[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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