[Congressional Record Volume 140, Number 16 (Wednesday, February 23, 1994)]
[Senate]
[Page S]
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 EFFECTS OF BUDGET DEFICITS

  Mr. WALLOP. Mr. President, one of the things about budget deficits 
that ought to concern Americans is that it is the tool by which 
Government can excessively control the lives of Americans. With 
Congress inattentive and uncaring about the size of the budget deficit, 
we find that we end up funding an increasingly arrogant bureaucracy 
which stretches its influence over the daily lives of Americans in 
untold, unnumbered, and unimaginable ways. The loss of freedoms that 
Americans sense can be directly attributed to the size of the Federal 
budget deficit.
  If Congress ever got to the point where we actually accounted for 
everything we spent, we would then have to prioritize. And once we 
started to prioritize, those agencies of Government that are the most 
offensive, the most invasive of American privacy, would clearly come 
under our purview.
  We discuss the deficit in such abstract terms that it is almost 
impossible to understand fully what impact the deficit has on the lives 
of Americans. As I travel this country, and as I travel my home State 
of Wyoming, I find an increasing number of Americans terrified of their 
Government, actively trying to serve it instead of expecting it to 
serve them, and actively trying to stay out of sight lest it should 
take notice.
  For example, among the other things Congress does is to increase 
continuously the funding of an agency, like the Internal Revenue 
Service, which, when it challenges an American on his or her taxes, can 
rely on a bottomless well of money to audit, investigate, and litigate. 
Oftentimes, a taxpayer is placed in the position of literally having to 
admit guilt rather than contest the IRS's judgment because it will cost 
more to defend than to admit guilt.
  The EPA acts in much the same way. If you attempt to challenge the 
EPA, they will very likely declare you a willful violator and assess a 
fine, which will run throughout the litigation, for your alleged 
violation. Who dares expose themselves to that kind of judgment?
  This invidious power is the result, as much as anything, of agencies 
having too much money. Of agencies that themselves do not have to 
decide among the priorities under their purview. And so as we casually 
go along adding to the budget deficit, we are also adding to the 
arrogance of American bureaucratic power.
  We have allowed the budget system to get so complex that even its 
most admirable practitioners do not understand it all. That is why the 
debate on the balanced budget resolution is so critical a one to 
Americans.
  It is interesting to listen to those who oppose the amendment; they 
say it would raise taxes on Americans. The assumption behind such a 
statement is that those of us in Congress are such fools that we are 
unable to make a judgment about priorities. Instead of raising taxes on 
Americans, we might select among some of the current wealth transfer 
programs, or maybe we would make a judgment on whether some of the 
agencies of Government were actually serving the needs of the people as 
contemplated by the Constitution.
  We do not have to raise taxes to balance the budget. We have to make 
decisions. The assumption that our choice lies among adding to the 
deficit, continuing the deficit interminably, or simply increasing the 
abuse of Government on Americans is a telling statement about the 
mindset that has settled upon Congress. Why is it that we can borrow 
from our grandchildren's future or punish Americans with taxes, but we 
are unable to make a judgment to spend less or spend more wisely?
  Mr. President, I will have more to say on the budget as the morning 
goes on, but for the moment I yield 5 minutes to the Senator from 
Montana [Mr. Burns].
  The ACTING PRESIDENT pro tempore. The Senator from Montana [Mr. 
Burns] is recognized for 5 minutes.
  Mr. BURNS. I thank my friend. I wish to ask a question to my friend 
from Wyoming, who will be leaving this body at the end of this 
Congress, and he will be missed for the depth that he goes into 
subjects such as this.
  For those who would oppose the balanced budget amendment, is that an 
indication we have given up, that we cannot prioritize or quit funding 
programs that will not work?
  Mr. WALLOP. Mr. President, I say to the Senator from Montana, that is 
the only conclusion you can draw from the arguments raised against it. 
The whole argument that we are taking from Congress the power of the 
purse is nonsense. We will still have the power of the purse. It will 
just be a more responsibly defined power, which is not the type of 
power we possess at this moment.
  Mr. BURNS. I thank my friend. I am not schooled in the school of 
economics. I was raised in an area where economics or your economic 
well-being was judged by your accounts receivable which was in your 
left front pocket and your accounts payable were in your right front 
pocket. And nothing happens in the right front until something happens 
in the left front.
  That is the way we should operate this Government, because I come out 
of local government where we were not only the people who set the 
budget, we were also the same three people who were on the 
appropriations. We appropriated the money and spent it.
  Let us take a look at this budget this morning. Yes, there are some 
things that we like about the budget and some things we want to work 
with the Budget Committee on. But there are some that I think we have 
forgotten as we are making our assumptions on how we do our business. 
No. 1, it is my opinion that we have to get away or depart from 
baseline budgeting. If we are to get some kind of control on the 
spending side of the ledger, we have to do something other than 
baseline budgeting.
  We do not assume that we start 6 percent higher this next year based 
on last year's budget. It was my intention back in 1990 on the 4 
percent solution that would say we can allow the Federal budget to grow 
4 percent based on previous year's expenditures, and still maintain 
proper reserves in the event that we had a catastrophe or national 
emergency that we will take care of. We have had to take care of some 
of those, of course the latest being the earthquake in California. So 
deficit reduction is one thing. Debt reduction is quite another.
  I have talked about what is really fueling the economy at this time 
which, of course, is small business. Big business is laying off people. 
There is no expansion, no job opportunity right now like there is in 
small business. Yet, that engine that is powering this new rebirth of 
the American economy is under a great deal of pressure right now.
  The small businesses that I am talking about are on Main Street 
Montana which were telling me this: That they are hiring part-time 
workers--no full-time workers--because of the reluctance to accept the 
fact that this is a solid rebuilding, that the future is pretty well 
intact. But they also see more rules and regulations coming down the 
pike that is going to affect the way they do business. And they are 
worried about that. They are also worried, and legitimately so, about 
health care and which direction it is going to go while we reform that 
industry. I think we should probably tackle welfare reform before we do 
anything about health care reform.
  I am not particularly enamored with the President's health plan. But 
I am also not enamored with the status quo. There are some reforms that 
have to be made. I think we can do that. Let us take a look at welfare 
reform.
  I cannot blame these small-business men as they try to make some kind 
of commitment to the future not only for their employees but for 
themselves and for the enterprise that they are they are in.
  Let us take one example in the budget. There is a 1,000 percent 
increase in fees to be a dealer in firearms; 1,000 percent. That 
affects almost 3,000 individual people in my State of Montana who 
probably, more than anything else, maintain a license for a hobby.
  I would say that the engine that is fueling the economy--small 
business in this country--right now has more fears and reservations 
about the activities of this Government and what is coming down not 
only in taxes, not only in the taxes that were retroactively passed a 
year ago, but now are doing business with their CPA's and finding out 
that their future may be on the line and they might make it on that 
dreaded endangered species list.
  I thank my friend from Wyoming.
  I yield the floor.
  Mr. WALLOP. Mr. President, I yield 7 minutes to the Senator from 
Oklahoma.
  The ACTING PRESIDENT pro tempore. The Senator from Oklahoma is 
recognized for 7 minutes.
  Mr. NICKLES. Mr. President, I thank my friend and colleague from 
Wyoming.
  I wish to compliment Senator Wallop for his statement and also 
Senator Burns for his statement. I cannot help but think, when I listen 
to the Senator from Montana and he talks about changing the baseline, 
that he is really saying the Federal Government has a baseline that has 
built-in escalating spending. That does not happen in the businesses in 
Montana nor in Oklahoma nor in 99 percent of all the businesses in 
America or in families. When they use budgets, they say what are we 
spending this year? What are the actual dollars this year? And they use 
that as a baseline, not what is anticipated growth, expected growth. 
That is not the case with the Federal Government. That is very 
unfortunate.
  So I compliment my friend from Montana for saying that we should have 
some common sense budget reform, and we have not seen that yet.
  Mr. President, I want to address a couple of things concerning the 
President's budget. One is a lot of the rhetoric that we have heard 
from various administration officials.
  I serve on the Budget Committee, and I have heard people taking great 
claim for the deficit that is coming down. They are saying this 
administration is responsible for it largely as a result of the deficit 
reduction package that passed last year. They incorrectly state it is 
the largest deficit reduction package in history. CBO says that is not 
the case. CBO says 433, not 3,500.
  I think it is important we talk about facts. CBO says in the deficit 
reduction package that there are over $2 in taxes for every $1 of 
spending cuts. I continually hear people in the administration say it 
had more in spending cuts than it had in tax increases. That is not the 
case.
  Mr. President, there is CBO's estimates that the deficit for 1995 
will be $113 billion less than what they said it would be a year ago. I 
think it is important that we know why that is. That is $113 billion 
less in debt increase. All of us applaud that. Where did it come from? 
Did it come from the deficit package last year? Part of it. Did it come 
from spending cuts? None of it.
  I think that is important to know. We have $113 billion. CBO now says 
that we are going to have a smaller debt increase than anticipated 1 
year ago. That is a significant reduction. Where did that come from?
  Mr. President, I will insert this in the Record for my colleagues 
because we have done this not only for 1995, but for 1996, 1997, and 
for 1998.
  CBO says $5 billion will come from spending cuts. I said none of it 
from spending cuts. But CBO did not know we were going to pass so-
called urgent disaster relief. All of that was off budget. All of that 
was added to debt. That more than compensates for the $5 billion in 
spending cuts that CBO was saying was in this package. Forty-six 
billion dollars of it was taxes increases.
  I do not make any bones about that. We did pass that. I give 
President Clinton credit for it. Forty-six billion dollars of the $113 
billion was tax increases. The balance of it, $2 billion for debt 
service, $15 billion for economic changes, and $45 billion for 
technical and others. That means we are spending less on S&L bailouts 
and other assumptions.
  The economy is doing better than anticipated, but not through changes 
made by this administration or by this Congress. This Congress either 
raises taxes or spends money. That total amount of effort through those 
two things, all of it was done on the tax increase side of it. None of 
it was done on the spending cuts.
  As a matter of fact, if you look at this administration and compare 
CBO's number for 1993, how much did we have in spending cuts for 
deficit reduction in 1993? Zero. Actually, we had a $4 billion increase 
in spending over the baseline. How much in 1994? How many billions of 
dollars in spending cuts did we have in 1994? None. Actually, we had 
another $4 billion over baseline. We did have $28 billion in taxes 
increases.
  So if you look at this administration for the first 2 or 3 years, in 
1993 there were no spending cuts. In 1994 there were no spending cuts. 
We did have some tax increases, and in 1995, again, no spending cuts. 
All on the tax increase side. And the majority of the so-called deficit 
reduction was not through either spending changes or tax increases. The 
majority of it was reestimations done by CBO.
  I just want to make these facts known. These are not Don Nickles' 
facts, these are not Don Nickles' assumptions, this is the information 
that came from the Congressional Budget Office.
  So my colleagues can look and see. Well, if the deficit is coming 
down, and certainly it is significantly less this year, projected for 
1995--I say this year, but we are talking 1995 budget--at $171 billion. 
That is a significant reduction. I want my colleagues to know that all 
of that deficit reduction is in the form of tax increases or 
reestimates by CBO. Not one dime comes from a spending cut.
  I know my colleagues have heard the President and others taking great 
claim that, well, they are proposing over 150 different spending cuts 
or terminations. President Bush proposed over 220. What is not often 
said in the same statement is that the President is proposing something 
like $126.5 billion in spending increases over the baseline for the 
years 1995 through 1999--a $126 billion increase over and above 
inflation. These are new spending programs.
  I am going to insert this into the Record which details this. Whether 
you are talking about the crime bill, Head Start, housing vouchers--I 
do not know if my colleagues are aware of another $10 billion in 
housing vouchers--NIH, another $7.6 billion in authority, $10.5 billion 
in outlays; title I education, $5.17 billion in authority; National 
Service, $5 billion; dislocated workers, $4.2 billion in budget 
authority, $5.5 billion in outlays; Goals 2000, another $4.2 billion in 
budget authority and $3.6 billion in outlays.
  I could go on and on. It totals $126 billion of new spending over and 
above the baseline, which already has inflation built into it.
  The Senator from Montana said we should not have an inflated 
baseline. If you do that for 4 or 5 years, you have an escalated 
spending curve. He said we should use last year's real numbers. He is 
exactly right. This $126 billion in new spending is over and above the 
baseline.
  My point is, Mr. President, that the so-called deficit reduction we 
have heard so many great things about is a result of President 
Clinton's largest tax increase in history and is a result of 
reestimations by the Congressional Budget Office.
  I ask unanimous consent to have the two tables printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                                                      SOURCE OF DEFICIT CHANGE SINCE PRESIDENT CLINTON TOOK OFFICE                                                                                      
                                                                                                        [In billions of dollars]                                                                                                        
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Fiscal year 1993          Fiscal year 1994          Fiscal year 1995          Fiscal year 1996          Fiscal year 1997          Fiscal year 1998            Total 1993-98     
                                                   -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Amount       Percent      Amount       Percent      Amount       Percent      Amount       Percent      Amount       Percent      Amount       Percent      Amount       Percent  
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CBO deficit baseline (January 1993)...............         310   ...........         291   ...........         284   ...........         287   ...........         319   ...........         357   ...........       1,848   ...........
CBO deficit baseline (January 1994)...............         255   ...........         223   ...........         171   ...........         166   ...........         182   ...........         180   ...........       1,177   ...........
                                                   -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
      Deficit change..............................         (55)  ...........         (68)  ...........        (113)  ...........        (121)  ...........        (137)  ...........        (177)  ...........        (671)  ...........
                                                   =====================================================================================================================================================================================
Sources of deficit change:                                                                                                                                                                                                              
    Spending cuts\1\..............................           4            -7           4            -6          (5)            4         (20)           17         (39)           28         (56)           32        (112)           17
    Tax increases\2\..............................           0             0         (28)           41         (46)           41         (56)           46         (66)           48         (67)           38        (263)           39
    Debt service..................................           0             0          (1)            1          (2)            2          (7)            6         (13)            9         (20)           11         (43)            6
    Economic changes..............................           0             0         (13)           19         (15)           13         (12)           10         (14)           10         (25)           14         (79)           12
    Technical and other\3\........................         (59)          107         (31)           46         (45)           40         (27)           22          (5)            4          (9)            5        (176)           26
                                                   -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
      Total.......................................         (55)          100         (68)          100        (113)          100        (121)          100        (137)          100        (177)          100        (671)         100 
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\OBRA 1993 discretionary and mandatory spending cuts minus higher outlays for emergency unemployment compensation and supplemental appropriations for flood relief.                                                                   
\2\OBRA 1993 tax increases.                                                                                                                                                                                                             
\3\Technical reestimates (deposit insurance, revenues, and medicare/medicaid) and OBRA 1993 debt service savings.                                                                                                                       
                                                                                                                                                                                                                                        
Note.--Details may not add due to rounding.                                                                                                                                                                                             
                                                                                                                                                                                                                                        
Sources: CBO January 1993 Report, CBO September 1993 Report, CBO January 1994 Report.                                                                                                                                                   


                                          NEW SPENDING IN THE CLINTON BUDGET PLAN, INCREASES ABOVE 1994 LEVELS                                          
                                                                [In billions of dollars]                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               1995            1996            1997            1998            1999            Total    
--------------------------------------------------------------------------------------------------------------------------------------------------------
Crime bill initiatives:                                                                                                                                 
    Budget authority....................................           2.466           4.333           5.049           5.553           6.581          23.982
    Outlays.............................................           0.736           2.324           3.925           4.982           6.449          18.416
Head Start:                                                                                                                                             
    Budget authority....................................           0.700           1.400           2.100           2.800           3.500          10.500
    Outlays.............................................           0.463           1.204           1.872           2.567           3.266           9.372
Housing vouchers:                                                                                                                                       
    Budget authority....................................           1.339           1.408           1.478           2.658           3.138          10.021
    Outlays.............................................           0.456           1.003           1.633           2.301           3.064           8.457
NIH:                                                                                                                                                    
    Budget authority....................................           0.517           0.999           1.501           2.024           2.569           7.610
    Outlays.............................................           0.758           1.429           2.118           2.820           3.343          10.468
Title 1 education:                                                                                                                                      
    Budget authority....................................           0.667           0.909           1.152           1.397           1.642           5.767
    Outlays.............................................           0.029           0.583           0.899           1.151           1.395           4.057
National service:                                                                                                                                       
    Budget authority....................................           0.275           0.784           1.012           1.285           1.610           4.966
    Outlays.............................................           0.165           0.504           0.908           1.189           1.468           4.234
Dislocated workers:                                                                                                                                     
    Budget authority....................................           0.347           0.746           1.047           1.047           1.095           4.282
    Outlays.............................................           0.415           0.797           1.184           1.497           1.594           5.487
WIC:                                                                                                                                                    
    Budget authority....................................           0.354           0.704           0.956           1.035           1.184           4.233
    Outlays.............................................           0.316           0.674           0.925           1.017           1.161           4.093
Goals 2000:                                                                                                                                             
    Budget authority....................................           0.595           0.895           0.895           0.895           0.895           4.175
    Outlays.............................................           0.141           0.605           0.916           0.981           0.987           3.630
NIST growth:                                                                                                                                            
    Budget authority....................................           0.415           0.569           0.859           0.887           0.902           3.632
    Outlays.............................................           0.157           0.411           0.687           0.887           0.986           3.128
IRS tax modification:                                                                                                                                   
    Budget authority....................................           0.295           0.803           0.841           0.787           0.610           3.336
    Outlays.............................................           0.244           0.671           0.829           0.849           0.718           3.311
SSI processing:                                                                                                                                         
    Budget authority....................................           0.327           0.156           0.668           0.743           0.862           2.756
    Outlays.............................................           0.371           0.516           0.700           1.046           1.145           3.778
Highways:                                                                                                                                               
    Budget authority....................................           0.323           0.323           0.168           0.168           0.168           1.150
    Outlays.............................................           0.621           1.475           1.767           1.767           1.846           7.476
Homeless programs:                                                                                                                                      
    Budget authority....................................           0.427           0.177           0.177           0.177           0.177           1.135
    Outlays.............................................           0.286           0.408           0.676           0.933           1.072           3.375
All other increases:                                                                                                                                    
    Budget authority....................................           5.809           7.087           8.034           8.609           9.438          38.977
    Outlays.............................................           3.019           6.435           8.372           9.871          10.870          38.567
                                                         -----------------------------------------------------------------------------------------------
      Total:............................................                                                                                                
          Budget authority..............................          14.856          21.293          25.937          30.065          34.371         126.522
          Outlays.......................................           8.177          19.039          27.411          33.858          39.364         127.849
--------------------------------------------------------------------------------------------------------------------------------------------------------

  Mr. WALLOP addressed the Chair.
  The ACTING PRESIDENT pro tempore. The Senator from Wyoming is 
recognized.
  Mr. WALLOP. I would like to direct a few questions through the Chair 
to the Senator from Oklahoma.
  One, is it not the case that President Clinton said we were going to 
have honest figures for a change and we were going to use CBO figures?
  Mr. NICKLES. The Senator from Wyoming is exactly correct. That is one 
of the reasons I felt it was important to show that CBO says here is 
where the deficit reduction figures are coming from, and that there are 
no spending cuts in the first 3 years of this administration.
  Mr. WALLOP. So this is what we are hearing from downtown, despite the 
credibility given by the President to CBO in its first State of the 
Union?
  Mr. NICKLES. The Senator is exactly correct.
  Mr. WALLOP. Is it not also true that, whether we use OMB or CBO's 
figures, the deficit begins to rise dramatically after 1996?
  Mr. NICKLES. The Senator is exactly right. Not only that, most people 
are not aware of this, but in that time period, the next 5 years, we 
are adding $1.3 trillion to the national debt. Even though the deficit 
declined, according to CBO, for a year or two, it continues to 
escalate. Every year, we are adding hundreds of billions of dollars to 
the national debt.
  Mr. WALLOP. Is it not also the case that at no time within this 
Presidency is the debt decreasing; that it continues to increase over 
the 5-year budget period? We often get confused with the concepts of 
deficit and debt. When we discuss declining deficits, aren't we only 
discussing the decrease in the size of the increase in the debt, but 
not the size of the debt itself?
  Mr. NICKLES. The Senator is exactly right. The national debt stands 
at $4.1 trillion, and it will climb to almost $6 trillion in the next 
few years. That is without calculating many of the new, expensive 
entitlements this administration has proposed, such as subsidizing--the 
Federal Government picking up 80 percent of the health retirement costs 
for people retiring between ages 55 and 65--and massive new subsidies 
for businesses, and so on, in their health care proposal. Those will 
explode in the future years.

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