[Congressional Record Volume 140, Number 16 (Wednesday, February 23, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: February 23, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                      THE PRESIDENT'S 1995 BUDGET

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                      Wednesday, February 23, 1994

  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, February 16, 1994 into the Congressional Record:

                      The President's 1995 Budget

       Last week President Clinton submitted to Congress his 1995 
     budget. It makes only fairly modest shifts in priorities, and 
     includes no bold innovation. It reflects the constraints of 
     two big deficit reduction agreements in recent years, and 
     combines spending cuts in many programs and elimination of 
     others, with modest new initiatives to promote technology and 
     education, and to fight crime.


                              Major Themes

       President Clinton proposes spending $1.52 trillion in 1995, 
     up from $1.48 trillion this year. As in past years, the 
     biggest spending increases are for Social Security (up $17 
     billion), Medicare and Medicaid (up $22 billion), and 
     interest on the national debt (up $10 billion). Spending on 
     these three areas now comprises 51% of total federal 
     spending, and without the increases in these three areas, 
     overall federal spending would actually drop next year.
       The other major category of federal spending, national 
     defense, would decline by $9 billion under the Clinton plan. 
     Some 17% of total federal spending goes to defense.
       Everything else the federal government does makes up the 
     remaining 32% of total federal spending. Under the Clinton 
     budget, spending in this category would basically remain 
     unchanged from the 1994 level. The President would, however, 
     shift around some spending. He would eliminate 115 programs, 
     cut spending for more than 200 others, and reduce the federal 
     workforce in order to increase spending for his investment 
     agenda. Savings from energy programs, foreign aid, and farm 
     programs, for example, would be used to fund science and 
     technology, infrastructure, education, job training, 
     environmental protection, and anti-crime efforts.
       The President's budget proposes $1.35 trillion in revenues, 
     up from $1.25 trillion this year. Most of the increased 
     revenue results from the strengthening economy.
       The President estimates that the 1995 deficit will be $176 
     billion, down from $255 billion in 1993 and an expected $235 
     billion this year. the deficit would be at its lowest level 
     since 1985.
       The modest economic assumptions underlying the budget seem 
     in line with private forecasts. The budget assumes 3.0% 
     economic growth in 1994 declining to 2.7% next year, 
     inflation rising from 3.0% to 3.2%, and unemployment dropping 
     from 6.4% to 6.0%.
       The budget reflects the major Clinton themes--cutting the 
     deficit and increasing investment on programs intended to 
     boost U.S. productivity. The budget leaves out several 
     important items, including the cost of welfare reform and 
     implementation of the worldwide trade agreement.


                  major budget issues before congress

       It is my sense that Congress will generally be comfortable 
     with the broad outlines of the Clinton budget. Yet several 
     major budget questions will have to be considered by Congress 
     this year.
       How much to provide for new investment? The Clinton 
     emphasis on shifting a greater share of federal spending to 
     productivity-enhancing investment and away from consumption 
     is a good one. Greater investments in public infrastructure, 
     education and training, science and technology, and programs 
     for children are central to a growing economy that produces 
     good jobs and is internationally competitive. Yet, since 1980 
     the share of total federal spending going to nondefense 
     investment has decreased sharply from 16% to 9%.
       The President's investment agenda halts that decline and 
     increases it slightly. Yet funding these investments will not 
     be easy. Tight caps on discretionary spending will make these 
     investments difficult without offsetting cuts in other 
     programs. And some of the cuts the President has proposed, 
     such as cuts in mass transit operating subsidies and in low-
     income energy assistance, will have difficulty getting 
     through Congress.
       How much to reduce the deficit? The President and Congress 
     gave top priority last year to reducing the deficit, and that 
     has clearly paid dividends. The lower deficit has helped 
     bring down long-term interest rates and stimulate the 
     economy. The principal message of the President's budget is 
     that the deficit is coming down. The 1995 deficit would be 
     2.5% of Gross Domestic Product--down from 4.9% in 1992 and 
     the lowest percentage of GDP since 1979.
       Deficit reduction will be a major concern of Congress again 
     this year. The balanced budget amendment is scheduled for a 
     Senate vote later this month, and Congress will continue to 
     consider additional spending cuts totalling $35 billion or 
     more over the next five years.
       Although major progress has been made on the deficit, more 
     can be done. We need to cut deeply into programs that have 
     outlived their usefulness, and look not just at spending 
     subsidies but also tax subsidies, such as tax breaks for 
     companies to build plants overseas. At the same time, we need 
     to make sure that the cuts proceed at a reasonable pace and 
     do not stall the current economic recovery or preclude 
     productivity-enhancing investments central to the long-term 
     health of the economy. Any sustained attack on the deficit 
     must include a healthy economy that ensures a strong stream 
     of federal revenues.
       What to do about health care? Most of the changes from 
     health care reform under consideration would kick in after 
     1995. Yet the key to reducing the budget deficit in future 
     years is getting federal health care spending under control. 
     For example, federal Medicare costs were $57 billion ten 
     years ago, now stand at $143 billion, and, without program 
     changes, will rise to $435 billion in another ten years.
       Reining in federal health care costs must be a central 
     component of the health care reform debate. We need a package 
     that meets unmet needs and increases the health security of 
     Americans, but also is fiscally responsible and helps bring 
     down health care outlays. Otherwise, all the recent progress 
     we have made on the deficit will be wiped out.


                              conclusion:

       The President's budget is the most important document of 
     the federal government, but it does not get the public 
     attention it should and once did. The budget reflects 
     hundreds of tough decisions, assures a contentious debate, 
     and puts some real limitation on federal spending. Over the 
     past several years, Congress typically has changed a 
     President's budget proposal by less than 1% of total 
     spending, though it has rearranged some priorities. In this 
     sense, the President is still the chief budgetmaker, setting 
     the agenda which Congress largely follows.

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