase
of the territory. A payment of $11,250,000 to France at six
percent interest, not redeemable for fifteen years was the
price. An additional $3,750,000 would be used to assume the
claims of American citizens against France. While there is no
record of Jefferson giving a written justification of
incurring such a debt, it might be assumed that because he
was eventually willing to set aside his concerns about the
constitutionality issue (because of what one historian called
the national emergency of acquiring Louisiana), he was also
willing to lead the country into debt because of the long-
term advantages he foresaw.
This paper attempts to give a brief summary of the events
leading to the ratification of the treaty by which the United
States purchased the Louisiana Territory with special
attention given to Jefferson's constitutional concerns.
Jefferson's Constitutional Dilemma With the Louisiana Purchase
The presidential election of 1800, often referred to as the
``Revolution of 1800'', marked the beginning of the end of
the Federalist Party and the rise of a more democratic, less
formal style of government. In his inaugural address, the new
president proclaimed: ``* * * a wise and frugal government,
which shall restrain men from injuring one another, which
shall leave them free to regulate their own pursuits of
industry and improvement, and shall not take from the mouth
of labor the bread it has earned. This is the sum of good
government, and this is necessary to close the circle of our
felicities.''
During Jefferson's first term internal taxes were
abolished, the national debt was reduced by half, the armed
forces were restructured, West Point was established and the
land area of the country was doubled by the purchase of the
Louisiana Territory. This last accomplishment, however, was
the subject of strenuous debate among Jefferson's Cabinet and
in Congress because the Constitution gave the Federal
government no explicit authority to acquire territory and
incorporate it into the American nation.
Through a secret treaty with Spain in 1800, France secured
title to the Louisiana Territory of North America.
Circumstances on the European continent, however, led
Napoleon to seek a means of raising funds to purchase war
supplies for France's military campaigns and he was forced to
forego his dream of an empire in the Americas and turn his
attention to the coming war with Great Britain. As a result,
he was willing to sell the millions of acres just across the
Mississippi River from the United States. President Jefferson
had a tremendous opportunity to enlarge the country's borders
by purchasing a territory many in Congress had advocated
taking by means of war.
In January of 1803 legislation was introduced in the House
of Representatives to appropriate $2 million to speed the
negotiations between the United States and France, or rather,
``to defray the expenses which may be incurred in relation to
the intercourse between the United States and foreign
nations; to be paid out of any money in the Treasury not
otherwise appropriated, and to be applied under the direction
of the President of the United States; who, if necessary, is
hereby authorized to borrow the same, or any part thereof, an
account whereof, as soon as may be, shall be laid before
Congress.'' (Annals of Congress, 7/2) The bill was passed and
referred to the Senate, which passed the bill by a 14-12
margin.
The American negotiators in Paris announced the purchase of
the territory in a letter to the Secretary of State dated 13
May. It was not until 14 July, however, that the treaty and
its accompanying documents arrived in Washington. Two days
later, the president met with his Cabinet to consider the
proper course of action. Under the terms of the treaty, the
United States would purchase the Louisiana Territory for
$11,250,000 with an additional $3,750,000 going to satisfy
private American claims against the French government. As
payment, the United States would create a stock of the former
amount bearing interest at the rate of six percent a year.
Interest payments were to be made each year with the
principal being payable no sooner than fifteen years from
the date the treaty was ratified. The treaty also
stipulated that should France wish to dispose of the stock
before maturity, the transaction would be conducted in the
manner most favorable to the credit of the United States.
Finally, the document provided that, in the event the
treaty was not ratified by 30 October 1803, the land would
revert to the French.
Secretary of the Treasury Albert Gallatin complained that
the treaty would allow the French to dispose of the stock for
cash (which they did almost immediately). At the same time,
the United States could not begin to curtail the debt for
fifteen years. The president, however, wrote an acquaintance
that the United States had gained in four months of
deliberations what would have required seven years of war and
cost 100,000 lives and $100,000,000 of debt. (There is no
record of the source of these estimates.)
Writing to a friend on 17 July, Jefferson explained that
Congress ``will be obliged to ask from the people an
amendment to the Constitution authorizing their receiving the
province into the Union providing for its government, and the
limitations of power which shall be given by that amendment,
will be unalterable but by the same authority.''
Writing to John Dickenson on 9 August, ``Our confederation
is certainly confined to the limits established by the
revolution. The general government has no powers but such as
the Constitution has given it; and it has not given it a
power of holding foreign territory and still less of
incorporating it into the Union. An amendment to the
Constitution seems necessary for this. In the meantime we
must ratify and pay our money, as we have treated, for a
thing beyond the Constitution, and rely on the nation to
sanction an act done for its great good, without its previous
authority.''
In letter to Senator John Breckinridge three days later,
Jefferson wrote: ``This treaty must of course be laid before
both Houses, because both have important functions to
exercise respecting it. They, I presume, will see their duty
to their country in ratifying and paying for it, so as to
secure a good which would otherwise never again be in their
power. But I suppose they must then appeal to the nation for
an additional article to the Constitution, approving and
confirming an act which the nation had not previously
authorized. The Constitution has made no provision for our
holding foreign territory, still less for incorporating
foreign nations into our Union. The executive in seizing the
fugitive occurrence which so much advances the good of their
country, has done an act beyond the Constitution. The
Legislature in casting behind them metaphysical subtleties,
and risking themselves like faithful servants, must ratify
and pay for it, and throw themselves on their country for
doing for them unauthorized, what we know they would have
done for themselves if they had been in a situation to do it.
It is the case of a guardian, investing the money of his ward
in purchasing an important adjacent territory; and saying to
him when of age, I did this for your good; I pretend to no
right to bind you: you may disavow me, and I must get out of
the scrape as I can: I thought it my duty to risk myself for
you. But we shall not be disavowed by the nation, and
their act of indemnity (an amendment to the Constitution)
will confirm and not weaken the Constitution, by more
strongly marking out its lines.''
Because Congress had adjourned for the summer and was not
due to go back into session until November, Jefferson called
for a special session beginning on 17 October. The purpose of
the session was to gain Senate approval for the treaties and
House authorization for payment of the purchase before the 30
October deadline. He spent the rest of the summer and fall
preparing for the coming session and trying to gather all the
information he could about the territory. (He also drafted
two versions of an amendment which Congress might consider
upon its return.)
In late August, word arrived from France that Napoleon was
having second thoughts about selling the territory to the
United States and would not accept the American ratification
if the Senate made any changes in the treaty. Jefferson
quickly surmised that raising the issue of the
constitutionality of the purchase would give Federalist
opponents in Congress an opportunity to delay the
ratification process into winter. As a result, he wrote to
Secretary of State Madison on 20 August: ``I infer that the
less we say about constitutional difficulties respecting
Louisiana the better, and that what is necessary for
surmounting them be done sub silentio.''
According to historian Dumas (Doo-mah) Malone, Jefferson's
most scholarly biographer, the president seemed to consider
the affair of Louisiana at this point a national emergency
that justified stretching the Constitution beyond its
original shape. To Treasury Secretary Gallatin, Jefferson
wrote: ``It will be well to say as little as possible on the
constitutional difficulty, and the Congress should act on it
(ratifying the treaty) without talking.''
Jefferson's third annual message to the Congress on 17
October made only passing reference to the constitutional
question. (It is also one of his few public statements about
intentionally increasing the debt.)
``It is already ascertained that the amount paid into the
treasury for that year (FY 1803) has been between eleven and
twelve millions of dollars, and that the revenue accrued
during that same term exceeds the sum counted on as
sufficient for our current expenses, and to extinguish the
public debt within the period heretofore proposed.
``The amount of debt paid for the same year is about three
millions one hundred thousand dollars, exclusive of interest,
and making, with the payment of the preceding year, a
discharge of more than eight millions and a half dollars of
the principal of that debt, besides the accruing interest,
and there remain in the treasury nearly six millions of
dollars. Of these eight hundred and eighty thousand have been
reserved for payment of the first instalment [sic] due under
the British convention of January 8th, 1802, and two millions
are what have been before mentioned as placed under the power
and accountability of the president, toward the price of New
Orleans and other territories acquired, which, remaining
untouched, are still applicable to that object, and go in
diminution of the sum to be funded for it.
``Should acquisition of Louisiana be constitutionally,
confirmed and carried into effect, a sum of nearly thirteen
millions of dollars will then be added to our public debt,
most of which is payable after fifteen years; before which
term the present existing debts will all be discharged by the
established operation of the sinking fund. When we
contemplate the ordinary annual augmentation of imposts from
increasing population and wealth, the augmentation of the
same by revenue by its extension to the new acquisition, and
the economies which may still be introduced into our public
expenditures, I cannot but hope that Congress in reviewing
their resources will find means to meet the intermediate
interests of this additional debt without recurring to new
taxes, and applying to this object only the ordinary
progression of our revenue. Its extraordinary increase in
times of foreign war will be the proper and sufficient fund
for any measures of safety or precaution which that state of
things may render necessary in our neutral position.''
The Senate ratified the treaty on 20 October by a vote of
24-7. A subsequent Senate vote to establish a government for
the new territory passed by a 26-6 margin less than a week
later. New England Federalists provided the opposition on
both votes.
On 25 October three resolutions relating to the government
of the territory and payment to the French government were
introduced in the House. A resolution to enforce the
provisions of the treaty passed 90-25. The bill establishing
a government for the territory met with stiff initial
opposition because it would have given all military, civil
and judicial powers to the President. Even loyal Jeffersonian
Republicans refused to support the resolution until an
equitable distribution of power between the President and
Congress was added. This measure passed 89-23. The resolution
regarding payment for the territory was approved by voice
vote the same day it was introduced.
Not content to let the constitutionality question die,
Senator John Quincy Adams of Massachusetts introduced a
measure on 25 November which would have established a special
Senate committee ``to inquire whether any, and if any, what
further measures may be necessary for carrying into effect
the treaty between the United States and the French Republic
* * * whereby Louisiana was ceded to the United States.'' The
Senate did not consider the measure until 9 December. Only
two of his Federalist colleagues joined him in supporting the
motion. It subsequently died and the issue of the
constitutionality of the Louisiana Territory ended.
The debt incurred by the purchase was finally paid off in
1823, twenty years after the agreement was ratified.
This chain of events established a precedent for the
principle of implied powers in the Constitution and the
elasticity to meet changing situations.
Mr. SIMON. Mr. President, I ask unanimous consent that the time
allocated for myself tomorrow, Wednesday, February 23d, be equally
divided between myself and Senator Hatch, or our designees.
The PRESIDING OFFICER. Without objection, it is so ordered.
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