[Congressional Record Volume 140, Number 17 (Thursday, February 24, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: February 24, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
BALANCED BUDGET AMENDMENT
Mr. LEVIN. Mr. President, the major issue that we are discussing
these days is the balanced budget amendment, and I want to spend a few
minutes discussing my thoughts on that amendment.
I think everybody in this Chamber would agree that deficits are
harmful; that the mountain of debt we have built up is nothing less
than shameful. Surely, the Senator from Illinois and others are right
on that issue. On whatever side of this constitutional amendment people
happen to fall, I would think there is equal strength in feeling that
the deficits we have allowed and the debt we have built up as a result
of those annual deficits is something which has weakened our economy
and is disgraceful in terms of representative government.
There is something else that would also be a terrible mistake,
though, and that would be to place an illusion or gimmick in the
Constitution to pretend that we are addressing something which cannot
be addressed successfully in the way it is proposed. It can only be
addressed through congressional and Presidential will.
So there would be great harm in telling the public now, in 1994, that
5 years from now something is going to happen on the deficit when in
fact whether or not anything happens 5 years from now is still going to
depend on congressional and executive will. It is not going to happen
automatically. It is going to require us to take actions just the way
it requires us to take actions now.
Mr. Reischauer, who is the Director of the Congressional Budget
Office, said the following about that issue. First he said that ``a
large reduction in Government borrowing is highly desirable.'' And I
would think 100 of us would agree with that. But then he went on to say
that ``a balanced budget amendment on its own does not advance the
chances for lowering Federal borrowing.''
In his testimony he put it another way, that ``a balanced budget
amendment in and of itself is not a solution. Rather, it is only a
repetition in an even louder voice of an intention that has been stated
over and over again during the course of the last 50 years.''
``In an election year,'' he said, ``it would be a cruel hoax to
suggest to the American public that one more procedural promise in the
form of a constitutional amendment is going to get the job done. The
deficit cannot be brought down without making painful decisions to cut
specific programs and raise particular taxes. A balanced budget
amendment in and of itself will neither produce a plan nor allocate
responsibility for producing one.''
That is the head of the CBO who gave us that wisdom, and I think he
is right.
This constitutional amendment relies on the Congress to act to
implement it. That is the bottom line. This is the same reed that
proved so weak in the 1980's when Congress and the President amassed
these deficits. We had opportunities to reduce the deficits, such as
1986, when we closed tax loopholes and chose not to use the revenue
that we produced for deficit reduction. But last year this same
Congress, which had been so weak in the eighties, finally got some
strength and some backbone and passed the President's deficit reduction
plan.
But nothing is going to change in that regard. The President and the
Congress are going to have to act to implement the requirements of this
constitutional amendment or nothing is going to happen. It is the same
Congress and the same President which right now have that
responsibility and finally exercised it last year after a decade or
more of not exercising it.
If congressional weakness is the reason for this amendment--and it
is--then Congress will use the loopholes in this amendment to evade the
responsibility which it sets forth. My greatest fear, and I have many
fears about this amendment, my greatest fear is that it will take us
off the hook until 1999 when it could become effective at its earliest,
and the deficit will become worse until then because we can always say,
``Oh, heck, it''--the deficit-reduction budget amendment--``will take
care of our problems starting in 1999.'' We will not have the pressure
on us until then because it will do the job for us in 1999. So as a
result of having the pressure off us, off the hook until 1999, we will
pile up greater deficits than we otherwise would. Then what will happen
in 1999? Not much, because when this deficit-reduction budget-balancing
amendment takes effect, if it ever does, there is not much of a hook.
There are plenty of loopholes right inside that balanced budget
amendment.
Again, let me quote from Mr. Reischaeur's testimony about those
loopholes. This is what he said about a year and a half ago.
Probably the most important difficulty with the balanced
budget rule is that it offers many opportunities for
avoidance or evasion. The President and the Congress could
get around an apparently rigid balanced budget rule primarily
in three ways. The first involves using timing mechanisms and
other budget gimmicks to achieve short-run budget targets,
including such actions as shifting pay dates between fiscal
years.
And we have done that one.
Accelerating or delaying tax collections, delaying needed
spending until future fiscal years, and selling government
assets.
The second way, he points out, to evade the balanced budget
constraint might be to base the budget on overly optimistic economic
and technical assumptions. That is the second way.
Boy, have we done that one. That is the rosy scenario that Senator
Conrad and others were talking about yesterday. We had ``Rosie the
Riveter'' in World War II. If this amendment passes, we will also have
``Rosie Scenario'' in the Constitution. And we have done it--these rosy
scenarios.
David Stockman wrote a book about rosy scenarios and what they did in
the eighties. Murray Weidenbaum, who was the Chairman of the Council of
Economic Advisers, was tasked with coming up with a budget. And they
cooked the numbers. Rosy scenario was born right there in the executive
wing. They asked him where the numbers came from, after he came up with
these rosy scenarios, these projections as to what the growth rate
would be, what the interest rate would be, what the revenues would be,
what the unemployment rates would be; all rosy to make the budget look
better than it really was.
This is what David Stockman says.
Somebody finally taunted Professor Weidenbaum. ``What model
did this come out of, Murray?'' Weidenbaum glared at the
inquisitor for a moment, and he said, ``It came right out of
here,'' and with that he slapped his belly with both hands,
``My visceral computer.'' He smiled.
Never before or since----
Stockman wrote--
has a single belly slap produced such devastating results.
The new Weidenbaum forecast added $700 billion in money,
gross national product, over 5 years to our previous
consensus forecast.
With that visceral computer, that rosy scenario, $700 billion was
added to the projection as to what the gross national product would be
over what they previously had, by consensus, forecast, believed the
gross national product would be.
* * * and nearly $200 billion in phantom revenues tumbled
into our budget computer in one fell swoop. The massive
deficit inherent in the true supply-side fiscal equation was
substantially covered up, and eventually----
Stockman wrote--
it would become the belly slap that was heard round the
world.
What does the amendment before us say about estimates and rosy
scenarios? It says we can use them. Section 6 of the amendment says
that ``Congress shall enforce and implement this article by appropriate
legislation which may rely on estimates of outlays and receipts.''
Section 1 holds out the promise that we are going to balance income
with outlays. But section 6 says that we can comply with section 1 by
the use of estimates. That is what we did in the 1980's. That is
exactly what we did in the eighties. We used estimates. Here are some
of the estimates.
In 1981, our estimates were off by $58 billion; 1982, our estimates
were off by $72 billion; 1983, our estimates were off by $91 billion;
and on and on. In 1990, they were off by $119 billion --$119 billion in
1990. But that is OK. We can rely on estimates we are told. You talk
about a loophole. This one is big enough to drive a $119 billion
deficit through. That is how big this loophole is.
And then we are told in the report of the Judiciary Committee, well,
these estimates are supposed to be in good faith. Who is going to
decide that? Is that going to go to a court as to whether or not
Congress adopted a good-faith estimate? And are the sponsors of the
resolution telling us that when we made these estimates in the 1980's
they were not in good faith? Was the 1981 estimates, which were $58
billion off, were they made in bad faith? Most of the Members of this
body voted for that. And every year through the 1980's, same thing.
Were they bad-faith estimates? Is someone going to make that judgment
now looking back? Or is a court going to make that judgment then
looking forward?
Maybe we ought to add a little provision, a little language to
section 6 and say that Congress may rely on estimates of outlays and
receipts provided that the estimates allowed are not based on Murray
Weidenbaum's visceral computer. Maybe we ought to put that in the
Constitution to prevent the kind of shenanigans that went on during the
1980's. But do not believe for 1 minute that those shenanigans cannot
happen again. But this time the evasion will not be a political evasion
trying to fool the people. It will be an evasion of a Constitution
which we are supposed to be living under.
This now will become a loophole right in the Constitution itself. The
sponsors of the amendment say: But it will take a 60 percent vote to
increase the debt limit, so if our estimates are too rosy, if we follow
the 1980's model of estimates, in order to evade the constitutional
requirement, if the choices are too tough and we use that particular
evasion, then we can fall back on another requirement of the
constitutional amendment before us, which is that the debt limit can
only be increased by a 60 percent vote in the Senate.
Well, history has proven that that is a weak reed to rely on, because
by the time you vote or not vote to increase the debt limit, you are
voting whether or not to bring down the Government of the United
States. If we do not pay our debts, we are done economically. That is
not a realistic way to produce any reliance on the section 1 promise of
this amendment. We are not going to produce compliance by that
provision because the choice is to use a nuclear weapon on the economy
of this country. If we do not pay our debts, this country's economy is
finished. So it is not a realistic alternative to simply point to the
debt limit increase with a 60-vote requirement as the back up in case
the rosy scenario is used, as it was almost every year during the
1980's.
So, Mr. President, I must say I am amazed that a constitutional
amendment is offered because of the lack of confidence in the Congress,
when the very language of this amendment, by its very terms, relies on
Congress to implement the amendment and when there are so many
loopholes that are open if the Congress and the President choose to use
those loopholes. I have just discussed one today--just one of many--and
that is the rosy scenario loophole, which is very obvious. We
are experts at that.
Mr. President, this amendment has a double problem. It lets us off
the hook until 1999. It gives us an excuse, if we choose to use it--and
we have used it too often--not to act until the outyears, because by
its own terms it will not be effective until 1999 at the earliest. The
history of the politics of deficit reduction is such that Congress and
the President, if they are let off the hook, will in fact take the easy
way out. That is a very, very bad road to follow. I hope that we will
not. I hope we will have the courage and wisdom to realize that the
same Congress and the President which this amendment rely on to
implement it are here now, and the deficit needs to be reduced now, and
that we cannot have a loophole-filled constitutional amendment based on
the ability of the Congress to use the rosy scenario, the estimate, as
we did in the 1980's, as the way to balance the budget.
There is only one way now, or in 1999, or 2099, and that is
willpower. I hope we show it and defeat this constitutional amendment
and show the will to reduce the deficit with the hard decisions now.
I yield the floor.
Mr. CRAIG. Mr. President, I ask unanimous consent to speak as in
morning business.
The PRESIDING OFFICER. Without objection, it is so ordered.
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