[Congressional Record Volume 140, Number 20 (Tuesday, March 1, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: March 1, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
BALANCED BUDGET AMENDMENT
The ACTING PRESIDENT pro tempore. Under the previous order, the
Senate will now resume consideration of Senate Joint Resolution 41, a
resolution proposing an amendment to the Constitution of the United
States to require a balanced budget, which the clerk will report.
The assistant 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 Senate resumed consideration of the joint resolution.
Pending:
Reid amendment No. 1471, in the nature of a substitute.
The ACTING PRESIDENT pro tempore. The time until 1 p.m. today shall
be equally divided between the Senator from West Virginia [Mr. Byrd],
the Senator from Utah [Mr. Hatch], the Senator from Illinois [Mr.
Simon], and the Senator from Nevada [Mr. Reid].
Who yields time?
Mr. REID addressed the Chair.
The ACTING PRESIDENT pro tempore. The Senator from Nevada.
Mr. REID. Madam President, with some urgency and concern, I spoke
yesterday to this Chamber about the balanced budget amendment. That
urgency and concern have only increased.
I believe a specter haunts this body, Madam President. Gaunt lined
and hollow eyed as death it leers down at us with malicious glee. It is
the ghost of lost chances; the shade of missed opportunities; the
phantom of wrong turns in the paths to which the Senate has turned this
Nation's feet over these 200 years past.
In the fire of its eyes one may read of the rejection of the League
of Nations and of Smoot Hawley. Around its shoulders are draped the
shades of isolationism and it proudly wears the ribbon of McCarthyism.
Heaped at its feet are the meaningless failed economic theories upon
which this Chamber and our Nation have pinned their past economic
hopes. It counts them with glee as a miser counts coins; glorying in
every program and every promise that the budget would be balanced by
1933, by 1964, by 1991.
That specter is laughing now, Madam President, and clapping its bony
hands, for once again this body is engaging for its entertainment in a
sham and a charade.
The Simon bill will fail, Madam President. Its supporters have
conceded as much. My amendment, my substitute, has enough support; that
taken together with Simon, it would finally result in passage of a
constitutional amendment to the States. Naturally, once the Simon
supporters recognized that their bill would fail one would expect they
would flock to an amendment that gives them most of what they want and
which assures the same requirements for the end result they seek a
balanced budget. One would think so, but that is only common sense, and
now, as too often before common sense and the common good seem to be an
uncommon commodity in this debate.
I ask you now my fellow Senators, to look not to your own partisan
political interests, not to party nor dogma nor cant. Listen instead to
the still, small voice of reason.
I plead with my friends on the other side of the aisle who have had
someone announce on their behalf that none of them would vote for the
Reid substitute. I plead with them to place the future of this country
over the benefit of the next election.
Look not to how you will be best able to fool your constituents with
snake oil tales and opium pipe dreams of what might have been if only
those others had been true to the quest. Do not seek to camouflage what
you have not done with stories of what might have been.
Rather, I ask my friends on the other side of the aisle to join me in
voting for a substitute which if it passed would join us together. So
let us join and stand together for that upon which we can agree. This
is the way the political process is supposed to work. It is the only
way this body can effectively work.
E pluribus unum; one from many. It is this Nation's motto. It is a
touchstone for the Union. Too many of us have forgotten that guiding
light; too many of us have forgotten our responsibility to work
together in the common interest; too many have forgotten that politics
is the art of compromise, the art of the possible.
I ask one more time of my friends on the other side of the aisle,
will you join with me? Together we can make a mighty change and place
this Nation on a road to fiscal responsibility. Separately, we will
achieve nothing.
I have been told several times today that the media announced last
night or this morning that the Reid substitute is going to fail, and
that the Simon amendment was going to fail. What have we accomplished?
So, Madam President, the specter is watching and glowing, but the
Nation is watching and hoping. Let us stand together and be counted
together. It is the only way we will make a difference, the only way to
lay this ugly shade to rest.
I reserve the remainder of my time.
The ACTING PRESIDENT pro tempore. Who yields time?
Mr. SIMON. Madam President, I yield to the Senator from
Massachusetts. How much time does he need?
Mr. KENNEDY. If the Senator will yield, I understand that the
chairman of the Appropriations Committee is on his way to the floor. I
am not familiar with how the time is divided prior to the lunch period.
Mr. SIMON. Senator Byrd has 1 hour, Senator Reid has 1 hour, Senator
Hatch has 1 hour, and I have 1 hour.
I assume the Senator from Massachusetts is speaking on behalf of the
Simon amendment.
Mr. KENNEDY. Madam President, the Senator is usually correct 99
percent of the time.
Mr. REID. I will be happy to yield to the Senator from Massachussetts
some time. I am sure Senator Byrd will give it back to me.
Mr. KENNEDY. If I could have 15 minutes.
Mr. SIMON. I feel the same. Whatever the time the Senator from
Massachusetts needs.
The ACTING PRESIDENT pro tempore. Who is yielding to the Senator from
Massachusetts?
Mr. REID. Will Senator Byrd give Senator Kennedy 15 minutes?
Mr. BYRD. Madam President, as a former Boy Scout, I would consider it
to be my good deed for the day to yield to Senator Kennedy 20 minutes.
Mr. KENNEDY. Madam President, I oppose the balanced budget
constitutional amendment. I support the goal of a balanced budget, but
it is wrong for Congress to tamper with the Constitution to achieve it.
Congress and the Clinton administration have made remarkably good
progress in reducing the deficit in the past year. Last August, we
enacted the most significant deficit reduction ever--$500 billion over
the next 5 years.
We are succeeding where the past two Republican administrations have
failed. The deficit is coming down. The economy is heading up. There is
no need to take the extreme step of amending the Constitution to
achieve our economic goals.
It does not take a constitutional amendment to reduce the Federal
deficit or balance the Federal budget. All it takes is enough courage
by Congress and the administration to make the tough decisions we are
elected to make. If we are not willing to balance the budget, the
Constitution cannot do it for us.
Amending the Constitution could well make all our economic problems
worse. Writing this kind of straitjacket into the Nation's founding
charter could jeopardize our economy, diminish the Constitution,
distort its system of checks and balances, and undermine the principle
of majority rule that is at the core of our democracy.
The amendment is unsound and unwise economic policy, because it would
require a balanced budget each and every year, regardless of the
condition of the economy, unless three-fifths of the Senate and House
vote to approve a specific deficit.
In the Great Depression of the 1930's, nearly one-fourth of our
citizens were out of work. It is no accident that this country has not
suffered a depression like that since then. The ability to cut taxes or
increase spending during recessionary times, even though it means an
increase in the deficit, has been a powerful tool to stabilize the
economy, and we should not weaken it by amending the Constitution. When
the economy slides into a recession, Government policies such as tax
cuts, unemployment compensation, and jobs programs have provided the
means to sustain families in need and to maintain demand for the goods
and services produced by business.
The balanced budget constitutional amendment could well make these
``countercyclical'' Government tax and spending policies impossible. To
a great extent, these policies go into effect automatically, to avoid
even the delays inherent in the legislative process. When unemployment
increases by 1 percent, the budget deficit increases by $50 billion
because of decreased tax revenues and increased spending for benefits
for unemployeed workers and their families. In recessionary times, the
balanced budget constitutional amendment would require just the
opposite--tax increases and spending cuts. It could turn painful
recessions into catastrophic depressions, with dire consequences for
the Nation.
Supporters of the amendment often make what they call a ``common
sense'' argument that it would simply require the Federal Government to
balance its budget in the same way that American families do. That
argument is not common sense--it is nonsense.
Have the sponsors of this amendment ever heard of a home mortgage? If
this amendment applied to families, it would require all homeowners to
pay off their entire mortgage immediately, this year. You could not
borrow to buy a home, or pay for college. I doubt that the sponsors of
this amendment would vote to put any family into that kind of
straitjacket, and they should not do it to the country either.
Most State constitutions permit deficit spending for long-term
capital investments. But the balanced budget constitutional amendment
would flatly prohibit prudent deficit spending for long-term
investments or even to ease the effect of a recession, unless a deficit
is agreed to by a three-fifths vote of the Senate and the House.
As Senator Moynihan pointed out during the debate last week,
President Roosevelt convinced narrow legislative majorities to accept
deficit spending to finance the construction of warships during the
1930's, to ensure that America would have a Navy ready and able to
fight Nazi Germany when war began. If the balanced budget
constitutional amendment had been in place, those investments in our
Nation's security would not have been made.
Today, by preventing expenditures to solve long-term problems, the
balanced budget amendment would jeopardize the Nation's economic
vitality, and make it more difficult to mobilize to protect national
security.
The amendment is unsound as a matter of economic policy, and it is
equally unsound as a matter of constitutional law. The true genius of
the Framers who gathered in Philadelphia and wrote the Constitution 200
years ago is in the system of checks and balances that has preserved
our democracy, allowed the Nation to flourish and protected our most
fundamental rights and liberties for more than two centuries.
The balanced budget constitutional amendment says nothing about how
it would be enforced; and the Judiciary Committee report is ominously
silent on this important issue. But any fair reading of the amendment
makes clear that it is fraught with dangerous possibilities.
A wide range of constitutional scholars have testified that the
amendment inevitably gives the President broad powers to impound
Federal funds to achieve the amendment's goal. Neither the language of
the amendment nor the text of the Judiciary Committee report suggests
any limit to this broad impoundment authority. The historic power of
the purse that has served this country so well would be taken from
Congress and given to the President.
The amendment would also undermine important principles of our
Federal system by giving Congress and the President a strong additional
incentive to place unfunded mandates on the States in order to avoid
increasing the budget deficit.
The sponsors of this amendment are already among the strongest
critics of unfunded mandates. Why would they vote to expand them? If
this amendment passes, Members of future Congresses can say to
themselves, ``Why come up with the funds to pay for Federal benefits,
and the three-fifths vote needed to appropriate those funds, when a
simple majority vote can mandate the States to provide them?''
The amendment would also give the courts a new and highly
controversial role in resolving important and complex budget and
economic disputes--disputes that unelected judges are ill-quipped and
ill-suited to resolve.
Suppose a future President orders an across-the-board cut in Social
Security payments to avoid a predicted deficit. A Social Security
recipient would undoubtedly have legal standing to bring suit to
challenge the cut, and argue that there was no budget deficit, and the
President lacked the authority to make the cut.
A Federal district judge would be required to hold a trail to
determine whether or not the Federal budget would be balanced for the
year in question. The trial would no doubt involve many expert
witnesses and take months or even years to complete. When it is over,
the judge would issue an opinion as to the legality of the across-the-
board cut. If the cut is found to be illegal, it could have profound
economic consequences for the Nation.
If we adopt this constitutional amendment, cases of this kind will
not be rare. Scores of them could occur every year. The Federal courts
would be required to spend hundreds of hours, and millions of dollars,
to resolve them.
In fact, under the language of the amendment as it is now pending
before the Senate, the judges hearing those cases could order tax
increases or spending cuts to remedy violations. Obviously, such orders
from judges would profoundly alter the role of the courts in our
constitutional system.
In seeking to avoid such results, the sponsors of the amendment have
indicated their intent to add a provision offered by Senator Danforth
to strip the Federal courts of any authority to remedy violations of
the amendment, except by issuing declaratory judgments.
The proposed modification would create a new double standard for
constitutional violations. The Federal courts would retain their
traditional authority to remedy violations of all other provisions of
the Constitution. But when a President or Congress violates the
balanced budget amendment, a Federal court would be powerless to do
anything but declare that a violation exists. The modification would
turn the balanced budget amendment into the first toothless amendment
the Constitution has ever had.
Finally, the proposed amendment would undermine the principle of
majority rule that is at the core of our constitutional democracy. In
the Federalist Papers, James Madison rejected the idea of requiring
super-majorities to pass legislation. To do so, he wrote, would mean
that ``the fundamental principle of free government would be
reversed.''
The balanced budget amendment would do just that--substitute minority
rule for majority rule.
Forty-one percent--a minority--of the membership in the Senate or the
House could block a measure the majority felt was needed to protect the
economy. If you like filibusters, if you like gridlock, you will love
the balanced budget constitutional amendment.
I fully support the goal of balancing the Federal budget. But today's
budget deficits are the bitter fruit of 12 years of ``buy-now-pay-
never'' budgets from past Republican administrations. Supply-side
economics was an experiment that failed.
After 12 years of these reckless measures, we finally have a
President ready, willing and able to take the difficult steps necessary
to deal with the budget deficit.
President Clinton has provided impressive leadership. Last year,
Congress passed a $500 billion deficit reduction package, which has
resulted in low interest rates and a recovering economy. As a result,
we will have declining deficits for 3 years in a row, for the first
time since President Harry Truman was in the White House.
It is ironic--but predictable--that so many Republicans who opposed
that deficit reduction plan last year are now seeking cover by
supporting a balanced budget constitutional amendment. They are for a
balanced budget in the abstract, but they voted ``no'' when the time
came to act.
Controlling spiralling health care costs is the next essential step
in reducing the budget deficit. Here again, President Clinton is
providing real leadership that will result in real deficit reduction.
And here again, it is Republicans who are raising objections and
complaining that the cost controls in the President's plan are too
strong.
Obviously, it will take additional steps in deficit reduction to
achieve a balanced budget by the end of this century. But not one of
the proponents of a constitutional amendment have offered a serious
proposal to achieve that result. It is no wonder that the sponsors of
the amendment do not want it to take effect until the year 2001. ``Gone
With the Wind''--I will worry about it tomorrow, they say. And tomorrow
is the next century.
The fault is not in the Constitution. Let us rededicate ourselves to
achieving lasting economic prosperity for the Nation in ways that
count, and spend no more time debating gimmicks that have no place in
the Constitution.
Finally, I commend the chairman of the Appropriations Committee,
Senator Byrd, for the extraordinary leadership he has provided in
building a solid case against the balanced budget amendment and
demonstrating its many economic and constitutional flaws.
Senator Byrd cares deeply about the Constitution and the country and
the legacy that we will leave to our children and grandchildren. His
dedicated efforts to preserve, protect and defend the Constitution
against this unwise and mischievous proposal deserve the gratitude of
every American. He is truly a profile in courage for the Constitution
and the country.
In sum, the balanced budget constitutional amendment will not cut the
deficit by a single dollar. It will endanger the economy, distort the
constitutional system of checks and balances, and substitute gridlock-
by-minority for government by majority. And it should not pass.
The ACTING PRESIDENT pro tempore. The Senator from Nevada.
Mr. REID. Madam President, I yield 10 minutes to the Senator from
California [Mrs. Boxer].
The ACTING PRESIDENT pro tempore. The Senator may be recognized when
she is removed from the chair.
The PRESIDING OFFICER (Mr. Reid). The Senator from California is
recognized.
Mrs. BOXER. Thank you very much, Mr. President.
I plan to vote in favor of the Reid balanced budget amendment and
against the Simon version.
When I was elected to the U.S. Senate about a year ago, I pledged to
make my primary focus economic recovery for my State. Economic recovery
that is steady, strong and consistent. Economic recovery that builds a
solid base for California's future
That economic recovery can only move forward if we have real deficit
reduction; low-interest rates that stimulate private investment in
business and homes; public sector investment in education, economic
conversion, and the information highway; expanded trade opportunities;
health care reform; and Federal reimbursement to the States for such
costs as immigration.
We are on course with this President and this Congress.
Last year we enacted a $500 billion deficit reduction plan that will
bring down the deficit from 4.9 percent of gross domestic product in
1992 to 2.3 percent of gross domestic product in 1998.
Mr. President, I well remember the prediction of doom on the other
side of the aisle when we debated the President's deficit reduction
plan. We did not get one vote of support from Members on the other side
of the aisle. We did not get one vote for a plan that is producing real
deficit reduction, meaningful deficit reduction. A plan that is having
a positive impact on our economy.
Roughly 1.6 million jobs were created over the past year, more jobs
than were created during George Bush's 4 years in office.
Real GDP is expected to grow at a steady annual rate of nearly 3
percent.
Inflation is low. And, inflation is a very cruel tax indeed. It rose
at a rate of only 2.7 percent last year, which was the smallest annual
rise in 7 years.
The 30-year mortgage rate dropped from 8.22 to 7.09 percent over the
last year. And, 5.4 million American homeowners refinanced their
mortgages, putting money in their pockets.
This is surely a strong start. My home State is still lagging. We got
hit harder by this recession, and the impact of reducing the military
budget is felt worst in our State. But I say: We are on the right
track, and I believe California will join in this economic recovery, as
long as we are smart and we do not do things that will take us off
course.
I believe Senator Simon's version of the balanced budget amendment
would, in fact, divert us from this economic recovery.
Now, I know there are philosophical arguments on whether any
constitutional amendment on a balanced budget is consistent with our
constitutional heritage, and I respect those who argue this point.
But, I want to address the economic consequences of the Simon
amendment, consequences which will affect real people with real
problems, consequences which simply can and should not be ignored,
consequences which will impact virtually all Americans.
A study by the Wharton Econometrics forecasting group, the leading
economic forecasters in this Nation, found that, with Senator Simon's
balanced budget amendment: California would lose over 712,000 jobs by
the year 2003; and, personal income in California would drop by 12
percent over the next 10 years. The Treasury Department found that the
Simon amendment would cost California between $21 billion and $24
billion a year.
The prospects for the Nation's economy are just as serious. Wharton
Econometrics found that, with the Simon budget amendment: 6.4 million
jobs would be destroyed by the year 2003; the Nation's economic output
would drop sharply; taxes would have to rise to record levels; State
and local government services would be severely constrained; and,
income would drop in the country by roughly $479 billion by 2003.
And, what about Federal assistance after an earthquake or a flood or
a hurricane? The Simon amendment would require a supermajority vote for
disaster aid approval, which could mean either no aid or delayed aid
for those suffering after a natural disaster. Talk about tyranny of a
minority.
The Simon amendment makes no distinction between a capital budget and
the operating budget, a distinction that is crucial in meeting the
needs of a community after an emergency. A capital budget could be used
to pay for important disaster aid.
And, what about bad economic times? Lord knows, we have lived through
those. The deficit increases automatically whenever the economy
weakens. Senator Simon's amendment would force Congress to raise taxes
and cut expenditures when the economy is already weak or in a
recession--exactly the opposite of what is needed for a weak economy.
And, what about Social Security? It will be in jeopardy under the
Simon amendment.
I do not believe this is the course to follow.
In contrast, the Reid amendment addresses many of my concerns.
The Reid amendment excludes Social Security from the balanced budget
amendment. This will prevent the Government from destroying a program
that has lifted our senior citizens out of the poorhouse. Many people
are too young to remember, but we certainly never want to go back to
those days. This is a program that pays for itself. Social Security
would be put on a chopping board with the Simon amendment, and I think
that is wrong.
The Reid amendment allows capital investments to be excluded from the
supermajority vote. Most States with balanced budget requirements have
separate capital and operating budgets. Many States finance capital
projects, such as roads and bridges and airports, outside their
operating budgets. I think that makes sense. We must be able to finance
certain investments that will make our Nation strong and secure and
competitive in the future.
The Reid amendment also allows greater flexibility in times of
economic downturn. It gives us the power to help stimulate the economy
and job creation in times of slow economic growth.
Mr. President, I know this has been a long and difficult debate. I
feel very strongly that this Congress and this President have taken
real steps to lower the deficit; not phony steps, not steps for the
year 2002 or 2001 or 1999, but real steps. And we are seeing the
rewards in terms of a stronger economy.
I believe that the Reid amendment takes all the objections that I
have laid before this body and meets them head on. That is why I will
vote for the Reid amendment and I will very clearly and strongly oppose
the Simon amendment
I yield the floor.
The PRESIDING OFFICER. Who yields time?
The Chair, in his capacity as a Senator from the State of Nevada,
suggests the absence of a quorum, and asks unanimous consent that the
time be divided equally.
Without objection, it is so ordered.
The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. SIMON. Madam President, I ask unanimous consent that the order
for the quorum call be rescinded.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
Mr. SIMON. Madam President, let me respond just very briefly to my
friend and colleague, Senator Kennedy, in his brief remarks.
When he says this will result in the President having authority to
impound, there is not one word in this amendment that gives the
President any additional authority. The only thing we say to the
President is, you have to submit a balanced budget when you submit a
budget. So that simply is not accurate.
Second, when he suggests that we are saying to States, we are going
to give you all kinds of unfunded mandates, we do a lot of that right
now, as you know, Madam President. I am a cosponsor of a bill that
would say, when we give these mandates, we have to give the finances
with them. But there is nothing to stop us from doing that right now.
In terms of the amendment being toothless, we are being criticized on
both sides: That it is toothless and that it is too tough. When we say
to raise the debt you have to have a three-fifths majority, that is
teeth. That is tough, and it has to be tough. It is not toothless.
In terms of moving away from majority rule, James Madison warned
about majoritarian abuses. I think we have clearly, for 25 years, spent
more than we have taken in. That is an abuse of future generations, as
well as ourselves, by the majority.
The average American income, family income, today is $35,000. The
study that was released by the Concord Coalition says the average
American family income today would be $50,000, but for the deficits
that we have piled up. That is an abuse.
In the Constitution there are eight different instances where you
have an exception to majority rule, plus, the Bill of Rights is clearly
a place where we say we are not going to let the majority do things.
Alexander Hamilton originally opposed the Bill of Rights because he
said it was taking power away from the majority. It does. But when
there is a potential for abuse, we take away certain powers.
So long as we have a balanced budget, there is a majority rule here.
When you have a situation where you have a deficit, that will require
60 votes.
But we have, since 1962, on 11 different occasions, passed in this
body stimulus packages to respond to recession, each time passed by
more than 60 votes. We can do it, but it does stop some of the abuses.
Senator Kennedy mentioned we have had declining deficits 3 years in a
row. That is correct. And to the credit of President Clinton and the
Members who voted for that, that is happening. But then they start back
up again.
Two other points: One is the Senator says that this does not take
effect until the year 2001. That is correct. We have to get on a glide
path.
But I know if this passes, the Senator from California, Senator
Boxer, the Senator West Virginia, Senator Byrd, and all the rest of us
will start work immediately to make sure we get on that glide path.
The arguments against it are precisely the same arguments we heard in
1986. In 1986, the deficit was $2 trillion. Now it is $4.5 trillion. If
we do not pass it this time, this is not going to die. The deficit will
keep piling up and we are going to hear the same arguments as the
deficit piles up, as we get closer and closer to the edge of the cliff
in terms of policy.
Two points were not mentioned by my colleague from Massachusetts.
I regret I was not on the floor when the Senator from California
spoke. Perhaps she did mention these. But two things were not
mentioned.
One is, as you project, as you take OMB's statistics from the budget
books they gave us, no nation has gone that far in terms of debt-and-
debt service without monetizing the debt, without just printing money,
without having hyperinflation. We can take a chance that we can be the
first Nation in history to do that, but we are taking a huge risk. I
suggest we do not take that risk. It is not prudent to take that risk.
Second, the question of foreign debts was not mentioned. Seventeen
percent of our debt is now held by foreign governments or foreign
individuals. That is the publicly held debt. In addition to the
publicly held debt, there are those, I think largely because of laws in
their own countries, that do not want it publicly known. We do not know
what that figure is. But at some point, a prudent international banker
is going to say, ``I ought to put my money somewhere else.''
Lester Thurow, one of our great economists, says the question is not
if they are going to do that, the question is when they are going to do
that. We have to take a look at that. So, with due respect, I differ
with my colleague from Massachusetts.
I would like to, finally, quote from a letter of Thomas Jefferson.
This is in 1816, 10 years before he died, after he had been President.
We have had a number of Jefferson letters inserted in the Record. Here
he says:
Private fortunes are destroyed by public as well as private
extravagance. And this is the tendency of all human
governments. A departure from principle becomes a precedent
for a second; that second for a third, and so on * * *.
That is exactly the path we have followed, that Thomas Jefferson
talked about here in this letter of 1816.
I hope we do the right thing. I hope we reject the Reid amendment and
adopt the Simon amendment.
Mr. BYRD addressed the Chair.
The ACTING PRESIDENT pro tempore. The Senator from West Virginia.
Mr. BYRD. Madam President, on yesterday I spoke about the history of
our English forebears and about the various parallels that exist
between our own written Constitution and the unwritten English
constitution. There are those who undoubtedly feel that it is
superfluous to talk about history, especially the history of England or
the history of the Romans, in connection with the amendment that is
going to be voted on toward the end of this day.
First, let me say that I respect my colleague from Nevada, Mr. Reid,
and those who are supporting his amendment. The Senator from Nevada is
seeking to cure some of the many ills with which our Nation would be
inflicted in the event that the Simon amendment, God forbid, ever
becomes a part of our Constitution. I applaud Senator Reid and others
for their efforts.
But try as they may, there is no way to cure the ills imbedded in the
Simon amendment. It is like a hydraheaded monster: Chop off one head,
another head appears. Therefore, I shall direct my brief remarks toward
the Simon amendment.
The history of England is, indeed, germane to this debate, as is the
history of the Romans. Montesquieu knew that. That is why Montesquieu
wrote a history of the Romans. The two things that had the greatest
influence on the shaping of Montesquieu's political philosophy and
political system were the history of the Romans and the history of the
English institutions. The Founding Fathers, the Framers of our own
Constitution, were greatly influenced by Montesquieu and his political
system of separation of powers, and checks and balances. It is
important, therefore, that those histories be studied.
Let me just briefly call attention, again, to some of the parallels
that exist in both the English and the American Constitutions. After
all, we must remember that our Colonies adopted the British model, with
some adjustments made for local conditions and social forces that were
existing at the time of the Colonies, and certain adjustments to
include republican principles.
Our constitutional framers leaned upon the experience of the Colonial
governments which had reflected the bicameralism of the British model,
which, when transferred to the Colonies, took the form of Houses of
Representatives elected by the people, and upper councils, the members
of which were appointed by the Royal Governors.
Section 2 of Article I of the Constitution provides for a House of
Representatives. Section 3 of Article I provides for a Senate which, at
the time that the Constitution was framed, would be made up of
individuals selected by the State legislatures. Hence, the principle of
bicameralism came down to us from the English archetype, Article I,
section 1, stating that:
All legislative powers herein granted shall be vested in a
Congress of the United States, which shall consist of a
Senate and House of Representatives.
Also, in section 2 of Article I, we note that:
No person shall be a Representative who shall not * * *
when elected, be an inhabitant of that State in which he
shall be chosen.
Article I, section 3, states that:
No person shall be a Senator who shall not, when elected,
be an inhabitant of that State for which he shall be chosen.
These provisions, too, have roots in the Middle Ages when kings
sought to pack the Parliaments. The sheriffs would announce as their
nominees, knights who had not been chosen in the shires which they were
supposed to represent, but who were chosen outside the counties which
they were to represent. But, in 1413, the last year of Henry IV's
reign, and again in 1430 and in 1445, legislation was enacted to
require that the members of Commons should reside in the counties, the
shires, the cities, the boroughs which they represented.
Section 2 of Article I, provides that:
The House of Representatives shall chuse their Speaker and
other Officers * * *.
This is taken from the British model. The British Commons chose their
first Speaker, Thomas Hungerford, in the year 1377, during the rule of
Edward III.
Section 3 of Article I says that:
The Senate shall have the sole power to try all
impeachments.
And section 2 says that:
The House of Representatives shall * * * have the sole
power of impeachment.
Does the United States Constitution follow the British model in this
respect? Yes. The first impeachment under the English constitution
occurred in 1376, in what was called the ``Good Parliament,'' during
the reign of Edward III. Richard Lyons, a customs officer and merchant,
and other officers were impeached for abusing their offices.
Then in 1621, when Parliament met, after having not met for 7 years,
going back to 1614, Sir Edward Coke, who was at that time a Member of
the House of Commons, brought about the impeachment of his old enemy,
Lord Chancellor Francis Bacon. Bacon admitted to having taken bribes,
and he was sent to the tower. He was not executed but, nevertheless, he
could never hold any office under the government from that time
forward.
So we see that Article I, sections 2 and 3 provide for impeachment
and trial, and, again, after the British model, impeachment to be
brought in the House of Commons; in our system in the House of
Representatives; and trial under the English system by the House of
Lords, and, in our system, by the United States Senate.
Section 4 of our own Constitution says that:
The Congress shall assemble at least once in every Year * *
*.
Now, this was extremely important because the kings called Parliament
into session only when the kings needed money. When they could not
borrow from the kings of France or Spain, or raise necessary funds
through non-parliamentary means, they had to resort to calling
Parliament into session. When they were forced to ask Parliament for
grants, the members would demand concessions before providing the
necessary funds. This was the power of the purse at work.
For 7 years, from 1614 to 1621, Parliament was not in session. James
I refused to convene Parliament. From 1629 to 1640, Parliament was not
in session because Charles I would not convene Parliament. Parliament
never met for 11 years. Charles I badly needed money grants, and
finally was driven to call Parliament into session. He was encouraged
to do so by Sir Thomas Wentworth--``Black Tom Tyrant''--who was the
Lord Deputy of Ireland and who was ruthless in his policies. Wentworth
believed in despotic government, and advised Charles I to call
Parliament into session because the Scots had overrun the northern
counties of England. Sir Thomas Wentworth, who was made the Earl of
Strafford by Charles I, told the King that it was popular to be against
the Scots--the English being anti-Scottish--and that Charles would be
applauded if he called Parliament back into session, secured money
grants and bought the Scots out of England. The Scots were costing
England 850 pounds a day but the Scots refused to get out of the
northern counties until an agreement could be reached with Parliament
to meet their demands.
Therefore, the English kings had to call Parliament into session when
they needed money. But when they could make do without grants, they
prorogued Parliament, or dismissed it or dissolved Parliament. That was
a major problem: the Kings avoided having Parliament meet often.
Finally, when the English Bill of Rights was made into a statute on
December 16, 1689, that document, the English Bill of Rights provided
that Parliament should meet often. This allowed Members to debate their
grievances, and to use the power of the purse to obtain a redress of
those grievances. Therefore, we find that in our own Constitution,
section 4 of Article I provides:
The Congress shall assemble at least once in every year * *
*.
Section 5, Article I of the U.S. Constitution provides that:
Each House shall be the Judge of the Elections, Returns,
and Qualifications of its own Member * * *.
During the reign of James I, in 1604, there was a contested election
between Sir Francis Goodwin and Sir John Fortescue. The King favored
Fortescue, but the Commons insisted upon judging the election. Commons
won.
After a long dispute, James I acceded to the right of Commons, to
judge the elections, returns, and qualifications of its own Members,
and that right was never again challenged.
In Article I, section 6, we find that ``in all cases, except Treason,
Felony and Breach of the Peace'' Senators and Representatives shall
``be privileged from Arrest during their Attendance at the Session of
their respective Houses, and in going to and returning from the same *
* *.''
Freedom from arrest. This was a right accorded to Members of the
Witenagemote, as far back as Ethelberht, the first Christian King of
Kent, one of the Anglo-Saxon kingdoms, who lived from 560 to 616. So,
this right goes back all the way to the 6th century. He provided that
no person should be put in danger when that person had been commanded
to attend a meeting of the Witenagemote.
King Cnut, who reigned from 1016 to 1035, had the same rule. He
provided protection against arrest of any Members who were commanded to
attend meetings of the Witenagemote.
Sir Thomas Shirley was imprisoned for debt in 1604. The House of
Commons insisted that King James I had no right to collect forced
loans. Thomas Shirley had been imprisoned because he refused to pay the
forced loan demanded by the King. Commons won this battle also. James I
reluctantly accepted the House of Commons' decision upholding Shirley's
claim of freedom from arrest.
Also Article I, section 6, the U.S. Constitution, provides that
Members of both Houses shall be protected in the freedom of speech and
debate and ``for any Speech or Debate in either House, they shall not
be questioned in any other Place.''
Henry IV, who reigned from 1399 to 1413, acknowledged the right of
Commons to debate freely, and, in 1407, he proclaimed that the Lords
and Commons had this right, which was finally confirmed by the English
Bill of Rights in 1689 which declared that: ``Freedom of speech,
debates, and proceedings in Parliament ought not to be questioned in
any place out of Parliament.''
Section 6 also provides that ``no Person holding any Office under the
United States, shall be a Member of either House during his Continuance
in Office.'' And the English had that problem, too, when the kings
sought to pack Commons with their favorites.
The Act of Settlement of 1701 provided that no person who had an
office or place of profit under the King or received a pension from the
crown was capable of serving as a member of the House of Commons.
Article I, section 7, provides:
All Bills for raising Revenue shall originate in the House
of Representatives.
That provision has its roots in the Middle Ages. Henry IV made a
solemn declaration before a joint session of both Houses in 1407, in
which he laid down the principle that in the future, grants would be
made by the Commons and assented to by the House of Lords.
That right was violated from time to time, but finally in 1677, under
Charles II, the Commons passed a historical resolution declaring that
all supplies and aids to the King ``ought to begin with the Commons''
and that it was the sole right of the Commons to direct, limit, and
appoint in such bills the purposes, conditions, limitations, and
qualifications of such grants; which ought not to be changed or altered
by the Lords.
As the years went by, the Commons were more and more insistent on the
origination in the House of Representatives of revenue bills.
Article I, section 7, also provides that:
Every bill which shall have passed the House of
Representatives and the Senate, shall, before it becomes a
Law, be presented to the President of the United States; if
he approve he shall sign it, but if not he shall return it,
with his Objections to that House in which it shall have
originated * * *.
Early on, the King and the Privy Council issued ordinances which had
the effect of law. Then as the Knights and Burgesses during the time of
Edward I--who ruled between the years 1272 to 1307--were included in
the Parliament, the Knights, and Burgesses insisted on providing
petitions to the King requesting this or that law. The King would
consider the petitions with his Privy Council, and the King and the
Privy Council might or might not convert such petitions into statutes.
Sometimes the King and Council would change the details from those
prescribed in the petition, and the resulting statute might be very
different from the original petition.
Then by the reign of Henry IV, bills were being substituted for
petitions. So that when Parliament passed a bill, it contained within
its four corners the exact statute that Parliament wanted. The King and
his Privy Council could no longer change that. The statute was already
in the bill. The King could accept or reject the bill in its entirety,
but he could not alter or change any of its details.
Therefore, we find that in our own Constitution, Article I, section
7, bills that pass the House of Representatives and the Senate are
presented to the President for his signature. He has to sign them or
reject them in their entirety. He does not have a line-item veto. Our
Framers were wise in copying from the experience of the English.
Section 8. The Congress shall have power to lay and
collect taxes.
That was a power that Parliament insisted upon. The Danegeld was a
land tax which was approved by the Witenagemote under Ethelred the
Unready, Ethelred II, who reigned from 978 to 1016. The Magna Carta
provided that taxes should only be levied by common counsel of the
Kingdom. And as the years went by, Parliament insisted upon that right.
Therefore, we have hundreds of years of English history in which the
Parliament insisted that grants could only be made, and taxes could
only be levied by act of Parliament.
Finally, that, too, was nailed down by the English Bill of Rights in
1689 which said that there would be no levying of money except by the
grant of Parliament. It was never again a matter of question.
Article I, section 8, of the U.S. Constitution references the raising
and support of armies ``but no appropriation of money to that use shall
be for a longer term than 2 years.''
The late 1700's, Parliament provided that appropriations or
expenditures for the army had to be renewed annually. Consequently, our
Framers copied after the English experience.
Article I, section 9, provides that, The Privilege of the
Writ of Habeas Corpus shall not be suspended * * *.
The Habeas Corpus Act was passed in England in the year 1679. It
provided that no British subject could be imprisoned without being
brought to a speedy trial.
Article I, section 9, also provides that ``no money shall be drawn
from the Treasury, but in consequence of appropriations made by law.''
This, again, is rooted in the antiquity of the English experience.
The power of the purse was wrested from the English monarchs and
vested in the Parliament.
Article III, section 1 of the Constitution says, in part, ``The
judges, both of the supreme and inferior courts, shall hold their
offices during good behavior.''
In the Settlement Act of 1701 it was provided that judges would no
longer serve at the pleasure of the King, but they could be removed
only for ill behavior, and that had to be proved in both houses of
Parliament. So we have the same thing in our Constitution. Judges shall
hold their offices during good behavior.
Finally, let us take a brief look at the amendments, and I shall not
detain the Senate long. I will only touch on one or two of these
amendments. I shall mention especially the due process in the fifth
amendment.
The Magna Carta was the foundation for this phrase ``due process.''
There were 63 clauses in the Magna Carta, and in clause No. 39 it was
provided that no free man would be imprisoned, banished, exiled,
dispossessed of any of his property, or in any way have his standing
injured except by the judgment of his peers and--get this--according to
the law of the land. The law of the land. The law of the land. That was
a magic phrase, used time and again in the English constitution
throughout its development.
That phrase, ``the law of the land,'' became our own phrase, ``due
process,'' in the fifth amendment to our own Constitution.
Finally, amendments VI and VII of our own Constitution deal with
trial by jury in criminal cases and in civil cases. The English Bill of
Rights provided for trial by jury. Of course, the roots of that right
go all the way back to William I, who brought from the continent the
sworn inquiry. Henry I who ruled from 1100 to 1135 and, Henry II from
1154 to 1189, developed this instrument, the jury trial, which likewise
had continental origins.
Finally, I will just touch upon the eighth amendment: ``Excessive
bail shall not be required nor excessive fines imposed.'' Again, the
English Bill of Rights in 1689 provided against excessive fines and
excessive bails.
So here we are. Let me sum it up by saying that in instance after
instance, clause after clause, phrase after phrase of our own
Constitution were adapted from the experience in the English
Constitution.
Therefore, it is important that we consider the English history; we
should not just consider the history of our own Constitution from the
time it was written. We should also consider the roots of that
Constitution, and the roots of the power of the purse.
In my discussions concerning the history of the Romans last year, we
found that when the Roman Senate gave up its power over the purse--and
it had complete control over the purse--when it gave up that power over
the purse to the dictators and to the emperors, it gave away its power
to check the emperors, to check the dictators, to check the executive.
We should not just consider our Constitution from the year of its
writing, in 1787, up to the present time as being in a vacuum. We must
study the English roots of the Constitution. We must know why these
phrases are in the Constitution. We must know from where they came.
What was the history? What were the historical events that generated
them? We have to realize that our English brethren gave their blood,
often at the point of the sword, for these rights. They executed a
king, Charles I of England, for being a traitor, a murderer, a tyrant,
and public enemy to the good people of England. They executed Charles I
on January 30, 1649.
These are matters that are serious. They ought to be considered. We
must not forget the roots from which this priceless jewel, the
Constitution of the United States, came.
I implore Senators not to vote for an amendment that will destroy
that Constitution, destroy the separation of the powers, destroy the
checks and balances, and shift away from the Congress the power of the
purse, which is the central pillar of the Constitution that protects
the liberties and freedoms of all Americans.
I yield the floor.
Several Senators addressed the Chair.
The PRESIDING OFFICER (Mrs. Feinstein). The Senator from Utah.
Mr. HATCH. I yield 7 minutes to the Senator from Texas.
Mr. REID. Parliamentary inquiry.
The PRESIDING OFFICER. Does the Senator yield for an inquiry?
Mr. HATCH. Yes. I would be happy to yield for an inquiry.
Mr. REID. If I could ask my friends who are managing this
legislation, we all have a number of Senators who wish to speak. I am
wondering if we could, to make it easier for everyone, kind of arrange
the time a little bit.
Mr. HATCH. Why do we not work out a list? Why do we not move to
Senator Hutchison?
Mr. REID. She will speak how long?
Mr. HATCH. Seven minutes.
Mr. SIMON. I have indicated to Senator Exon that I will yield to him
next.
The PRESIDING OFFICER. The Senator from Texas [Mrs. Hutchison] is
recognized for 7 minutes.
Mrs. HUTCHISON. Thank you, Madam President. I thank Senator Hatch.
Madam President, I rise today to add my voice to those who are
calling for a balanced budget amendment. I want to compliment the
senior Senators from Illinois and Utah, Mr. Simon and Mr. Hatch, for
their fine work on this very important legislation. Without their
courage and leadership, we would not be close to enacting mandatory
fiscal responsibility.
You may have seen the editorial cartoon reprinted in Saturday's
Washington Post showing the famous bow tie of the senior Senator from
Illinois. It shows what might be called the ``bow tie argument,'' that
a balanced budget will squeeze too tight.
The opponents of the amendment are saying that we cannot have a
balanced budget because we cannot balance the budget. If there was ever
an inside-the-beltway policy argument, that is it. Imagine the Framers
of our Constitution adopting such a view. We would not have the fifth
amendment which says that private property shall not be taken for
public use without just compensation.
Of course, the Framers knew that public funds were limited. Some had
struggled with financing the Revolutionary War and the Government under
the Articles of Confederation. But as the first stewards of our
country, they put the Government on a pay-as-you-go basis. They did not
write, ``The Government will not pay citizens for seized property
because it will not have the money--so it may seize private property
without paying for it.''
The Framers believed in a limited Federal Government. And I do not
think they would view our grandchildren's pocketbooks as open to
seizure.
If we are going to hear more vague claims against the amendment in
order to protect the Constitution, I want them to include the respect
for all of the Constitution, including protection of private property,
freedom from excessive Government intrusion into daily lives. I do not
believe we are protecting the Constitution by continuing to add to a $4
trillion debt.
We have heard objections that the contractionary economic policy of a
balanced budget will bring on the next Great Depression. Cutting
Federal spending and freeing up capital for private investment will not
bring a depression. But interest payments swallowing up the Federal
budget will.
Herbert Hoover probably saw this coming when he said, ``Blessed are
the young, for they shall inherit the national debt.''
The balanced budget amendment does not strictly require a balanced
budget. It requires that spending not exceed revenue unless three-
fifths of each House votes to permit a deficit. The amendment only
tilts the playing field back in favor of a balanced budget. Obviously,
the playing field is not level now or we would not have over $4
trillion in gross Federal debt and almost $300 billion a year in gross
interest payments.
Of course, balancing the budget will not be easy. But what is the
opponents' alternative? Increasing the Federal deficit?
It does not give me any comfort to know that our deficit for 1995 is
less than expected, mostly because of higher taxes and lower-than-
expected savings and loan bailout costs. Unless we take action now, the
deficit and debt will continue to grow.
The plan I support to balance the budget is the First Act, also known
as Putting Families First. Under the First Act, we can save $542
billion over 5 years by limiting the annual growth in Federal spending
to 2 percent a year. The budget can be balanced by the year 2001, and
we can provide tax relief for American families with children,
including a tax credit of $500 per child; incentives for private
savings and investment, including expanded IRA's and IRA equity for
homemakers, and lower taxes on capital gains; and a repeal of the
retirement earnings test for older Americans on Social Security.
These are not across-the-board spending cuts. They are discretionary
reductions in future spending increases. To meet the 2 percent ceiling
in growth in Federal spending, the cuts would be determined by a
commission, as proposed by Senator Mack --a spending reduction
commission. Then Congress would have to vote up or down on their
recommendation, like we do on the Base Closing Commission.
Madam President, there is a plan. It will balance the budget; it will
take money out of Washington and put it back into the pocketbooks of
American families; it will increase the savings rate and reduce the tax
rate on investments. The First Act will increase private investment in
business, create jobs that increase economic growth, and increase tax
revenues. No scary-sounding cuts in dollars inflated to the year 2000
will be necessary--just cuts in increases in future spending. All we
must do is stop acting as politicians with short-term goals and act as
the Framers did, as statesmen protecting the future of our country.
In closing, I want to encourage all of my colleagues to think
carefully before they vote today. Before voting, think of the heroes of
the Alamo that have been mentioned here before on the floor. Senator
Simon, there really was a back door at the Alamo. The back door was a
line drawn in the sand. Colonel William Barret Travis drew the line in
the sand before the battle, and he asked all those who wanted to stay
and fight to cross the line. They had the chance to leave. All but one
of the 184 men crossed that line, and the one, Jim Bowie, said, ``Carry
my stretcher across that line.''
So that band of 184 men crossed the line to stay and fight 6,000
soldiers coming to the Alamo under Santa Anna. Those brave men
voluntarily closed the door to protect the independence of Texans for
generations to come.
The Congress of the United States today has the opportunity to
voluntarily close that back door and protect the future of generations
of Americans to come. Thank you.
I yield the floor.
Mr. HATCH. Madam President, I thank the distinguished Senator from
Texas for her cogent remarks.
The managers of the bill--the three of us--have gotten together to
try to get a list of speakers in order, so everybody will know when
their turn is. If I could recite that order, I think it will help
everybody to get here on time and to take their place.
Senator Reid would like 1 minute at this time. Then Senator Thurmond
will have 8 minutes. Then there will be Senator Exon, Senator Cohen,
Senator Sasser, Senator Burns, Senator Ford, Senator Kempthorne,
Senator Robb, and Senator Coverdell. That is as far as we got.
Mr. REID. Madam President, if I can suggest to my friend from Utah, I
think it would be well that he list the amount of time and who is
yielding in case we get out of whack with the time.
Mr. HATCH. I am not sure what the time is. Senator Thurmond, 8
minutes. Senator Exon has 10 minutes. Senator Thurmond will be yielded
time by me. Senator Exon's time will be yielded by Senator Simon.
Senator Cohen has 10 minutes from me. Senator Sasser needs how much
time?
Mr. REID. I will yield him 20 minutes.
Mr. HATCH. Senator Burns gets 10 minutes from me. Senator Ford has
how much time?
Mr. REID. Ten minutes.
Mr. HATCH. Senator Kempthorne has 5 minutes from me or Senator Simon;
Senator Robb, 5 minutes; and Senator Coverdell 5 minutes, from either
Senator Simon or me.
Mr. SIMON. Madam President, this is just for the convenience of
Members; this is not a unanimous-consent request. We reserve the right
to have some flexibility in this.
Mr. REID. Madam President, I ask unanimous consent that the remaining
time of Senator Byrd be yielded to me. I ask that with the consent of
Senator Byrd.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REID. The reason I wish to stand at this time is to spread across
the Record in this Congress and for the American public and future
generations, something that is unique that we just heard. I am an
attorney. I went to law school, practiced law, had dozens of jury
trials. I have a son that is an attorney, and I have another son going
to law school at Stanford University. I did not have--and I am sure my
sons did not, even though they went to fine law schools--a lesson on
what the Constitution is really about, such as the one provided by the
President pro tempore of this Senate.
This morning, he went through article by article of that
Constitution, and he gave us the reason it is in our Constitution, and
the history of why it is in our Constitution. I, frankly, wish that I
had someone spend an hour with me before I went to law school so it
would have made studying the Constitution much more meaningful. I am
going to send a copy of the remarks of the President pro tempore of the
Senate to my son, the practicing lawyer, and to my son, who is in one
of the finest law schools in the world, Stanford University, because no
matter how fine the professors are at Stanford, they could not have a
better lesson on the Constitution than the one we have just heard this
morning.
Mr. HATCH. Madam President, I yield 8 minutes to the distinguished
Senator from South Carolina.
Mr. THURMOND. Madam President, I rise today in opposition to the
substitute amendment offered by Senator Reid which we will vote on
today at 3 p.m.
The language of the substitute amendment has been referred to as a
figleaf, a spurious attempt to provide political cover for those who
believe they should vote to support a constitutional amendment to
balance the budget but fear its consequences. I do not question the
sincerity or motivation of Senators who have spoken in favor of the
Reid substitute amendment. However, it is clear that the substitute
amendment is rife with loopholes which swallow the mandate of achieving
a balanced budget.
Over the years, proponents of an effective balanced budget amendment
have carefully crafted language to address the concerns of
constitutional scholars, economists, and others across the Nation. The
language contained in Senate Joint Resolution 41 is a result of many
hearings, debates, and thoughtful discussion to constitutionally
restrain congressional spending in an effective manner. Included in our
proposal is a practical safety valve which would allow the Congress,
when necessary, to engage in deficit spending by a three-fifths vote or
during military conflict.
By contrast, the language of the Reid amendment has appeared within
the last few days without the benefit of any hearings or meaningful
discourse beyond the Senate floor. The Reid amendment would exclude
capital expenditures from being considered as outlays by the Federal
Government under the mandate of a balanced budget amendment. There is
no consensus as to what should or should not be included as part of a
capital budget. It strikes me as inappropriate to place such an
ambiguous concept as capital budgeting in the Constitution as a narrow
policy decision.
If the Reid amendment becomes part of the Constitution, I predict
that there would be a great push to redefine many Federal programs from
noncapital spending items to place them in the capital budget. Under
this scenario, by manipulating the capital budget, we could face even
larger deficits than we have today. This loophole in the Reid amendment
would render a balanced budget amendment meaningless.
Further, the Reid amendment would suspend the dictates of a balanced
budget amendment any time the Director of the Congressional Budget
Office estimates that real economic growth has been or will be less
than 1 percent for two consecutive quarters. Madam President, this is
an enormous amount of power the Congress would be shifting to the CBO
Director. Just imagine, under the Reid amendment, the Director of the
CBO--who serves at the pleasure of the majority leader and Speaker of
the House--would have the power through his estimates on economic
growth to suspend, nullify, and to eliminate the mandate of a
constitutional amendment.
I do not believe that the Founding Fathers envisioned, nor would the
American people accept, such an arrangement whereby a Government
official could derail the mandate of a constitutional amendment. On the
other hand, our proposed constitutional amendment, Senate Joint
Resolution 41, allows the Congress by a three-fifths vote to exercise
reasoned judgment as to the necessity for engaging in deficit spending.
Under Senate Joint Resolution 41, we could rely on the CBO estimates of
economic growth but it need not be the only factor to consider when
making a decision on deficit spending.
Madam President, I will vote against the Reid amendment because in my
opinion it will fall short of our goal to achieve and maintain balanced
budgets. The Federal Government has posted deficits in 56 of the last
64 years, balancing the budget only eight times in 64 years. I repeat
only eight times in 64 years. This Nation is $4.2 trillion in debt and
deficits continue to loom on the horizon unchecked and without any
restraint. The national debt will continue to rise and there is no
assurance when we will ever begin paying off the principal on this
debt. For the time being, we are merely servicing the debt by spending
over $200 billion--I repeat over $200 billion--annually in interest
payments. Perpetual deficit spending is a shameful reality and a
disgraceful legacy which we are leaving to future generations.
I urge my colleagues to vote against the Reid amendment and instead
vote for Senate Joint Resolution 41 which is the only truly effective
proposal to constitutionally mandate balanced Federal budgets.
I repeat again: We have balanced this budget only one time in 31
years, only eight times in 64 years. How are we going to stop it? The
Congress has not shown the willingness to stop it. They have not shown
the will to stop it. The only way to stop it is to mandate the Congress
to stop it, to make the Congress stop it, require the Congress to stop
it, and the only way to do that is to pass a constitutional amendment.
There is no other way to do it. Do we want to ever balance the budget.
If so, let us pass this constitutional amendment, this constitutional
amendment No. 41. That is the only way we will get results.
Madam President, I yield the floor.
The PRESIDING OFFICER. Who yields time?
The Senator from Illinois.
Mr. SIMON. Madam President, I yield 10 minutes to the Senator from
Nebraska [Mr. Exon].
The PRESIDING OFFICER. The Senator from Nebraska is recognized for 10
minutes.
Mr. EXON. I thank the Chair and I thank my colleague from Illinois.
Madam President, having listened to much of the debate on and off the
Senate floor, I have come to the conclusion that many of the arguments
for and against the proposed balanced budget amendment are lacking in
substance. There has been entirely too much bombast and questioning of
the motives of Members on opposite sides of the issue.
I come to the floor to support the balanced budget amendment and in
opposition to the substitute currently before the Senate.
The timing of the substitute amendment before us, basically to create
a separate capital and operating budget, might have some merit from a
technical standpoint. It is not new. The concept has been around for
years. But to bring it up at this juncture is clearly ill conceived. It
will not prevail, and I believe that is a given.
I think we should not be wasting as much time as we have on this
substitute, notwithstanding the sincere efforts of its well-intentioned
sponsors. It is going nowhere and the more time we waste debating
before burying it forever, at least for now, the more tarnished our
image becomes.
Three weeks ago, I addressed the Senate and expressed my pleasure
over the encouraging news that the Congressional Budget Office had
brought to the Senate Budget Committee regarding the dramatic upswing
in the overall economy. This was due largely to the deficit reduction
bill that we passed last year, according to the nonpartisan
Congressional Budget Office. Our actions to date have allowed the CBO
to dramatically reduce its estimates of our projected deficits over the
coming years. However, this does not mean that we can relax in our
efforts to bring expenditures more in line with receipts.
For those of you who doubt what I am saying, I suggest that we look
at CBO's numbers. Our projected deficit for 1994 is $223 billion; for
1995, $171 billion; for 1996, $166 billion; for 1997, $182 billion; and
for 1998, $180 billion. That is a total of $922 billion over the next 5
years of debt that we are simply passing on to the next generation of
Americans. Suffice it to say, even with our recent steps in the right
direction, we have a long, long way to go.
In addition, we should all pay close attention to the fact that our
deficits are projected to stop decreasing and to start increasing
significantly in 5 or 6 years. At that point, we veer off of our
downward glide path toward a balanced budget. As President Clinton
suggests, health care reform may reverse that upward trend. Yet, the
details of such reform are too unpredictable, and our cost projections
too unreliable at this point, to be confident of that result.
We dare not rely solely on health care reform to also solve our
deficit problems. I have never been of the mind that health care reform
can be fashioned to cost the Government less.
We have allowed our government to operate in the red for far too many
years and it is quite simply time to begin to stop. It is foolish to
continue the unabated growth of our Federal debt as it continues on its
ever increasing upward spiral dramatically. The Federal debt stands at
over $4.4 trillion. That is the killer, even more than the annual
deficits which add to it. If we stopped deficit spending tomorrow, we
would still have to deal with our mountain of debt and its crushing
interest payments which gobble up about 15 percent of our entire annual
budget.
I have heard before, and I hear again, more than a few excuses for
not adopting a balanced budget amendment but for the most part they
boil down to one complaint. Please do not change the status quo or cut
my program. Do not upset the apple cart. Keep things just the way they
are and continue to curse the beast and the process that got us to this
point.
But, I maintain it is time to change. We have started down that path
with the adoption of the hard fought deficit reduction bill, but I am
afraid that we are going to stop with the task only half complete. In
my view, we must continue down that path and pass the balanced budget
amendment.
Adoption of such an amendment will surely cause our President and
Congress to consider and pass legislation equally as controversial as
the deficit reduction bill. I can well understand the reluctance many
of us have to engage in a similar battle. Yet, we were sent here to
make those difficult and tough decisions, not to continue to ignore
them.
I do not necessarily disagree with all the arguments of those who say
we should not need a balanced budget amendment. We should indeed simply
be able to pass, or get on a steady glide path toward, a balanced
budget without a constitutional amendment. We should--but we do not. I
believe we have proven ourselves incapable of achieving that goal over
the years, despite the constant hand-wringing and rhetoric about the
evils of deficit spending and the mounting debt which we are leaving to
our children and grandchildren.
Let there be no mistake. Even if the amendment is added to the
Constitution, it will not be a cure-all. It is no panacea. It sure will
not be easy. Unfortunately, whether it is the best solution or not,
Congress and the President seem to need the hammer of a constitutional
amendment to force us to do our duty. Even with some obvious pitfalls,
I reject the argument that it will ``trivialize'' the Constitution.
Madam President, I have been a long-time proponent of the balanced
budget constitutional amendment and have introduced my own version
during the last several years. When I was Governor of the great State
of Nebraska, I had the benefit of a similar provision in the Nebraska
State Constitution. That mandate forced fiscal discipline and has kept
my State fiscally sound.
A half-dozen years ago, I stood here in the Senate and said that it
was time to swim out of our sea of red ink and to put our economic ship
on course. We failed to pass a balanced budget constitutional amendment
then and I am sad to say that the red ink continued to flow at even a
greater rate.
Many who oppose the amendment for a meaningful balanced budget
amendment still maintain it is not necessary. They fail to understand
history.
During my 15-year history on the Budget Committee, I have been
pleading and reasoning for stronger fiscal discipline. On May 14, 1982,
12 years ago, beginning on page S-5329 of the Congressional Record, I
warned of the coming peril. Then we had much smaller yearly deficits
and a national debt of a little over $1 trillion. Today it is over $4.4
trillion. I cited then the alarming projected trend of rising yearly
deficits of $2.8 billion in 1970 to $175 billion in 1987. I detailed
the corresponding annual national debt increases, from $382 billion in
1970 to $2 trillion in 1987. Obviously, little heed was said; even I
did not then anticipate a $4.4 trillion national debt by 1994. So much
for those who say we can do this on our own without the discipline of a
balanced budget amendment. If history teaches us anything, it should be
clear that we need to dramatically change course.
Those opposed to the basic constitutional amendment should be
credited with making some valid points. However, their bottom line
inconsistency is that while professing support for its worthy goal,
they offer the historic and failed alternative: just do it without
a constitutional requirement. Sounds reasonable, but they conveniently
ignore the fact that this way has not worked and has minuscule chances
of ever working in the future.
I can sympathize with their argument that we cannot responsibly
accomplish the desired goal in 7 years, given the magnitude of the
problem and the uncertainty of future unforeseen problems that could
face us.
I do not like gimmickry. That was the reason I voted against Gramm-
Rudman, Gramm-Rudman II, son of Gramm-Rudman and the other phony 5-year
plans that could not and would not work. I believe that history has
proven me right, as all but the diehard opposition to the
constitutional amendment seem to agree.
Reality and the doable must be understood. I have always maintained
that if we were going to be eventually successful, we need to be
committed with a workable plan with teeth and get on a course of a
glide path to balance that I think will probably require a minimum of 8
to 12 years.
Do I think we can accomplish the worthy ultimate goal in the 7-year
timeframe required in the proposed constitutional amendment? No. And
you can take my word for it and call me a liar if we miraculously
accomplish it in 7 years.
But the redeeming feature that is wisely in place in the proposal
allows the Senate, by 60 of its 100 votes, to suspend the requirement
temporarily if and when we can't prudently accomplish the mission as
scheduled.
I still have enough confidence in this body that we can and will
muster the three-fifths vote when and if necessary to do what must be
done.
Is that not a loophole that you could, to use the ever-popular
phrase, drive a truck through? Not if you understand the process. After
7 years, we would be on the spot, a vote to temporarily suspend the
mandate by 60 votes would be tough. If the people do not think we acted
properly and prudently, the spotlight clearly would be on ``the dirty
or courageous five dozen,'' and they could be shortly voted out of
office.
The point is that this is a good proposition to force responsibility,
with the teeth to make it happen as quickly as practicable and
possible.
Is the constitutional amendment proposal a flawless approach to
getting something done? No, probably not, but at long last we have a
chance to solve the fiscal mess that has been created over a
considerable period of time. In my view, with all of its warts, it is
the only chance we have, since all others have failed.
As a longtime fiscal realist or conservative, I believe that our
Government, like a family or business, cannot continue unabated to
spend more than it has without facing financial ruin. I thus intend to
support this Resolution calling for a balanced budget amendment and
strongly urge my colleagues to do so as well.
Thank you, Madam President.
Madam President, I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. HATCH. Madam President, I yield 10 minutes to the distinguished
Senator from Maine.
The PRESIDING OFFICER. The Senator from Utah has yielded to the
Senator from Maine, who is recognized.
Mr. COHEN. I thank the Chair.
Madam President, I remember when President Clinton submitted his
budget last year--a document of some 1,200 to 1,300 pages. I recall
reading an article by a distinguished columnist and journalist in this
city, David Broder. He said, in all of those 1,200 to 1,300 pages, two
numbers that were missing. One number was, as I recall, $940 billion.
That $940 billion represented the amount of additional debt we will
accumulate, assuming President Clinton's budget works as planned.
Assuming all the projections are accurate, assuming all the interest
rates calculations and revenue projections are correct, we will still
go nearly $1 trillion more in debt during the next 5 years.
The second number that was missing was 57 cents. Fifty-seven cents
did not appear anywhere in the President's budget. The 57 cents
represents the amount of the individual income tax dollars that go to
pay interest on the debt. Out of every dollar that we pay in personal
income taxes now, 57 cents goes just to pay interest on the debt.
Madam President, we are engaged in what I have called fiscal child
abuse--fiscal child abuse. We are beating our children with what I
would call the equivalent of rubber hoses. The bruises do not show just
now. There are no telltale signs of the beating, but the pain is going
to last their lifetimes and probably be passed even on to their
children.
Mr. President, I rise in support of Senate Joint Resolution 41,
amending the Constitution to require a balanced budget.
I have not always supported the balanced budget amendment. When this
measure was considered by the Senate in 1982 and again in 1986, I felt
that Congress could and would address deficits without the aid of a
constitutional amendment. Several years ago, however, I realized that I
had been wrong about Congress' ability to deal responsibly with
deficits. For instance, when it came time for the tough spending cuts
ordered by the Gramm-Rudman deficit reduction law, Congress did not
have the will to follow through. So in 1992, for the first time I
supported a balanced budget amendment in the Senate.
I would like to begin my remarks by explaining why I think a balanced
budget is good policy. I will then explain why I have reached the
conclusion that a constitutional amendment, despite its limitations,
offers the only chance of balancing the budget. Finally, I will address
the arguments offered by opponents of the balanced budget amendment,
many of which I think are grossly misleading.
Public debt is not inherently bad. For example, it was both necessary
and wise for the Federal Government to borrow heavily during World War
II. In the three decades immediately following the war, the United
States gradually paid down this debt. Beginning in the seventies and
worsening in the eighties, however, the Federal Government reversed
this trend by borrowing more and more to pay for current expenses. It
is important to understand that the huge deficits we have been running
for the past 15 years have not been to finance public investments that
will yield benefits in the future. We have been borrowing simply to pay
for current consumption.
Contrary to popular belief, Congress is never faced with the choice
of raising taxes or borrowing money to finance Government. Spending can
only be paid for through taxes; it is simply a question of whether we
use today's or tomorrow's tax dollars. Borrowing invariably means that
future taxes will be higher than they would otherwise be. The deficit
poses a problem for younger generations because it represents higher
taxes in the future. In fact, the Office of Management and Budget
recently published an analysis of the growing tax burden. The report
forecast that, without changes in Federal law, the average net tax rate
for future generations would eventually reach 82 percent of their
lifetime earnings. Clearly, this would be an unsustainable situation.
This situation is compounded by the fact that, because today's
Government borrowing draws down the pool of savings available for
investment, future generations will be less able to afford higher taxes
than they otherwise would be. Rising standards of living require
investments in infrastructure, plants, equipment, education, et cetera.
Savings--personal, business, and government--provide the source of this
investment. By running a deficit, the Federal Government draws down the
national pool of savings by an equal amount. With less savings and less
investment, economic growth will not be as quick. As a result, future
generations will be hit with a larger tax bill and be less prepared to
handle it.
Beyond current and future economic problems caused by repeated
deficits, they pose a serious problem in terms of diminishing respect
for Congress. For many, Congress' inability to balance its books
symbolizes our inability to act responsibly. For the sake of the
integrity of the institution, Congress cannot continue to promise the
American people long-term deficit reduction and do little about it.
Actions do speak louder than words. If a majority in the Congress take
the view, as some economists do, that deficits do not matter, that case
should be made clearly to the public, and the disconnect between words
and deeds can be abolished.
Personally, I believe deficits do matter and now would like to
explain why I think a constitutional amendment to require a balanced
budget is necessary.
As I mentioned, I have not always supported the balanced budget
amendment. During the debates in 1982 and 1986, I argued that Congress
should address deficit reduction through legislation rather than
through changes to the Constitution.
Since I made those arguments, however, we have tried to deal with the
deficit through various pieces of legislation. While some have helped
at the margin, none have successfully addressed the structural deficits
that continue to be part of the budgetary landscape. The brief respite
of relatively lower deficits we will enjoy for the next few years
should not be interpreted as a sign that we have conquered the
deficits. In fact, such arguments reflect precisely the sort of short-
term thinking that permitted deficits to grow out of control in the
1980's. The evidence is undisputed that, unless significant steps are
taken, deficits early in the next century will dwarf those of the
1980's.
We have tried every conceivable statutory option to force Congress to
be more fiscally responsible. With few exceptions, these efforts have
failed. A constitutional amendment appears to be the only solution
left.
Amending the Constitution is not something that Congress should
propose lightly. It is a very serious matter. However, I believe that
the balanced budget amendment is consistent with the historic role of
the U.S. Constitution to safeguard the rights of those who may be
underrepresented in the political process. In this case the
underrepresented individuals are future generations who are being asked
to pay for our profligacy.
I would now like to address the arguments that have been made against
the balanced budget amendment currently before the Senate.
I respect the view of those who oppose the balanced budget amendment.
After all, I once shared their view. Nonetheless, the distorted
rhetoric offered by some opponents of this amendment has been
regrettable.
Reports, for instance, claiming to detail specific cuts that would be
required under the balanced budget amendment are baseless. Certainly,
balancing the budget will require spending to be cut, and it would be
disingenuous for me to suggest that these cuts will occur in 49 States
only. Some of these cuts will obviously affect Maine. Nonetheless, to
suggest that the amendment predetermines cuts in specific programs is
grossly misleading.
It is ironic that those arguing that the balanced budget amendment
will force disastrous cuts in spending in the same breath criticize the
amendment as a gimmick that will not work.
It is also misleading to suggest that the balanced budget amendment
is some sort of sham. The sham has been with budget rules that Congress
has bent and broken at every stage. The balanced budget amendment will
only be a sham if Members of Congress lose all respect for the
integrity of the Constitution--an occurrence I do not expect under any
circumstances.
Suggesting that the balanced budget amendment offers Members of
Congress an ``easy'' political vote is also unfortunate. The easy votes
have been the ones to spend repeatedly beyond our means. Although the
balanced budget amendment will not itself reduce the deficit, I have
not shied away from proposing tough spending cuts. Last year, I joined
Senators Danforth, Boren, and Johnston in offering a tough bipartisan
alternative to President Clinton's budget. Our plan would have cut $2
in spending for every $1 in new taxes. More recently, I joined Senator
Kerrey and others in offering a list of cuts totaling nearly $100
billion over 5 years. My support for the balanced budget amendment is
not a matter of political convenience. I am willing to support the
spending cuts that will be necessary to enforce it.
Madam President, I know all about 30-second spots. I know what has
happened to our political system. I know all about the tactics used by
political opponents in coming elections. I know that every one of those
cuts that I voted for will be held up on television and someone will
say: Look what he did. He voted to cut this program and that program.
He is cruel and he is heartless. And I know what the political
consequences of having to face voters under the compressed time of a
senatorial campaign is all about. So I do not need to be lectured about
postponing effective dates being an act of cowardice.
It is also misleading to suggest that the balanced budget amendment
would somehow target senior citizens. Nothing could be further from the
truth. To the extent that deficits fuel inflation that undermines the
purchasing power of those on fixed incomes, seniors have much to gain
from lower deficits.
Also, the balanced budget amendment preserves the statutory
provisions that protect the Social Security trust fund. For example,
the law excluding Social Security from across-the-board cuts under
current budget law would be unaffected by the balanced budget
amendment.
While the Social Security trust fund currently operates at surplus,
it is expected to face severe cash shortfalls early in the next
century. Balancing the budget by 2001, as required by the proposed
balanced budget amendment would ensure the viability of the trust fund
for current and future retirees.
It is also misleading to suggest that the balanced budget amendment
would prevent Congress from responding in times of national crisis. The
balanced budget amendment does not categorically prohibit deficits.
With the approval of at least three-fifths of the Congress, deficits
would be permitted. In times of war or dire economic circumstances
warranting deficit spending, three-fifths of the Members of the
Congress can be expected to recognize the need for deficits at these
times. Unfortunately, Congress has too often viewed deficits not as
necessary evils in times of dire circumstances, but as normal parts of
the annual budget process.
The balanced budget amendment would essentially raise the burden of
proof for when Congress should deficit spend. Deficits would be
permitted only when three-fifths of the Members of Congress are
convinced that special circumstances exist to warrant them.
Finally, I would like to address the concerns that the balanced
budget amendment would open the door for judges to enforce this law by
taking it upon themselves to raise taxes and cut spending. Unlike some
of the other arguments that have been raised against the balanced
budget amendment, I find that to be a very serious and legitimate one.
As a member of the Senate Judiciary Committee, I take very seriously
the prospects of judges usurping Congress' role in making budgetary
decisions. Judges are simply not qualified to undertake these
responsibilities. Permitting them to do so would be irresponsible and
would upset the delicate balance of power between the three branches of
Government.
To address this concern, I worked with Senators Danforth, Nunn, and
Domenici to develop constitutional language to restrict the role of the
Judiciary with respect to the balanced budget requirement. I am pleased
that this language has been incorporated into the balanced budget
amendment that the Senate is now considering.
Our provision would permit the Supreme Court to rule on the
constitutionality of the Federal budget, but would prohibit the Court
from taking further steps to enforce its ruling unless such steps were
specifically outlined by Congress. In other words, judges could not
order taxes or spending cuts unless specifically authorized to do so by
Congress. It is unimaginable that Congress would grant such authority.
This is not to suggest, however, that the balanced budget amendment
would be unenforceable. The balanced budget amendment will be honored
because the legislative and executive branches respect the
Constitution. Neither branch will want to see the Constitution honored
in the breach, as this would undermine respect for the Constitution
among all citizens.
Suggesting that the balanced budget amendment is not enforceable
simple because judges would not be empowered to raise taxes or cut
spending ignores the fact that, in the end, no judicial decision is
ever self-enforcing. As was at issue in the seminal case of Marbury
versus Madison, the rulings of the Supreme Court are honored by the
other two branches of Government not because the Supreme Court itself
has the means of enforcement, but because the other two branches of
Government respect the judiciary and the U.S. Constitution.
I cannot help but note the irony that those suggesting that the
amendment's language limiting the role of judges renders the balanced
budget requirement meaningless have in the past vehemently argued that
it would be disastrous to have judges raising taxes and cutting
spending. If this reflects a change of heart on this matter, I would
point out that, under the proposed balanced budget amendment, Congress
could authorize judges to raise taxes and cut spending. I doubt,
however, that Congress would want to grant such authority.
In closing, I would like to make three points that I think put this
debate into context.
First, 37 States have balanced budget amendments. Complying with
these requirements is not always convenient. But over the long term,
forcing governments to balance their budgets promotes good government.
Second, the fact that taxpayers are willing to finance only $1.3
trillion of the 1.5 trillion dollars' worth of current Government
services, it is reasonable to question whether the public really wants
as much Government as we currently provide.
Last, we should not lose sight of the fact that there is no free
lunch here. Every dollar the Government borrows is a dollar unavailable
for job-creating investment in the private sector. Also, every dollar
the Government borrows today is a dollar tomorrow's taxpayers will have
to repay. At its most basic level the balanced budget amendment stands
for the simple principle that we should pay today for the Government we
use today. If we are unwilling to put the money on the barrel
ourselves, by what right can ask future generations to put their money
on the barrel?
I heard my distinguished colleague from Illinois quote from Thomas
Jefferson earlier this morning. There is another quote which I am
familiar with. Jefferson said that whenever one generation spends money
and taxes another to pay for it, that we are ``squandering futurity on
a massive scale.'' We are squandering futurity on a massive scale.
What we have been engaged in over many, many decades has been the
squandering of the future of our children by refusing to do that which
we are elected to do and that is to make the hard, tough choices of
allocation of responsibilities and priorities. We have not measured up
to that responsibility. We have tried every device to force ourselves
to do this. A balanced budget amendment is a last resort for me, but I
feel it is an absolutely critical one.
The PRESIDING OFFICER. The time of the Senator has expired. Who
yields time?
The Senator from Illinois.
Mr. SIMON. I will yield myself 1 minute simply to commend my
colleague from Maine for his excellent, logical remarks. And
particularly, he is a wordsmith. When he comes up with a phrase,
``fiscal child abuse,'' that is precisely what we are doing. We are
imposing on our grandchildren and future generations this huge burden.
This amendment says let us stop it.
I commend our colleague from Maine.
The PRESIDING OFFICER. The Senator from Utah.
Mr. HATCH. Madam President, if I could take another minute, I would
like to just join in that commendation because I know how difficult it
is for the distinguished Senator from Maine to change his point of view
with regard to this. Because I was here in 1982, I was here in 1986,
and helped to bring those amendments to the floor.
Frankly, I think he is right. We have reached a point where we can no
longer continue doing what we are doing. This is the only alternative
left. Not the Reid amendment, which will not solve the problem, but the
Simon-Hatch amendment, which is the consensus amendment and the only
one that has a chance of getting through both Houses of Congress.
I thank him for his good remarks here today. At this particular point
I know we are supposed to have Senator Burns here. Senator Sasser could
not be here at this time so we are hoping Senator Burns will come to
the floor and we can have him take his time.
The PRESIDING OFFICER. Who yields time? The Senator from Nevada.
Mr. REID. Madam President, I want to bring to the attention of this
body during this lull in the proceedings, a column written by James
Schlesinger, former Secretary of Defense, Director of Intelligence and
Director of Budget.
It is interesting that a number of people who were so vehemently
supporting--so strongly supporting, I should say--the Simon-Hatch
balanced budget amendment are also people who are in the throes of
talking about how great our defense should be, how strong our military
should be.
I think those individuals should really look at what they are doing,
according to former Secretary Schlesinger.
The balanced budget amendment--talking about the Simon
amendment--is an arrow pointed straight at the heart of
America's defenses.
He says, among other things:
Given the many who vigorously support or profess to support
a strong national defense, I have been astonished that so
many appear to be advocates of the balanced budget amendment
considering its dire consequences for our defense posture.
Either they do not understand these consequences or,
conceivably, they are just posturing. What we have here is a
formula for unilateral disarmament designed for ostensibly
conservative reasons. No true supporter of defense could
logically vote for this amendment. It is the best way to
ensure the recessional of American power.
I think those individuals should reassess their position and take a
look at the Reid substitute.
Madam President, I suggest the absence of a quorum and ask that the
time be allotted equally between the three managers of the bill.
The PRESIDING OFFICER. Without objection, it is so ordered. The clerk
will call the roll.
The bill clerk proceeded to call the roll.
Mr. REID. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Campbell). Without objection, it is so
ordered.
Mr. REID. Mr. President, I yield myself as much time as I may
consume.
During this lull in the proceedings, I thought it would be
important--in that we have just a short amount of time to debate the
Reid substitute--I think it is important to note again the differences
between the Simon balanced budget amendment and the Reid substitute,
which is also a balanced budget amendment.
The Reid substitute does what is done in virtually every State in the
Union. Virtually every State in the Union has a balanced budget. We
should have one, but we should do it in a reasonable manner. What the
Reid substitute does is say, yes, we should have a balanced budget, but
we should also have an operating and a capital budget, like the States
have. We should also take off the budget Social Security.
In effect, in calling for an operating budget and a separate capital
budget, we are simply asking the Federal Government to balance its
budget the same way that States, families and businesses balance their
budgets. That seems reasonable.
We all know that balancing the Federal budget, as the Simon-Hatch
amendment would have us do, would be devastating to the country. The
Reid amendment treats Social Security participants fairly by setting
the Social Security trust funds outside the budget and establishes the
Social Security trust fund and not the ``Social Security Slush Fund.''
For those who say, well, there is going to come a time when the
Social Security funds may not be there, it certainly is not going to be
there if this amendment passes. Mr. Ball, who was head of the Social
Security Administration during three Presidents, testified--and I have
read that testimony time after time before this body the last 3 days--
where he said if the Simon amendment passes, it will be the end of
Social Security. So that is the reason we have to recognize the
importance of the Reid substitute.
It is interesting that there are those who say the Reid substitute
is, by the terms of one newspaper report, a fig leaf. Mr. President, if
it is a fig leaf, a cover, I would ask the Members on the other side of
the aisle to call my bluff and vote for this amendment because the way
things now stand, the Simon amendment, we have all acknowledged, is
dead, and now they are saying mine is dead. That is probably true
because the spokesperson on Friday for the Simon-Hatch position, the
senior Senator from Idaho, said no Republicans would vote for my
amendment. That puts me 44-0 right to begin with and then there are
some people who will not support any balanced budget amendment. That
also puts me in trouble.
So those people who believe in a balanced budget amendment, that
recognize that this is not a partisan issue, I suggest, Mr. President,
that they call my bluff and vote for the Reid-Ford-Feinstein amendment.
I see on the floor one of the cosponsors, the senior Senator from the
State of Kentucky. I yield to him 10 minutes, or if he needs more, of
course, he is welcome to that.
The PRESIDING OFFICER. The Senator from Kentucky [Mr. Ford] is
recognized for 10 minutes.
Mr. FORD. Mr. President, I have but a few minutes to speak this
morning on behalf of the Reid-Ford-Feinstein balanced budget amendment.
So I will concentrate my remarks this morning on trust.
The public trusts the Congress to keep the Nation's finances in
order. Nowhere is that agreement and that trust more evident or more
important than in governing the Social Security trust fund.
In the debate over our amendment and the Simon amendment, honesty and
protection of the trust fund have played a very big role. Right now,
surpluses in the trust funds are being used to hide the true amount of
the deficit. The biggest example of this is in Social Security, but it
is by no means alone in this distinction.
During the 1980's, we allowed the Federal trust funds to run up huge
surpluses. We would collect a gasoline tax to fund highway construction
but then not spend it all on highways, thus creating an accounting
surplus. The problem is, we did spend money elsewhere creating masked
deficit and budgetary illusions.
The Simon amendment will allow us to continue to do this. I have a
speech in my folder that I made back in October of 1987 that addressed
this very issue. This particular speech dealt with the Aviation trust
fund. At the time, it represented a $6 billion surplus.
Mr. President, I say to my colleagues that that is only peanuts when
compared to Social Security. According to OMB, from 1985, when the
Social Security System started to run a surplus, to 1993, it
singlehandedly covered up $366 billion in Government red ink. Social
Security covered up $366 billion in Government red ink.
If you think that is bad, wait until we look to the future. From 1994
through the year 2001, the date that Senator Simon's amendment would
likely take effect, CBO projects another $703 billion in budgetary
chicanery, for a grand total of $1.69 trillion worth of deception.
When compared with that, the deficit hidden by the other trust funds
are small potatoes--only another $35 to $40 billion. Pretty soon
though, as we have heard in the past, it adds up to real money. We pat
ourselves on the back and claim to cut spending and do what is right
for our electorate, all the while our Social Security trust fund is
full of IOU's.
Well, I, and those who support our amendment, mean to do something
about that. Our amendment respects the pact our Nation made with its
people many years ago. It reinforces it, makes it stronger, safer, and
more secure. Social Security is exempt from our amendment, thus
securing and fortifying its position as a separate trust fund. If you
do not believe me, just listen to the Gray Panthers, and they will tell
you themselves. I have here three letters to that effect. AARP, the
National Alliance for Senior Citizens, and the National Committee to
Preserve Social Security and Medicare, all endorse Social Security's
treatment under this amendment.
Other trust funds will be treated honestly as well. They will be
considered as a part of the capital budget that invests in
infrastructure and development. Building highways and airports pays
dividends in the future through higher productivity and job opportunity
and growth. Social Security and these other trust funds did not cause
the deficit, and under our amendment they will not be used to hide the
deficit either. This is honest budgeting and a workable balanced budget
amendment.
Mr. President, time is short and a vote on the Reid-Ford-Feinstein
balanced budget amendment is near. Unfortunately, I fear that it is not
near passage but defeat. Standing beside that defeat will be a good
faith effort of those who are truly concerned about the world that we
leave for future generations. Standing beside that defeat will be the
last attempt of this Congress to face reality and tackle an ever-
crippling debt and deficit problem. Standing beside that defeat will be
faith in Government. I support the efforts of my friend and colleague
from Illinois to take on this persistent fiscal dishonesty, but his
version of the amendment will go down to defeat as well.
The Reid-Ford-Feinstein amendment is the only amendment that could
stand the chance of final passage. We all know that. Yet standing by
the defeat of yet another balanced budget will be my colleagues from
the other side of the aisle. Instead of getting what they could, they
will go home proud of taking the supposed moral high ground. If that is
what they want, they can have it. What I want and what 70 percent of
our Nation's people want is a sound financial future. What they will
get is more of the same under the Simon amendment, for standing tall at
the end of the day will be disenchantment, dishonesty, and fiscal
irresponsibility.
I hear so much about ``if 40-some-odd Governors can operate a
balanced budget, why can't the Federal Government.''
Well, I give them an opportunity. I operated under it. It worked. We
had a huge surplus when I left the Governor's office. We had an
operating account. We had a capital account.
They say operate like you do at home. At home you have income, your
salary. That is your operating account. You buy a car within your
means. You pay that out of your operating account. You buy a home. You
pay that out of your operating account. But your operating account is
always balanced. And we have a time period in which to pay it off.
They say, ``Oh, we will never implement that legislation.'' How do
you know we will not? I have seen some amazing things come out of this
Chamber. I have seen people work and do the right thing.
I think implementation of this amendment will work. I think we can
make it work. But on the other hand, if we want an issue, fine. Stay
with Senator Simon and Senator Hatch. Stay with them and then have an
issue when you go home.
But do you want a balanced budget amendment? There are enough votes
with those who are supporting that amendment that we can get one.
Oh, I hear all this, ``The House is going to make us do it.'' I have
never seen us make the House do anything. I have never seen the House
make us do anything. So when they pass their balanced budget amendment,
what is it going to do? It is going to die between here and there. That
is what is going to happen to it. It is going to die between here and
there.
``Oh, we will be forced into it.'' Nope. The House will not do that
to us. We will not do it to the House. So if you want a balanced budget
amendment operated like Nebraska was operated, like Kentucky was
operated, I will guarantee you that we can do the right thing.
That is what it is all about here today, to do the right thing. We
have an operating budget. We are going to pay this in 10 years. The
slice is in here. We have IOU's in the Social Security. We are going to
buy it. It is in operating. We buy it, pay it off. So Social Security
is sound. I do not understand why it takes a brain surgeon to
understand how you operate a budget the way the States do.
And so, Mr. President, I would hope that we would reconsider between
now and 3 o'clock this afternoon that this is an opportunity to pass a
balanced budget amendment that will work and will give us a financially
sound future, not only for ourselves but for our children and our
grandchildren.
I hear my distinguished friend say he is going to do it for his
unborn grandchildren. I have five. The Senator is no ``Lone Ranger.'' I
am just as worried about my grandchildren as he is. And I think I have
a pretty good idea. I have had to work under it. I had to operate it. I
understand how it works. There are few in this Chamber who do. You will
find that most of those will vote for this amendment because it works.
Do it like the Governors do; pass the Reid amendment. Do it like you
do at home and operate your own budget; pass the Reid amendment. It is
just that simple, Mr. President.
I do not know how much time I have remaining, but I will reserve it.
The PRESIDING OFFICER. The Senator has 20 seconds.
Mr. FORD. Pardon?
The PRESIDING OFFICER. The Senator has about 20 seconds.
Mr. FORD. I yield back the remainder of my time.
Mr. HATCH addressed the Chair.
The PRESIDING OFFICER. The Senator from Utah [Mr. Hatch].
Mr. HATCH. I yield 10 minutes to the distinguished Senator from
Montana.
The PRESIDING OFFICER. The Senator from Montana [Mr. Burns] is
recognized for 10 minutes.
Mr. BURNS. I thank the Chair. I thank my friend from Utah.
I was not a Member of this body whenever the Gramm-Rudman-Hollings
Act was passed, but it was one of those many efforts we have had to
control spending in this Government. While well-intentioned, the law
did fall short of what it was to do. Mostly, it could be rendered in
the neutral position just by waiver vote.
In 1990, I would remind my colleagues, I introduced a little bill
called the 4-percent solution. Now, there are a lot of scare tactics
going on around here. They are telling a lot of folks that it is going
to cost them more money, the benefits are going to be slashed. Let us
call them exactly what they are. They are scare tactics.
I come out of county government. The Senator from Kentucky came out
of State government. I expect he probably ran his State a lot better
than we ran our county. But when I left, we had a lot of money in the
bank, we had a reserve. The three county commissioners were budget
cutters, they were the budget setters, and they were the appropriators.
It is a little bit different here, so that is where maybe a little
bit of our problems start.
The 4-percent solution said this. We could establish a budget based
on previous years' expenditures, not this baseline budgeting of add 6
percent and they will say, OK, you are either over the baseline or
under the baseline, which nobody knew what it was. We were throwing a
lot of chaff out here, and a lot of dust, so nobody really knew how the
budgeting process operated.
But what I said is, OK, if inflation grows, or the demand for
Government services continues to grow, we can allow Government to grow
or finance those programs, each and every program, each and every one
of them grow 4 percent a year, based on previous years' expenditures.
That makes a lot of sense to me. If I am making more money this year,
I will tell my wife, OK, we can increase our budget that much. But if
we are not, then we have to make some very hard choices. And the debate
so far on this floor says I was sent here to make those hard choices
without any strings attached. And I agree with that. But we have not
done it. That is the problem. That is the crux. That is the base to it
right now.
We have a lot of folks in town calling on our offices that say in
this budget we are going through right now, appropriations, they will
say, ``Don't cut me, don't cut thee; cut the guy behind the tree.''
What happens when they are the ones behind the tree?
The American people understand. They are not so naive that they do
not understand what we are doing. If you want a new program, they
understand it is going to cost more money. Therefore, it is going to
cost more in taxes. More is going to come out of your paychecks. But we
are almost to that point where we can vote ourselves in the red. Then
this society, as a free society, may be in serious jeopardy as we know
it.
There is not a person in this country who does not understand that
they want the same opportunities for their children and their
grandchildren as we had. But with deficit spending, those opportunities
melt away. Yet, those very folks are in town saying: We want more of
the pie from Uncle Sam.
I said, ``Fine. What do you suggest we cut?''
``I do not know.''
There has to be some balance here. We have to pay for it in some way
or another. We like to balance it, and we need your help. Maybe we have
to do more with less. Maybe more is going to be required of you, the
responsibility. Everybody talks about rights and entitlements; rights
and entitlements. Nobody talks about responsibility. And we have to
start doing that.
The 4 percent solution was merely this: Let the budget grow 4 percent
based on previous years' expenditures, and nobody takes a cut;
everybody increases a little bit every year. In 4 years, we would have
balanced the budget, and we could start to work on this terrible debt
of over $4 trillion on which our children and our grandchildren will be
paying the interest. It will be a long time, the way they are cutting
things around here. The biggest line item in the budget will be the
interest on national debt.
I agree some of that interest probably goes out to folks that own
bonds. That is not all that bad. The investment has been pretty good
thus far. As long as we are solvent, that is a pretty good investment.
But where are we?
So I realize--and I respect my good friend from West Virginia and all
the folks who would say vote for my amendment, and my friend from
Nevada. But what does it do? Nothing. That is what it is meant to do--
nothing. It was not offered to do something. Go home and feel good? I
do not think so.
You go home and talk to people who pay taxes, who walk up to that
window and pay taxes. They will say, ``Well, there is a lot of cynicism
in Government.''
I will say, there sure is; because every time you turn around, you
are looking at a Government employee or a bureaucrat in some way or
another. They are in more people's lives now than they ever have been.
The only way we curb that is we have to operate our house a little bit
tighter than we are operating it right now.
I heard all the threats. We have all heard them. But I will tell you
right now that if it is going to take draconian measures to get our
house in order, then let us get our house in order. Let us take that
step. Let us all hurt a little. It does not hurt us. Let us all hurt a
little with the people of this country, because I think they really
want to do that.
I still go back to the old 4 percent. There are people telling Social
Security recipients that their benefits are going to be slashed by over
$500 a year if this amendment passes; that is wrong. That is as wrong
as wrong could be. It is not there.
I noticed my good friend in the chair this morning. We understand the
cattle industry. There is an old saying that liars figure, but figures
don't lie. This is wrong. You cannot tell people and scare people into
accepting something that is unacceptable to 75 percent of the people in
this country.
I spoke to a group of people who are involved in rural water systems
just last Friday. There was a couple hundred people there who serve my
State of Montana. I said, ``How many people would like to see a
balanced budget amendment?'' You do not want to know how many hands
went up. Three-fourths of them put their hands up.
So let us not hoodwink the American people and do not believe that
they are naive enough that they do not understand and know what is
going on when we offer this balanced budget amendment.
I want to congratulate my friend from Illinois. It has taken great
sacrifice for him to fight this battle and to come up with a proposal
that at least gets us started in the direction of fiscal responsibility
in the U.S. Government.
I know he has the support of folks in Illinois, because I know some
of his constituents. They are in support of this, 75 percent. Those are
big numbers when we start talking about doing the right thing when it
comes.
But if this does not happen, then the American people are the big
losers. I think we have an opportunity there to really pass this
amendment and make it part of the Constitution. If you do not want to
do that, I would even entertain the suggestion to let us write it into
law. Let us just write it into civil law, right into the codes. If it
works, I want to see some people standing on this floor making the
argument to repeal it.
If you do not want to put it in the Constitution, let us put it into
law where the lawmakers can handle it. It does not have to go in the
Constitution so that it binds this body. It is just merely a
suggestion. I think maybe we ought to think about that if we do not
make it a constitutional amendment.
I thank my friend from Illinois, my friend from Utah, and the Chair.
I yield the floor.
Mr. SIMON. Mr. President, I yield myself 2 minutes.
Just to respond to my friend from Montana, I thank him for standing
up. The National Taxpayers Union just released a poll done of 1,000
Americans asking about this constitutional amendment: Favoring it, 67
percent; opposing it, 18 percent. That is almost 4 to 1. That simply
underscores it.
Then, in terms of the statutory suggestion the Senator makes in
changing the law, the reality is we have a law right now, believe it or
not, introduced by Senator Harry Byrd a long time ago, which requires
us to have a balanced budget. We just ignore it. That is the problem
with the law. We either ignore it or we change the law. That is why we
need the constitutional amendment.
I yield the floor, Mr. President.
The PRESIDING OFFICER. Who yields time? The Senator from Utah [Mr.
Hatch] is recognized.
Mr. HATCH. Mr. President, before I summarize the reasons the Reid
amendment is an unacceptable alternative to the Simon-Hatch balanced
budget amendment, I would like to reply to some of the points made by
the Senator from Nevada and others in response to my statement
yesterday.
The Senator from Nevada said that my arguments criticizing his
amendment were a lot of ``legal mumbo jumbo.'' It seems odd to me that
anyone would object to a discussion of constitutional law and
principles in a debate on a constitutional amendment. It seems even
odder that a recitation of the significant Supreme Court precedent
would be termed ``legal mumbo jumbo.''
The Senator stated that, as an attorney, he was familiar with the
maxim that when the facts are not on your side, argue the law.
Well, as with so many other things in this debate, the Senator from
Nevada has it backwards. The traditional maxim is that when the law is
not on your side, argue the facts, and when the facts are not on your
side, pound the table.
Mr. President, the Senator from Nevada did not respond to my
arguments that his amendment flies in the face of constitutional theory
and history: That the Reid amendment cedes unprecedented power to
suspend the Constitution and to make budget decisions to unelected
officials, and violates the basic norms of due process, which we have
followed for 200 years in constitutional history.
In fact, he admitted that his amendment would overturn the very
important Bowsher decision, which struck down the grant of budget-
cutting authority to the Comptroller General of the United States as
inconsistent with the constitutional principle of separation of powers.
He once again raised the false specter that the Simon-Hatch amendment
could enhance Presidential impoundment. I have responded to this point
at length during the past few days of debate. By way of summary, the
Simon-Hatch amendment does not grant the President any impoundment
authority, because it is intended solely as a limitation on Congress'
taxing, borrowing and spending powers. Ironically, he did not fully
respond to the suggestion that his amendment created possible
impoundment powers in unelected officials in Congress.
Instead, finding the law against him, the Senator from Nevada
attempted to argue the facts, but he could find none. Instead, he
invoked, just as Clinton administration officials did a week earlier,
what seems to be the substitute for the facts in this debate--a litany
of dire consequences if our amendment is enacted--all transportation by
car, rail, and plane would shut down; people freezing and dying in the
streets. Mr. President, that is not constitutional argument; that is
not arguing the facts; that is hysteria.
Mr. President, the law supports the Simon-Hatch balanced budget
amendment, and the facts do as well, because it is the only amendment
that will actually balance the budget. The facts are that we have a
$4.5 trillion debt. And without the Simon-Hatch amendment--with no
amendment or with the Reid amendment--the debt will be $6.4 trillion in
1999.
Finally, the Senator made the point that hard choices make bad law.
On the contrary, Mr. President, hard choices make good government.
Invoking hysterically exaggerated dire consequences of prioritizing our
spending is not the way to rationally discuss correcting our fiscal
mess. Of course, we must make hard choices under our amendment, because
under our amendment we must actually balance the whole budget. But
under the Reid amendment, we can avoid those hard choices by exempting
virtually everything or turning the difficult jobs over to some
unelected officials.
Mr. President, the Reid amendment is clearly insufficient. It is not
a serious balanced budget amendment.
I will list 10 reasons why the Reid amendment is an unacceptable
alternative to the Simon-Hatch balanced budget amendment.
First, the Reid amendment is a political fig leaf.
Mr. President, the Reid amendment is simply a sham, a cover vote to
allow Members to say to their constituents--the vast majority of whom
want a balanced budget amendment--that they supported something of that
name.
Second, the Reid amendment is in fact a killer amendment.
Even if the Reid amendment passed, which it will not, a substantial
change of this nature to the balanced budget amendment will kill its
chance of passage in the House of Representatives. In 1992, the
Gephardt amendment, which had similar exemptions, lost handily. It got
only 104 votes, with over 300 votes against it. Make no mistake, the
Reid amendment is a killer amendment.
Third, the Reid amendment is a hastily constructed, poorly thought-
out attempt at a balanced budget amendment.
It is ironic that Senate Joint Resolution 41, the Simon-Hatch
amendment--the product of years of hearings and public and
congressional debate--has been criticized as trivializing the
Constitution. Talk about trivializing the Constitution. The Senate
will, at 3 o'clock today, vote on the Reid amendment, which is called a
balanced budget amendment--a proposal unveiled just 5 days ago. Not one
day of hearings, and not any public debate, other than what we have had
over the last few days. No hearings, 2 days of debate, and here we are
voting on an amendment to the U.S. Constitution. This is truly
inadequate for the Senate, for the American people, and for the
Constitution's framers.
Fourth, the Reid amendment is undemocratic.
It is quite ironic, as well, that Senate Joint Resolution 41 has been
criticized as being undemocratic. Talk about undemocratic. This Reid
alternative, one, cedes authority to suspend the operation of a
constitutional requirement to balance the budget to the Director of the
Congressional Budget Office, an unelected official whose appointment is
not even subject to congressional confirmation; and, two, says that
Congress may delegate the power to order uniform cuts in the budget to
some unnamed ``officer of Congress.''
Mr. FORD. Will the Senator yield information a question?
Mr. HATCH. On your time.
Mr. FORD. Do I have 20 seconds left, Mr. President?
The PRESIDING OFFICER. Yes.
Mr. FORD. Does that not say ``may,'' and when we have the situation
on legislation to implement the amendment, do we have to do it?
Mr. HATCH. You do not have to do it.
Mr. FORD. It says ``may,'' and the Senator acts like it is mandating
it.
Mr. HATCH. Congress may delegate the power to order uniform cuts in
the budget to some unnamed officer of Congress. We have all heard the
expression a player to be named later. Well, if this alternative
passes, we will have a similar provision in the U.S. Constitution,
where the Congress may delegate to an unnamed, unelected official the
right to order uniform cuts. That is unprecedented anywhere. The
Senator's point does not diminish my point at all.
Fifth, the Reid amendment does not require that the whole budget be
balanced, and it contains a number of loopholes through which large
deficits could be run.
Mr. President, it is ironic, as well, that opponents of the Simon-
Hatch amendment have incorrectly criticized it as a gimmick which could
be easily circumvented. It is the Reid alternative, however, that has
mammoth loopholes, such as exemptions for everything outside of the
undefined operating funds of the United States, including what it
refers to as capital investments, a term which is not defined, and its
meaning is not agreed upon at the Federal level. Who knows how broadly
that might be construed? It could cover everything from education to
transportation expenditures. That is a laugher. Would welfare payments
be considered investment in human capital under that amendment?
Virtually anything could be excluded by this loophole.
Sixth, the Reid amendment has no functional enforcement provision.
The Reid amendment requires that estimates of spending and income be
balanced, but it has no backup enforcement provision to ensure a
balanced budget if those estimates are wrong. In marked contrast, the
Simon-Hatch amendment has a debt ceiling which cannot be circumvented
except by a three-fifths rollcall vote of the Congress. Furthermore,
the Reid amendment allows enforcement only in accordance with some
possible future legislation, ensuring that Congress can control how
much or how little enforcement is available. We want a balanced budget
amendment so that we can force Congress to do what is right, or at
least give every incentive to do what is right, rather than leaving it
up to Congress to do business as usual. Consequently, the Reid
amendment really is an unenforceable gimmick.
Seventh, the Reid amendment allows deficit spending in so many
instances that under it we would never get the debt under control.
The Reid amendment only requires that the undefined operating funds
of the Federal budget be balanced. Everything else can be financed by
deficits. Even this weak requirement of balancing Federal operating
funds, however defined, can be avoided for a full 2 years if there is
ever an economic slowdown for two quarters as estimated by none other
than the Congressional Budget Office.
Thus, if the economy slows down for two quarters, Congress has free
reign to run up deficit for 2 full years under the Reid amendment. It
has been estimated that applying the standards of the Reid amendment
could have resulted in a suspension of the balanced budget rule in 22
of the last 45 years.
Where are the teeth in this amendment?
Eighth, the Reid amendment constitutionalizes questionable economic
policies.
Section 3 of the Reid amendment allows deficit spending in times of
recession or economic slowdown. This is a distorted version of
Keynesianism, and it is not clear that it would work to stimulate our
current economy. In fact, our recent history seems to refute such an
expectation. We had record deficits and zero or low growth for 3 years.
This sort of stimulus mechanism is obviously not working. Perhaps more
importantly, it is not clear that the definition of recession contained
in the Reid amendment is appropriate. With all the questions about the
economic assumptions underlying the Reid amendment, it should not be
included in the Constitution.
Ninth, the Reid amendment conflicts with the philosophy underlying
the Constitution.
The Reid amendment conflicts with constitutional theory and history
in two ways. First, it explicitly cedes broad constitutional authority
to unelected officials, such as the Director of the Congressional
Budget Office and another unnamed ``officer of Congress,'' in a way
wholly inconsistent with traditional constitutional law and principles,
such as the separation of powers. Second, it denies fundamental norms
of due process by denying any and all access to any court to vindicate
any private rights unless Congress so allows in future legislation.
Tenth, the Reid amendment encourages continued congressional
irresponsibility in the budget process.
Each of the flaws I have discussed opens the Reid amendment to abuse
and creates a vent through which the pressure to make the hard choices
can escape, along with the possibility of a balanced budget. Mr.
President, the Reid amendment is a rule swallowed by exceptions.
It allows numerous avenues for deficit spending through which
Congress can continue its current profligacy. It contains numerous
abdications of congressional responsibility and accountability for
taxing and spending decisions. And finally, it supports continued
congressional irresponsibility.
In contrast, the Simon-Hatch amendment, the only one that has a
chance of getting through the Congress and I believe has a chance of
getting through today in spite of those who have been decrying this
amendment, requires Congress to take responsibility for all Federal
spending and taxing decisions. It forces Congress to set priorities and
make spending decisions within the limits of the available revenues. It
requires Congress to spend for the things the American taxpayers are
willing to pay for and no more. It stops the further abdication of
congressional responsibility encouraged in the Reid amendment, and it
requires Congress to once again take its constitutional duties
seriously in the way the framers intended.
Mr. President, for all these reasons the Reid amendment, this
political fig leaf, this caricature of a constitutional amendment, must
be rejected. The American people must not, and will not, be fooled. The
only serious balanced budget amendment is the Simon-Hatch amendment. It
is the only one that has the possibility of moving this Nation to a
balanced budget and the only one that will restore congressional
responsibility and accountability in the Federal budget process. The
Congress knows it, and the American people deserve it. I do not think
they will accept anything less than their Senators' support for the
Simon-Hatch balanced budget amendment.
This has been tough talk. I know there is a lot of sincerity in what
has been done, but that does not negate these 10 points which I do not
think can be refuted.
Mr. President, I am happy to yield 10 minutes, if I have it. How much
time do I have remaining, Mr. President?
The PRESIDING OFFICER. The Senator has 6 minutes remaining.
Mr. SIMON. I am happy to yield 6 minutes to the distinguished Senator
from Idaho.
Mr. HATCH. I yield 4 additional minutes to the Senator from Idaho.
The PRESIDING OFFICER. The Senator from Idaho is recognized for 10
minutes.
Mr. CRAIG. Mr. President, I thank my colleagues for yielding. Let me
build upon their comments and testimony this morning as it relates to
the Reid amendment. I use the word ``testimony'' for a very important
purpose because the Reid amendment has had no testimony, not 1 minute
of committee examination or Member examination beyond its presence here
on the floor as it freshly appeared last week.
I appeared on the floor yesterday in debate in opposition to the
amendment, and I brought with me a stack of documents that covered this
desk and nearly reached the top of this podium, some 3,000 pages of
testimony of both positive and negative critique of this amendment, the
Simon-Hatch-Craig-Thurmond amendment, which I think, in all fairness,
in reality deserves to be called the real amendment versus the Reid
amendment.
Yesterday during that give and take between Senator Reid and myself I
offered him 34 questions about his amendment that I submitted to the
Record that clearly deserved to be answered. I hope they can be
answered today. I hope they can become part of the Record.
Mr. REID. Mr. President, will the Senator respond?
Mr. CRAIG. Quickly.
Mr. REID. I will. There are a lot of questions we have answered. We
have answered many of them. Before the debate is ended, we will put
them in the Record so they will be there for the future.
Mr. CRAIG. I thank the Senator.
It becomes very important that we build this Record on an amendment
that in our opinion is serving very poorly as a substitute.
Now, I had just concluded those comments yesterday when the Senator
from Alabama came to the floor, Senator Heflin, and again began to ask
questions about an unknown commodity, the Reid amendment.
I think it is clearly incumbent upon the Senator to respond to those.
He has now just said he will attempt to do so, and it becomes very
important in the final outcome of this whole debate and more
importantly to the understanding the American people will have about
what is or is not the proper tool or device to put in the Constitution
for the purpose of balancing the budget.
First and foremost, the Reid amendment does not even address what we
commonly refer to as a balanced budget. It is his concept of a balanced
budget. It is a little off here, and a little off here, and we will
balance the rest. It is not a total picture for the American taxpayer
to analyze what their Government is doing in any regard.
Between actual outlays and receipts there is a phenomenal disparity.
Our amendment, the real balanced budget amendment, allows the use of
estimates as a means of achieving what we require, a balance between
actual outlays and receipts. His merely says estimates ought to be in
balance.
In other words, in our amendment estimates are acknowledged as
realistic means to an end. That becomes a very important part in the
total understanding of this issue.
Mr. President, I rise in support of Senate Joint Resolution 41, the
bipartisan, bicameral, consensus balanced budget amendment to the
Constitution, and in opposition to the amendment offered by the Senator
from Nevada [Mr. Reid].
The Reid proposal, technically, is called an amendment in the nature
of a substitute. But let us make no mistake: The Reid amendment is no
substitute for the real thing.
I pointed out yesterday on this floor that, over the last 14 years,
we have had--and I am estimating conservatively, here--3,000 pages of
legislative history behind our consensus balanced budget amendment.
That has included hundreds of hours of debate here on the Senate floor
and in the House, extensive committee hearings in both bodies, and
Judiciary Committee reports in virtually every Congress.
But when we look at the Reid amendment, we have only questions.
Yesterday, I submitted to Senator Reid and for the Record some 34
questions about his amendment. These were not rhetorical questions--
they were, and are, questions about the definitions in and the
operation of his amendment. The answers are not obvious from reading
the amendment and there is no legislative history, no hearing record,
to guide us.
Later yesterday, the senior Senator from Alabama [Mr. Heflin] asked a
number of additional questions, as did the senior Senator from New
Mexico, the former chairman of the Budget Committee [Mr. Domenici]. I
suspect that, if we had more than a couple of days to look at the Reid
amendment, we would see the need to ask more and more questions.
I still look forward to reviewing answers to the questions I
submitted to the Senator from Nevada. At this moment, I would like to
revisit just a few of the questions--as well as some of the serious
problems--that his proposal raises.
First and foremost, the Reid amendment does not even address what we
commonly refer to as a balanced budget--a balance between actual
outlays and receipts.
Our amendment, the real balanced budget amendment, allows the use of
estimates as a means of achieving what we require: A balance between
actual outlays and receipts. His merely says that estimates ought to be
in balance.
In other words, in our amendment, estimates are acknowledged as
realistic means to an end, that end being an actual balanced budget. In
the Reid amendment, some statement of balance between some outlays and
some receipts is the end itself. No followthrough is required.
Our amendment is basically self-enforcing, because even the most
honest failure to comply with it would result in the need to increase
the debt limit by a three-fifths vote in both bodies of Congress.
Congress and the President would do just about anything to avoid the
threat of having to face that hurdle--even balance the budget. If
Congress or the President actually violated our amendment in an
extreme, blatant way, we provide the backstop of limited but necessary
judicial enforcement.
The Reid amendment has absolutely no legislative or judicial
enforcement. His amendment allows legislative enforcement, while ours
makes it inescapable.
The Reid amendment excludes capital investment from estimated
outlays, although--and this is interesting--it does not exclude the
receipts of capital investment trust funds from its definition of
estimated receipts.
Apparently, Senator Reid would have us use highway taxes to pay for
the expenses of the operating budget, while highway spending would not
have to be paid for at all. This would destroy our current system of
dedicated trust funds.
There is no commonly accepted definition in the Federal budget
lexicon for capital investments, and Reid amendment does not define
them. I ask unanimous consent to print in the Record a table from page
109 of the ``Analytical Perspectives'' volume of the President's fiscal
year 1995 budget.
There being no objection, the table was ordered to be printed in the
Record, as follows:
TABLE 8-1.--COMPOSITION OF FEDERAL INVESTMENT OUTLAYS
[In billions of dollars]
------------------------------------------------------------------------
1993 Estimate
actual ---------------
1994 1995
------------------------------------------------------------------------
MAJOR FEDERAL INVESTMENT OUTLAYS
Major public physical capital investment:
Direct:
National defense............................ 76.1 66.5 60.4
Nondefense.................................. 19.1 22.5 22.9
-----------------------
Subtotal, direct major public physical
capital investment....................... 95.2 89.0 83.3
Grants to State and local governments......... 31.2 34.2 36.5
-----------------------
Subtotal, major public physical capital
investment............................... 126.4 123.3 119.8
=======================
Conduct of research and development:
National defense.............................. 40.4 38.9 39.4
Nondefense.................................... 28.0 29.2 30.3
-----------------------
Subtotal, conduct of research and
development................................ 68.4 68.1 69.7
=======================
Conduct of education and training:
Grants to State and local governments......... 21.5 24.9 25.6
Direct........................................ 20.4 17.4 19.0
-----------------------
Subtotal, conduct of education and training. 41.9 42.3 44.6
=======================
Major Federal investment outlays................ 236.7 233.6 234.0
=======================
MEMORANDUM
Major Federal investment outlays:
National defense.............................. 116.6 105.5 99.8
Nondefense.................................... 120.1 128.2 134.2
-----------------------
Total, major Federal investment outlays..... 236.7 233.6 234.0
=======================
Miscellaneous physical investment:
Commodity inventories......................... -0.2 -0.8 -0.2
Other physical investment (nondefense, direct) 5.6 5.8 5.5
-----------------------
Total, miscellaneous physical investment.... 5.4 4.9 5.3
=======================
Total, Federal investment outlays, including
miscellaneous physical investment.......... 242.1 238.6 239.3
------------------------------------------------------------------------
Mr. CRAIG. As we see from this table, the President's budget lists
the following investment spending: $89 billion for physical capital--
the category most analogous to traditional State government practices;
$68 billion for research and development; $34 billion for grants for
State and local physical capital; and $42 billion for education and
training.
Does the Reid alternative contemplate a capital budget of $89, $123,
$191, or $234 billion? Well, that would depend on how Congress,
implementing the Reid amendment, would define capital.
Many in Congress, the administration, academia, and the private
sector believe we should focus on the emerging concept of human capital
as an investment priority. If Congress adjusts its definition of
capital investments accordingly, then the Reid amendment may be calling
for a capital investment budget that would amount to $234 billion this
year. And remember all of that amount could be deficit spending under
the Reid amendment.
The Reid amendment's exemption of Social Security was dealt with
extensively in debate yesterday. I just want to reiterate a couple of
points briefly in this regard.
First, a constitutional amendment should enshrine timeless
principles, not address temporary situations.
The proponents of the Reid amendment have focused exclusively on the
surpluses that the Social Security trust funds are running today.
However, according to the Social Security trustees, by the year 2016,
trust fund outlays will begin exceeding trust fund tax receipts. By
2024, those outlays also will exceed interest revenue being earned on
Treasury securities. At that point, the trust fund will be operating
with annual deficits, as I pointed out yesterday with a graph, here on
the floor.
When the trust funds start running deficits, including them under the
balanced budget umbrella will result in annual surpluses in non-Social
Security spending, guaranteeing that funds will be available to meet
Social Security obligations to today's workers.
Today and in the future, the largest threats to Social Security are
deficit spending, the growing debt burden, and the interest payments
that increasingly crowd out other fiscal priorities. The only sure way
to protect Social Security from these economic and fiscal pressures is
to stop deficit spending, stop growing the debt, and start lowering
interest costs.
Under the Reid amendment, there is no bar to Congress redefining
other, non-Social Security programs, so that they could be moved off-
budget and paid for by draining Social Security revenues.
Under the Reid amendment, if Congress wanted to stimulate the economy
with tax cuts, there would be no balanced budget consequences from
slashing the off-budget Social Security taxes, without replacing those
revenues from somewhere.
In both cases, the Reid amendment would put the integrity of the
Social Security trust funds in great jeopardy.
I ask unanimous consent to print in the Record a copy of a Dear
Colleague several of us sent out last week that discusses in greater
detail how our amendment, the bicameral, bipartisan consensus
amendment, actually protects Social Security, along with endorsements
from seniors' groups.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From Congressional Leaders United for a Balanced Budget]
February 23, 1994.
Dear Colleague: Some opponents of S.J. Res. 41/H.J. Res.
103, the Balanced Budget Amendment to the Constitution, once
again have resorted to scare tactics, claiming that such an
amendment would threaten the existence of Social Security. We
can assure you that nothing could be further from the truth.
In fact, the amendment will protect Social Security from the
threat posed to by continued federal deficits.
Analyses of the amendment that project deep cuts in
specific programs as a result of across-the-board reductions
assume that, within a balanced budget framework, Congress and
the President will abdicate our responsibility to make
choices and put the budget process on automatic pilot. We
believe that members of Congress take their responsibilities
seriously. The Balanced Budget Amendment would impose a
discipline--now lacking--that would foster crucial priority-
setting.
The amendment does not change in any way the existing
status of Social Security. Current statutory protections
would not be compromised by the amendment and Congress surely
would take cognizance of Social Security's history of
protections in any implementing legislation. For example, any
legislation that would change the actuarial balance of the
Social Security trust fund is currently subject to a 60 vote
point of order in the Senate.
The greatest threat to the long-term status of the Social
Security program is the rapidly increasing federal debt.
Interest on the debt is consuming an increasingly larger
percentage of the federal budget. Interest payments will
continue to crowd out other spending, including eventually
Social Security, and will impair the ability of future
generations to repay monies borrowed from the Social Security
trust fund. By making deficit spending a rare exception
instead of the norm, a balanced budget amendment will protect
the long-term stability of Social Security and Medicare.
We have attached additional information regarding the
effect of our amendment on Social Security. If you have any
questions, you can contact any one of us or Damon Tobias
(Craig, 4/2752), Sharon Prost (Hatch, 4/7703), Janice Long
(DeConcini, 4/8178), Thad Strom (Thurmond, 4/9494), or Ed
Lorenzen (Stenholm, 5/6605).
Sincerely,
Charles Stenholm,
Dennis DeConcini,
Larry Craig,
Orrin Hatch,
Strom Thurmond.
____
The Balanced Budget Amendment Will Protect Social Security
The largest threats to Social Security are deficits and
debt.
Ballooning interest payments on the national debt already
are squeezing out other fiscal priorities. Spending more and
more on interest eventually threatens all programs, even
Social Security.
The BBA will protect Social Security now and in the long
run.
Even the Wharton study commissioned by BBA opponents shows
interest rates dropping immediately in anticipation of
phasing in a balanced budget. The 30-year government bond
rate would drop from 6.6% to 2.5% by the year 2003. Besides
all their other benefits, zero deficits, a smaller debt, and
lower interest rates would reduce the debt service squeeze on
Social Security and other federal programs.
When the trust funds start running deficits in the future,
including them under the balanced budget umbrella will result
in annual surpluses in non-Social Security spending,
guaranteeing that funds will be available to meet Social
Security obligations to today's workers.
Exempting Social Security from the balanced budget
requirement would threaten the trust funds.
The temptation would be irresistible to redefine other
spending items as ``Social Security,'' shift them out of the
balanced budget constraint, and pay for them by draining the
Social Security trust funds. This obviously would undermine
the integrity of the funds and threaten the purposes for
which they were established.
Forceful statutory protections can and will continue.
Social Security currently enjoys unique statutory
protections in the budget process. None of those would be
changed by the BBA. Both political reality and the positive
budget and economic effects of the BBA point to maintaining,
not eroding, its priority status.
A constitutional amendment is supposed to enshrine timeless
principles, not address temporary situations.
Social Security is running large surpluses today. However,
the funds' Trustees project that, by the year 2024, the
growing retirement needs of baby boomers will cause annual
deficits in the trust funds and begin drawing down
previously-accumulated surpluses. Unpredictable economic or
demographic changes are always possible.
____
How the Balanced Budget Amendment Protects Social Security
Put an end to the rapid growth in interest payments that
threaten to crowd out Social Security spending.
Interest payments have nearly quadrupled since 1980.
Interest payments in 1993 were $200 billion and are expected
to exceed $300 billion annually by the end of the decade.
Until we balance the budget, spiralling interest payments
will continue to crowd out other spending, including Social
Security.
Forcing Congress to balance the budget will avert the
threat of runaway inflation.
As Senator Simon and others pointed out during recent
hearings, no industrialized nation has reached the level of
debt we will face next century without monetizing the debt by
printing more dollars. Monetizing the debt will lead to
explosive inflation. Huge debt burdens contributed to ruinous
inflation in Germany in the 1920's and several Third World
nations in the 1980's. It would have a particularly severe
impact on senior citizens living on a fixed income. It will
not do any good to get a $1,000 retirement check if bread
costs $100 a loaf.
The amendment will force Congress to deal with the deficit
before we are faced with a budget crisis that forces
draconian cuts each year just to maintain the status quo.
The General Accounting Office has warned that if the amount
of deficit reduction required just to limit the deficit to
three percent of GDP will increase exponentially by the year
2005. By the year 2020, Congress would be required to enact a
half a trillion dollars of additional deficit reduction each
year just to restrain the deficit to three percent of GDP. No
program--including Social Security--will be able to escape
deep spending cuts under this scenario.
Balancing the budget will promote the economic growth
necessary to sustain the Social Security trust fund.
GAO, CBO and most economists warn that continued growth in
deficit spending will result in lower productivity and
deteriorating living standards. As real wages for taxpaying
workers decline, there will be increasing resistance to the
taxes necessary to meet the growing commitments of the Social
Security program. GAO found that balancing the budget by the
year 2001 will lead to the higher productivity and growth in
real wages that will be necessary to support our commitments
to the growing elderly population.
The amendment will help ensure that Congress takes action
before the Social Security trust fund begins running yearly
deficits.
Although the Social Security trust fund currently is
running a surplus, within a generation, it will face cash
shortfalls. A balanced budget amendment will provide Congress
and the President with the necessary incentive to take
corrective action to deal with this threat and provide for
the long-term solvency of the trust fund.
The amendment preserves statutory provisions that protect
Social Security.
The current statutory protections for Social Security would
not be eliminated by the amendment. For example, under
current law, any legislation that would change the actuarial
balance of the social security trust fund is subject to a
point of order which requires a three-fifths vote to waive in
the Senate. Under the 1985 Gramm-Rudman Act and the 1990
Budget Enforcement Act, Social Security was completely
protected from all sequesters. Given political realities,
Congress almost certainly would set budget priorities in such
a way that the protections for Social Security are maintained
or even enhanced.
Exempting Social Security would open up a loophole in the
amendment and tempt Congress to take irresponsible actions
that threaten the trust fund's integrity.
Exempting the Social Security trust fund from the amendment
would create an incentive for Congress to use it as an
instrument of countercyclical stimulus, social policy or
other uses other than as a retirement program, threatening
the ability of the trust fund to fulfill its obligations to
retirees. For example, Congress might pass legislation to
shift spending for Medicare, other retirement programs, or
any number of programs to the social security trust fund to
avoid a three-fifths vote to unbalance the budget. Thus, the
non-Social Security budget could be ``balanced'' simply
changing program definitions and draining the Social Security
trust fund.
The Constitution is not the place to set budget priorities.
A constitutional amendment should be timeless and reflect a
broad consensus, not make narrow policy decisions. As noted
above, the financial status of Social Security will change
drastically, and perhaps quite unpredictably, in the next
century. We should not place technical language or overly
complicated mechanisms in the Constitution and undercut the
simplicity and universality of the amendment.
____
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 real 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.
____
United Seniors Association, Inc.,
Fairfax, VA, February 16, 1994.
Hon. Paul Simon,
Hon. Larry Craig,
U.S. Senate,
Washington, DC.
Dear Senators Simon and Craig: The United Seniors
Association is proud to stand with you in support of the
Balanced Budget Amendment to the U.S. Constitution.
The 400,000 members of our organization--and the majority
of seniors across the country--know the importance of thrift,
of responsibility and of ``paying as you go.'' Seniors know
that, like a family or an individual, the federal government
cannot borrow more and more money, year after year, without
facing disaster.
Seniors are unconvinced by those who try to frighten them
about the future of Social Security if a Balanced Budget
Amendment were approved. They know that Social Security will
not survive if the government is unable to meet its
obligations, and the day of insolvency is approaching like a
freight train.
Certainly, balancing the budget will require sacrifice on
the part of seniors along with most other Americans. But
seniors are fed up with politicians who use them as a shield
for costly boondoggles. Seniors know that the federal
government spends too much money, and they want it to stop.
As one columnist wrote in 1992 in U.S. News & World Report,
``we can no longer afford the illusion that we can spend our
way to prosperity.'' We need to ``move forward immediately--
no more mannas--to restore our financial solvency. Some 49 of
our 50 states have learned to live within laws requiring
balanced books; surely Washington can do the same.''
That columnist was David Gergen, and he was right.
At the United Seniors Association, we recognize that the
amendment is not a cure-all. But if the amendment were
approved, political leaders tempted to overspend would find
at least one obstacle in their path.
We pledge to you that we will use our organization's
resources to spread the word among senior citizens across the
country--that a vote for the Balanced Budget Amendment is a
vote for the future of this country--for our children, for
our grandchildren, and for all of us.
Sincerely,
Steven J. Allen,
Director of Communications
and Public Policy.
____
[From the Seniors Coalition Issue Paper, October 1993]
The Balanced Budget Amendment--Restoring Fiscal Integrity to America
(By Daniel J. Mitchell)
It took 167 years for America's national debt to reach $100
billion, another 40 years to $1 trillion, but only nine more
years to climb to $3 trillion. The explosion of debt should
come as no surprise; the federal budget has not been balanced
since 1969. Deficit spending since that time is responsible
for about 90 percent of the national debt. Annual interest
payments on the national debt now consume nearly $200 billion
annually, a $3,300 burden for every family of four in
America.
The only solution to America's federal spending crisis is a
balanced budget amendment. Members of Congress repeatedly
have demonstrated that they are completely incapable of
exercising fiscal responsibility. On the rare occasions when
Congress approves legislation such as the Gramm-Rudman
Deficit Reduction Act, which actually slows the growth of
government, they quickly figure out some way to get around
the law. In most cases, of course, Congress simply makes a
bad situation worse. In 1990, for instance, Congress and the
Bush Administration approved a record tax increase. While the
politicians claimed the higher taxes were needed to reduce
the deficit, then projected to be about $150 billion, the
money was actually used to finance an orgy of new spending.
As a result, the budget deficit has climbed to nearly $300
billion, an all-time record. This year, unfortunately, the
Clinton Administration decided to ``solve'' the deficit by
repeating the mistakes of the 1990 budget deal. As a result,
a record tax hike will increase rather than reduce government
borrowing.
More than anyone else, it is the politicians who benefit
from the current system. They got to spend the money, in
effect buying votes from various interest groups. The bill
for this spending spree, however, is simply added onto the
national debt. In other words, while hurting today's
taxpayers, the bulk of the problem is passed on to future
taxpayers.
A balanced budget amendment would restore balance to fiscal
policy. By requiring politicians to balance the budget every
year, legislators finally would be forced to set priorities.
Wasteful, duplicative, and unnecessary spending programs
would be subject to some long overdue discipline.
Bureaucratic red tape and overhead expenses would be put
under a microscope. Pork-barrel spending, Congressional
junkets, and other unjustifiable expenditures presumably
would come to a stop.
special interests oppose fiscal responsibility
The arguments in favor of a balanced budget amendment are
well known. Most citizens recognize that it is immoral to
spend today while leaving the bulk of the bill for our
children and grandchildren. In addition to the moral
argument, economists have explained how deficits also are a
burden on today's economy, as government spending crowds out
legitimate borrowing in the productive sector of the economy.
Every time the government borrows a dollar, it leaves one
less dollar available for consumers to finance auto loans,
one less dollar a family can use to get a mortgage, and one
less dollar businesses can use to finance economic expansion
and job creation.
The myriad interest groups feeding at the public trough,
however, are not persuaded by arguments on behalf of the
public interest. If they were, they would not be riding on
the federal gravy train in the first place. Special interest
groups instead can be expected to use their well-honed
lobbying skills to fight a balanced budget amendment. These
groups, which already have demonstrated political clout by
pressuring politicians to support various federal programs
and pork-barrel spending, will pull out the stops to derail a
balanced budget amendment.
Unfortunately, one of the first casualties in this battle
will be the truth. Not that this should come as a surprise.
Interest groups are not going to persuade Americans to oppose
a balanced budget amendment by arguing in favor of subsidies,
pork-barrel spending, and government waste. Big city mayors,
for instance, are not likely to convince voters by arguing
that a balanced budget amendment is bad because it would
reduce subsidies to money-losing mass transit boondoggles
they have created in their cities. Large farmers will not get
much sympathy when they complain that a balanced budget
amendment will reduce the amount of taxpayer money they get
not to grow crops. Welfare lobbyists will not impress working
Americans by protesting that a balanced budget amendment
might restrict how much money people are being paid not to
work.
Special interest groups cannot reveal their real reasons
for opposing a balanced budget amendment. Politicians may be
impressed with their arguments (after all, the groups have
convinced politicians to create and fund the programs which
cause the deficit), but others are not likely to be
sympathetic. And make no mistake about it, voter outrage
is driving the balanced budget amendment. Were it not for
the 80 percent-plus support among the American people for
a balanced budget amendment, the politicians would not be
considering this long-overdue constitutional reform.
opponents try scare tactics
In an effort to defeat a balanced budget amendment,
opponents are using every weapon in their arsenal. They
assert that a balanced budget amendment would harm economic
growth by restricting lawmakers' ability to use fiscal policy
to stimulate economic growth. This claim, however, is based
on now-discredited economic theories which argued that
deficit spending is good for the economy. The work of Nobel
Prize-winning economists such as Milton Friedman, Friedrich
Hayek, and James Buchanan, in addition to many others,
conclusively demonstrated the flaws of any theory which
assumes that giving politicians and bureaucrats more to spend
is good for the economy.
Perhaps more than anything else, however, the events of the
last twenty years have proven that deficit spending is an
economic burden rather than a blessing. Rising deficits in
the late 1970s did not stimulate economic growth; nor have
today's record deficits been associated with a booming
economy. Instead, the evidence conclusively demonstrates that
tax cuts and fiscal responsibility are the keys to economic
growth, while higher taxes and deficit spending hinder job
creation and economic expansion.
frightening the elderly
Opponents of a balanced budget amendment are targeting
various groups and segments of the population. They argue
that a balanced budget amendment would wreak havoc, causing
massive budget cuts if not outright repeal of the program
being discussed. Underlying these arguments is the
implication that the entire $300 billion-plus budget deficit
would have to be eliminated next year. Not surprisingly,
opponents have included Social Security and Medicare in this
misleading campaign, implying that ratification of the
balanced budget amendment will be a disaster for senior
citizens.
These scare tactics are completely wrong. Assume that
Congress approves a balanced budget amendment. Most experts
believe that it would take at least a couple of years before
the amendment is ratified by three-fourths of the states, as
required. According to the amendment language, Congress then
would have two years before the amendment would take effect.
Since the balanced budget amendment is not going to take
effect until at least 1999, Congress effectively has five
years to bring deficit spending under control.
As the following table makes clear, balancing the budget by
1999 is not difficult. As a matter of fact, the budget can be
balanced without cutting spending by one penny. Federal tax
revenue is projected to increase from $1,244 billion this
year to more than $1.6 trillion in 1999. This $375 billion
revenue increase is more than enough to eliminate a $253
billion deficit. Indeed, Congress can balance the budget by
1999 and still be able to increase spending by $120 billion
between now and then.
FUTURE BUDGET PROJECTIONS
[In billions of dollars]
------------------------------------------------------------------------
1994 1995 1996 1997 1998
------------------------------------------------------------------------
Revenues................... 1,244 1,332 1,403 1,472 1,547
Spending................... 1,497
Deficit.................... 253
------------------------------------------------------------------------
Source: The Economic and Budget Outlook: An Update, Congressional Budget
Office, September 24, 1993.
Any budget plan which limits annual spending increases to
about $24 billion will be opposed by interest groups. These
special interest organizations will charge that too much
fiscal discipline will be harmful. The evidence suggests
otherwise. As recently as 1965 that government spending
actually fell from one year to the next. Nobody argues that
1965 was a disaster. Similarly, even though the federal
budget was nearly nine times larger by 1987, federal spending
that year grew by ``just $13.6 billion. Contrary to what some
would predict, the economy proposed and there was no
indication that the fiscal discipline actually harmed anyone.
what about built-in social security and medicare spending increases?
Balanced budget critics will be quick to point out that the
cost of programs for the elderly are projected to increase by
considerably more that $24 billion annually between now and
1999. Social Security recipients receive annual cost of
living adjustments, for instance, and both Social Security
and Medicare are expected to expand because the elderly
population is expected to climb. All this requires more
money. Does this not prove, they argue, that a balanced
budget amendment is poison to senior citizen programs? Not at
all! Consider the following scenarios:
Scenario #1: Full Funding of Social Security and Medicare.
Assume that lawmakers choose to balance the budget by
imposing discipline on every program with the exception of
Social Security and Medicare. According to Congressional
Budget Office projections, these programs, if unchecked, will
expand by a total of $195 billion between now and 1999.
Recalling from the previous table that tax revenues are also
expected to expand considerably, the net effect of fully
funding Social Security and Medicare is that all other
spending must decline by a grand total of $75 billion. Even
in Washington, $75 billion is a lot of money, but all that
would be required is for all other programs to shrink by 7.4
percent over five years. Is it really that draconian to put
government on a diet where programs have to shrink by less
than two percent annually? American families and businesses
facing hard times do it all the time.
Consider, however, that the defense budget already is
expected to shrink because of the collapse of communism.
Defense spending, which is about $275 billion this year, will
decline to somewhere around $250 billion according to the
Congressional Budget Office. So, of the $75 billion in
required budget cuts, at least $25 billion will be achieved
through the peace dividend.
What about the remaining $50 billion of budgets cuts that
would be required between now and 1999? That number may still
sound big, but the Congressional Budget Office projects that
declining deposit insurance experiences will make up some of
that gap. The federal government will spend $14 billion to
bail out the Savings & Loan deposit insurance system this
year. After the government takes over all the insolvent S&Ls,
however, Uncle Sam actually will begin to make money as the
assets of the seized financial assets are auctioned off.
Under current projections, the $14 billion cost this year
will disappear next year and by 1999 the federal government
will actually be collecting $4 billion from asset sales.
The $18 billion shift in deposit insurance spending will
measurable ease the alleged burden of complying with a
balance budget amendment--even if Social Security and
Medicare are fully funded. Indeed, once falling defense and
deposit insurance numbers are taken into account, all that
will be required between now and 1999 are $32 billion of
genuine budget cuts. In other words, the federal government
can balance the budget, fully fund Social Security and
Medicare, and only have to cut other spending by less than $7
billion annually. Some crisis!
Scenario #2: Limit Medicare Spending Growth to Twice the Rate
of Inflation.
Supporters of other government programs will be quick to
complain if programs benefiting senior citizens are
completely untouched while other programs effectively are
precluded from getting budget increases. That position can be
defended. After all, the Social Security program is running a
cash surplus of $28 billion this year and that surplus is
expected to grow to more than $40 billion by 1997. Nor is
Social Security spending growing that rapidly, with annual
increases between now and 1997 expected to average less than
5.2 percent.
Seniors, though, have never argued that their programs
should be completely exempt. Indeed, seniors are very
cognizant of the moral arguments against deficit spending,
and do not want to leave a deteriorating economy to their
children and grandchildren. The concern among the elderly is
that they not bear a disproportionate share of the deficit
reduction burden. So long as other interest groups are being
subjected to fiscal discipline, seniors will contribute their
fair share, particularly from the Medicare program.
Medicare is one of the fastest growing of all government
programs, with annual spending increases expected to average
more than 10.5 percent--over three times the expected rate of
inflation. If Medicare spending growth was limited to twice
the rate of inflation, something market-based reforms could
accomplish without compromising the quality of care, the
government would save $49 billion by 1999. Combined with
already expected declines in defense and deposit insurance
outlays, these modest Medicare savings would still allow
Medicare spending to grow twice as fast as inflation, full
funding of Social Security, and $17 billion higher spending
for other government programs.
conclusion
Government policy makers will have the ultimate
responsibility for choosing how to comply with a balanced
budget amendment. As with any strategy that relies on
politicians, there is some risk. Legislators, for instance,
could evade the intent of a balanced budget amendment by
raising taxes, causing suffering for all Americans because of
a weakened economy. Legislators could choose to attack
programs for senior citizens, though few, if any, observers
can foresee the circumstances under which legislators would
find such an approach popular.
Instead, a balanced budget amendment is likely to lead to
an outcome similar to that outlined in Scenario #2.
Legislators will take advantage of the projected $373 billion
increase in tax revenues to achieve the bulk of deficit
reduction. Already scheduled declines in defense and deposit
insurance spending will provide $43 billion of additional
deficit reduction.
The real question will be how legislators decide to limit
the overall growth of remaining government programs. In the
final analysis, programs for senior citizens are unlikely to
be completely unscathed, but it is realistic to assume that
the overall benefits of a balanced budget amendment to senior
citizens (and their heirs) will greatly outweigh the minor
costs it imposes.
Mr. CRAIG. Mr. President, with all its lack of enforcement, lack of
definitions, lack of legislative history, and explicit exemptions, the
Reid amendment is more loophole than law.
The National Taxpayers Union rapidly put together an analysis of the
Reid amendment showing how much deficit spending it would, on its face,
allow.
In the year 2001, the first year in which the real balanced budget
amendment would be effective, and the first year in which the Reid
amendment would be ineffective, the deficit under our amendment would
be zero, while the Reid amendment would allow ``off-budget'' deficit
spending of up to $200 billion.
By the year 2020, the Reid amendment would allow deficits of between
about $200 billion and $800 billion. By the year 2050, which year is
included in the projections of the Social Security trustees, Reid
amendment off-budget deficits would range from about $2.7 trillion to
$6.3 trillion.
These estimates count total investment spending as shown in the
President's fiscal year 1995 budget and are based on alternatives II
and III in the ``1993 Annual Report of the Federal Old Age and
Survivors Insurance and Disability Insurance Trust Fund.''
I want to emphasize: These are the off-budget deficits that the Reid
amendment explicitly allows: These projections assume that Congress
does not abuse the loopholes that the Reid amendment would give it.
This is the best-case scenario under the Reid amendment.
Finally, I want to touch again on inclusion of the Director of the
Congressional Budget Office in the Constitution, under the Reid
amendment.
Think of this: The most timeless document of governing principles,
enshrining fundamental rights and creating a compact between a great
people and their Government. It contains the once-novel, now revered,
system of checks and balances, in which no one branch of the Government
can attain supremacy and thereby threaten the liberties of the people.
And it specifies the powers and responsibilities of the executive, the
legislative branch, the judiciary--and, in a couple of areas, the
Director of the Congressional Budget Office.
The Congressional Budget Office is the figment of the imagination of
50 percent-plus-one of the Members of Congress. It doesn't belong in
the Constitution.
The Director of CBO is a political appointee of the congressional
leadership. Thankfully, those appointments up until now have been
relatively nonpolitical. But once the Director of CBO would have sole
power under the Constitution to declare recessions and suspend part of
the Constitution, that office either would become the fourth branch of
government or be turned into a political football of Super Bowl
dimensions.
The Senator from Nevada quoted Justice Marshall, in McCulloch versus
Maryland, as warning against over-complicating the Constitution.
Senator Reid's amendment contains some thoughtful ideas. Some of them,
I would agree with, as part of a statute. But proposed as a part of the
Constitution, his is the amendment that departs from Justice Marshall's
admonitions.
I know the Senator is in sincere agreement with the contents of his
amendment, but they are more appropriate to the debate over technical,
implementing legislation, not a constitutional amendment. We should
defeat the Reid amendment, and we will.
Once we do, we will have left before us the amendment worked on for
years by Senators Simon, Hatch, Thurmond, DeConcini, and myself;
members of the other body like Representatives Stenholm, Smith, Inhofe,
Kennedy, and Snowe; other members of both bodies; outside public
interest groups, constitutional scholars, and economists.
That is the bipartisan, bicameral, consensus version. That is the
real balanced budget amendment. Despite some of the debate we have
heard over the last couple of days, that the only amendment with a
chance of passing both bodies. In fact, just last Thursday, that was
the amendment discharged in record time and scheduled for floor debate
as early as March 14 in the other body.
I urge my colleagues to defeat the Reid amendment and then to support
the bicameral, bipartisan consensus amendment.
Because my time is limited and I have had opportunity to talk and
there are others who are waiting to talk, let me cover a couple of
brief points before I conclude.
There has been a great but frankly very confused debate on Social
Security. Anybody observing will hear all kinds of allegations made
about what is or is not going to happen to Social Security. The Simon-
Hatch-Craig amendment leaves it in the budget. The Reid amendment takes
it out of the budget. It is safe. It is secure. The bottom line is
Social Security today is very secure and it is secure for the
foreseeable future and Congress is handling it in a responsible
fashion.
What is at question is the future in the year 2024. That is when the
reserves are ultimately used up and the outgo begins to outpace the
reserves. If at that time our budgets are not in balance and our debt
is $9 trillion or $10 trillion, or more, is the American public going
to be able to afford the new revenue necessary to fund this line here
or will future citizens simply and clearly say, ``We cannot afford
it?'' And it is at that point that we begin to see dramatic changes in
Social Security. If the Reid amendment passes, this line stays intact,
this line stays intact, and we mount a huge deficit incapable of
responding to the very real human requirement required in this graph
and with this statistic.
We can afford Social Security today because we are a rich nation. If
we mount a debt of $9 trillion, if we are paying out $800 billion or
$900 billion a year in interest we are no longer rich. We are very
poor, and as a poor Nation can we, in fact, afford those
responsibilities?
I am offering for the Record what is known as analytical
perspectives. That is a volume of the President's 1995 budget, and the
question there is capital investment an issue inside the Reid amendment
and wholly undefined as to what it may or may not be, and it becomes
increasingly important to understand if we understand the debate.
The President's budget lists the following investment expenditures:
$89 billion, physical capital; $68 billion, research and development;
$34 billion grants to States for local physical capital; $42 billion
for education and training. The Clinton administration says that is an
investment. Is that the kind of investment that Senator Reid proposes?
We do not know. No hearings, no facts, no way for this Congress, this
Senate to make a wise judgment on a last-minute effort to create an
alternative to a document that has been 10 years in to making, and as I
said with over 3,000 pages of testimony pro and con as it relates to
the Simon-Hatch-Craig amendment, the basis from which it was
established and why we argue the point of view that we argue today.
Mr. President, that is the essence. There is a clear alternative
today. If you do not want a balanced budget amendment to pass, if you
find that it is not within your philosophy or your desire to see a
change in the environment in which we budget and therefore the outcome
of the budget process, then I would suggest you vote for the Reid
amendment and that the record shows and that the American people know
that that is exactly the choice you make, that you are not willing to
make the tough calls, you are not willing to address the current
deficit debt problem and you are not willing to say to your
grandchildren we are now today starting to build an environment in
which your future will be strong and your opportunity will be exciting.
There is an alternative, and the alternative is the Simon-Hatch-Craig
amendment, an amendment that says all things are on budget, there are
clear bounds by which the public can judge as to our performance and
our process. It leaves the responsibility of developing the new
budgetary mechanisms inside the amendment to the Congress as it should
and it says to the court, as it should, judiciary, you, like in all
other instances within the Constitution of our country, have a right to
determine whether acts of this Congress are or are not constitutional,
but you do not have the right to tell them then how to become
constitutional.
We have assured that because we do not want the courts raising taxes.
We do not want the courts prescribing budgets. But the American people
deserve to know that there is an enforcement mechanism within what we
are about today. There is not within the Reid amendment. In fact, the
only enforcement mechanism that makes realistic sense is that the Reid
amendment will create such a jungle of the budget process that
ultimately it will collapse and the American people frustrated by it
will turn back to Congress to solve the problem.
My last graph. If we take the percentage of the Clinton budget today
that is off budget and we extrapolate rates of increase as projected in
the Clinton budget, we come up with a phenomenal off-budget debt
structure that is proposed within the Reid amendment.
Mr. President, I would not want to tell this Senate, or anyone
watching, that this is an accurate chart. It is a projection based on
what we believe to be the reality of the Clinton budget--as we can
interpret through the Reid amendment--investment off-budget capital
expenditure to be.
The reality is debts well beyond----
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. SIMON. I yield my colleague 2 additional minutes.
Mr. CRAIG. My conclusion is this, and this chart dramatically shows
it. If I can accept the concept of capital budgets based on the
investment scenario of the Clinton administration, then these kinds of
conclusions can be drawn.
All of us know we would not create a whole new debt structure worth
trillions upon trillions of dollars knowingly. So what it merely speaks
to is the inability of this Congress to understand the Reid amendment
or what the Senator from Nevada is trying to say.
There are no questions and there is no doubt within the Simon-Hatch-
Craig amendment. All of the scenarios have been played over the last
decade. All of the questions have been asked and all of the answers are
available.
The judgment you make today on the Reid amendment and the judgment
this evening on the Simon-Hatch-Craig amendment can in fact be an
informed decision toward a true balanced budget and a new chapter, a
new amendment in our Constitution that is clear and profound in its
directives to the Congress of the United States.
I yield the remainder of my time.
The PRESIDING OFFICER. The Senator from Nevada is recognized.
Mr. REID. Mr. President, the most direct, concise statement made
during the last two presentations was the statement made by my friend
from Idaho that this was not an accurate depiction of the Reid
substitute. And that is true.
What we have been dealing with here, in the last two statements, is
make believe. The fact of the matter is that the Reid substitute is of
the same vintage as the Simon amendment. The Simon amendment was
introduced 5 days ago.
Remember, they keep changing it. Even though they have had 3,000
pages of hearings--it has been around 10 years--they changed it 5 days
ago. Why? Because it is a faulty amendment and they tried to correct it
to pick up a few extra votes. But it still was not enough. The
amendment is a bad amendment.
My friend from Utah, and I guess following the Late Show With David
Letterman, put forth his 10 points as to why he did not like my
amendment. Recognize that not once was there an insinuation, a
suggestion, or a contemplation or a remark about Social Security. Why?
Because they know that Social Security would be devastated with the
Simon amendment, as indicated by Mr. Ball, who was director of the
Social Security Administration during three Presidents, when he said
among other things, ``I believe it [the Simon amendment] would put at
great risk--'' everyone listen to this--``would put at great risk the
monthly benefits of 42 million people who are currently receiving
benefits and the benefits of millions more who are working and building
credits for future benefits.''
That is why it was not in the Late Show With David Letterman 10
points why he does not like the Reid amendment. Because he could not
talk about Social Security. He could not refer to Social Security
because the Simon amendment devastates Social Security. The Simon
amendment is a new amendment. It is of the same vintage, the same age
as the Reid amendment. They were both introduced on the same day, in
spite of 10 years and 3,000 pages.
The Senator from Utah still complains, as he did the other day--this
time I respectfully request that he listen to what I said. I will say
it again. The Senator from Utah complains that my amendment allows
Congress to delegate the power to make across-the-board cuts to a
congressional officer. The Senator from Utah is correct when he says
this is intended to overturn the decision of Bowsher versus Simon. The
Reid amendment would allow Congress to provide by law that a neutral
third party, the Comptroller General of the United States, could
referee across the board. This is the same compromise Congress embraced
in the 1985 Gramm-Rudman Act of which the Senator from Utah was one of
the major proponents.
Mr. HATCH. Will the Senator yield?
Mr. REID. The Senators from Utah and Arizona complained my amendment
delegates powers to an unelected official, the Director of CBO, to make
economic determinations.
Mr. HATCH. Will the Senator yield on that point?
Mr. REID. The point of that provision is to provide that a
nonpartisan, unelected official could make that decision. That seems
totally reasonable. But I find it amazing that the Senator from Utah
complained of ceding powers to unelected officials. In testimony before
the Budget and Appropriations Committees, respected constitutional
scholars testified that the Simon amendment granted the President
increased impoundment powers. Section 5 of my amendment ensures this
will not happen under my amendment.
You see, Mr. President, my amendment preserves what the framers of
the Constitution wanted. They wanted separate but equal branches of
government. The Simon amendment makes them unequal and gives all the
power to the executive branch.
I yield on Senator Simon's time since my colleague is out of time.
Mr. SIMON. I will be pleased to yield 3 minutes to the Senator from
Utah.
The PRESIDING OFFICER. The Senator from Utah is yielded 3 minutes.
Mr. HATCH. I just hasten to point out that when the Gramm-Rudman-
Hollings bill came up, I was consulted by both sides, in both the House
and the Senate, and they asked us whether we thought that provision
would be constitutional. We told them we did not think it was.
Frankly, we advised them not to go that route, but the House insisted
on having congressional control over the budget process through the
Comptroller General. As we all know, the Bowsher case confirmed what I
suggested would happen.
I am saying again today that we will be flying in the face of 200
years of separation of powers doctrine and constitutional law, to go
the way that the distinguished Senator from Nevada would have us go. I
think it would undermine the separation of powers principle and, I
think, cause people all over the country to fight his amendment, even
if it had a chance of passing, just because of that one point.
I reserve the remainder of my time.
Mr. REID. Mr. President, I appreciate the statement of my friend from
Utah. We have a simple disagreement based on the record before this
body and constitutional history of this country. It is a disagreement
that I think that those on the other side of the aisle should listen
to.
I think it is irresponsible for the Members on the other side of the
aisle to say that they are going to vote against my amendment. The only
hope we have of having a constitutional amendment is that we have some
of our friends on the other side of the aisle join in supporting the
Reid amendment. Otherwise, we are going to walk out of here today with
no amendment from anyone, and we will be right back where we started,
which I think would be a disservice to the American people.
The PRESIDING OFFICER. Who yields time?
Mr. SIMON. Mr. President, I yield myself 3 minutes, and then I will
yield to my colleagues.
The PRESIDING OFFICER. The Senator from Illinois is recognized.
Mr. SIMON. Mr. President, first, two points made by my friend--and he
is my friend--from Nevada, Senator Reid, on the language of our
amendment. We have gone over this carefully in all kinds of hearings.
The only language change is the Danforth language on judicial
involvement, and that was done very carefully.
Mr. President, some heard Senator Danforth speak on the floor saying
he checked that language with people as varied as Judge Bork, on the
right, and Prof. Laurence Tribe of Harvard. We also checked this out
with constitutional authorities. It was very, very carefully done. When
we are dealing with a constitutional amendment, we ought to do it
carefully. There have been no hearings on the Reid amendment. It is
hastily put together. It is obvious from the language it is hastily put
together.
On Social Security, it is ironic, Mr. President, because in the
Budget Committee, I have been the leader in terms of defending Medicare
for Social Security recipients. The chief actuary of the Social
Security Administration for 23 years, Robert Myers, has written me a
letter saying the most important thing we can do to protect Social
Security funds is to pass your amendment. The reality is the great
danger is monetizing the debt, printing money if we just keep piling up
this debt. If we go that route, Social Security trust funds are going
to be devastated. Our amendment protects Social Security, and no other
amendment protects Social Security.
Second, in terms of Social Security long-term--and I have indicated
to Senator Dorgan, who is very much concerned about this, I am willing
to work out a statutory change here long term--this amendment does not
deal with the fact, as Senator Craig was pointing out, in the year 2024
Social Security starts to go into the red. We have to protect people
who are 35 years old today, who will be totally dependent on that; or
someone 50 who, in the year 2024 will be 80 years old. That person 50
years old should be concerned. Our amendment protects them.
So in this general area of Social Security, if you are interested in
protecting Social Security, vote for the amendment which Senator Hatch
and I have proposed.
I would like to yield 10 minutes now to the Senator from Georgia,
Senator Coverdell.
The PRESIDING OFFICER (Mr. Breaux). The Senator from Georgia [Mr.
Coverdell] is recognized for 10 minutes.
Mr. COVERDELL. Mr. President, I thank my colleague from Illinois. I
rise in support of his, and others, balanced budget amendment and in
opposition to the amendment of the Senator from Nevada [Mr. Reid].
I would like to just make several comments with regard to what I view
has turned into three spears at the amendment, three arguments that are
being consistently made against the balanced budget amendment.
First, we have heard for weeks that the balanced budget amendment, as
offered by the Senator from Illinois and others, is a gimmick. Let me
just say that I think that argument has been rendered moot by the
intensity of the lobbying to defeat the amendment.
Clearly, if all the sectors who have so vigorously opposed this
amendment thought it was but a gimmick, we would simply let politics be
politics and go home. But, indeed, that has not been the case.
Throughout the Nation, we have had such an intense effort to
characterize and belittle the amendment, first classifying it as a
gimmick.
It is not a gimmick. It is the first serious attempt on the part of
this Senate and the people of this country to bring into control
runaway debt that will bring this Nation to its knees. We have stood
off so many enemies around the world: Hitler, Saddam Hussein,
Khrushchev, Stalin--stood them down. But we are in danger of failing by
our inability to manage our own affairs at home. This is not a gimmick.
Second, there is a scholarly argument. We have heard repeated
references to the fact that it is diminishing the power of the
legislative branch and strengthening the power of the executive branch.
The ultimate authority in our democracy rests with the people. The
legislative branch is the peoples' branch. The American people have
told us in the loudest terms that they expect us to seize control of
the financial health of this Nation; 32 States of the Union have
already passed resolutions calling for a Constitutional Convention to
address the subject of balancing the budget, only 2 States away from
the convening of that convention.
The American people, by anyone's poll, three out of four, are in
support of the Senator's balanced budget amendment. The American people
are where the final power rests in the United States, and they have
said loudly that they want a balanced budget to be put in place. They
have spoken in every way they know, and they are calling upon this
Senate, this Congress, to impose new rules of the road to gain control
of the financial health and security of the United States.
The third argument is that we need to be just responsible; that the
leadership of the Congress simply needs to do what is right: To seize
control of the financial abuses that we have seen over the last 30
years.
Since this amendment was first voted on in 1982, we have responsibly
added another trillion dollars in debt. Then 3 years later, we voted on
it again and we heard the arguments--``We just need to be
responsible''--and we added $2 trillion more in debt. Then on the last
vote, we heard that same argument--``We just need to be responsible''--
and we added another trillion dollars in debt.
By the President's own budget numbers, before this term has exhausted
he will have added another trillion dollars in debt. The debt right now
is nearly $5 trillion, and by 1996 it will be nearly $7 trillion. The
Senator from Idaho talked about the debt may be approaching, after the
turn of the century, $9 trillion or $10 trillion. We will have passed
that long before we get to the turn of the century at the pace we are
going.
The argument that we need just be responsible has been totally
rejected and ridiculed by our own behavior, as we have added $1
trillion, then $2 trillion, another trillion dollars and now another
trillion dollars in the face of the arguments that we just need to be
responsible.
A gimmick? Absolutely not, proven by the intensity of the effort to
defeat it. The scholarly argument that it is a divestiture of power in
the legislative branch; the power in America rests with the American
people and they are asking the legislative branch to impose this
restraint. The argument of being responsible leadership has been proven
by the behavior of the Congress over the last two decades. We need a
balanced budget amendment. We need new rules of the road.
My final comment deals with the executive branch. If this balanced
budget amendment fails, and I am fearful that it will, I believe that
its failure will rest directly at the feet of the President of the
United States and of this administration because even though coming
from an election that called for new restraints on the fiscal behavior
in Washington, the President has engaged in a wide-open battle to
defeat the balanced budget amendment. In this very close vote, that in
my judgment will have been the final difference. That will have been
the final difference.
Mr. President, the American people have spoken. They want a balanced
budget amendment.
Mr. President, I yield my time back to the Senator from Illinois.
Mr. REID addressed the Chair.
The PRESIDING OFFICER. The Senator from Nevada.
Mr. REID. I yield 5 minutes to the Senator from North Dakota.
The PRESIDING OFFICER. The Senator is recognized for 5 minutes.
Mr. DORGAN. Mr. President, I have listened somewhat this morning, as
I have been in meetings, and as I had an ear tuned to the television
set, it occurred to me we are doing the least productive thing we could
possibly be doing here this morning in the Senate, and that is spending
a lot of time debating about which constitutional amendment is better
than the other.
Both of these constitutional amendments have merit. I intend to vote
for the Reid amendment, and if that fails I will likely vote for the
Simon amendment. It is not a case where one side walked down from the
mountain with tablets of stone and said: This is the only amendment
that has merit; this is the only amendment that is worthy; and this is
the only amendment that will work. It is just wrong.
That chart--read the fine print--is wrong. It is wrong. That is not
the Reid amendment. If the Reid amendment passes, we will be better off
than we are today, in my judgment. And I will bet you this. If the Reid
amendment were the only constitutional amendment on the floor of the
Senate today, it would pass. If the choice was do we support the
constitutional amendment offered by Senator Reid versus the current
situation, I think this body would likely pass it, or at least be very
close. We should not be in a situation where more than enough Members
of the Senate support a constitutional amendment to pass it, but we end
up not passing it because we exercise all of our energy spending time
in the Chamber talking about which is worse.
Now, I read a lot of respected writers and thinkers who say we should
not do a constitutional amendment to balance the budget.
There was a time in my life when I thought that was the case, but you
get to $4.4 trillion in debt, spending $1 billion a day on things you
do not need, and at some point you wonder about your children's future
and you wonder whether we can continue, under any condition, to believe
that spending resources that are not ours will do anything but injure
this country's future.
The Senator from Nevada does a service to this body by offering this
amendment. It is a good amendment. I will not go into great detail
about Social Security, but this amendment has the Social Security
amendment which I was proposing to offer to the Simon proposal. That is
the right amendment.
Now, if the Reid amendment does not pass--and I am going to support
it--is the Simon amendment fatally flawed because it does not have it?
No, it is not fatally flawed. We can impose a higher standard later,
and we can discuss that this afternoon if the Reid amendment does not
pass.
But I think, listening to the discussion in the Chamber, we are in
the worst possible position. Those of us who honestly believe we should
do something to deal with this crippling deficit and this crippling
debt, which so injure this country's future, are reduced to spending
our time figuring out how we can divide votes between two proposals in
a manner that may allow neither to succeed.
I believe we will be better served today if, at the end of the
debate, we have advanced a constitutional proposal to ratchet up the
pressure, yes, on Congress, and also the American people, to reconcile
among all of us in this country that which we spend with the resources
we have to spend, and decide how we are going to balance those in some
reasonable fashion.
I have said it before--let me say it because it bears repeating--I
would not lose a minute's worth of sleep and I would not care one bit
if we spent $500 billion this year that we did not have and added it to
the deficit if, with that expenditure, we cured cancer. It would be a
bargain.
But that is not what this deficit is about. This deficit is not about
some unusual investment that is going to yield enormous potential
rewards. This is a structural operating budget deficit that represents
a permanent, continual imbalance between what we raise and what we
spend, and the Congress and the American people have conspired together
in a way in our political system that prevents us from dealing with it.
This constitutional amendment, no matter what one thinks of it, will
add to the pressure that we reconcile what we spend with what we raise,
and that we begin to assure a better economic future with economic
growth and hope and opportunity for our children once again. That is
what this debate is about.
I just wanted to come over again to say we ought not be spending most
of these hours arguing that one is awful and one is better. Either of
these will advance the interests of requiring reconciliation in our
fiscal policy so that it is a fiscal policy that promotes growth and
opportunity, not danger and despair and decline.
Mr. President, let me thank the Senator from Nevada. As I have said,
I intend to support him. If that does not prevail, I will be on the
floor in a colloquy with my friend from Illinois who, I think, also has
served this body's interests and served the country's interests by
proposing a constitutional amendment to balance the budget.
Mr. President, I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. SIMON. Mr. President, I yield 5 minutes to the junior Senator
from Idaho.
The PRESIDING OFFICER. The Senator from Idaho is recognized.
Mr. KEMPTHORNE. Mr. President, I thank the Chair. I also want to
thank the Senator from Illinois and the Senator from Utah and the
Senator from Idaho for their leadership in this effort.
We have heard all these numbers discussed the last 4 days: The fact
that the debt is $4.4 trillion, the fact that our Federal budget spends
$1.5 trillion each year. All these numbers, how do we boil them down so
all Americans can truly understand what is taking place? Many of the
speeches this morning were 10 minutes in length. In 10 minutes' time,
we will pay $5.5 million in interest payments in this Nation. If we did
not have to pay this interest, that would equate to adding 100 police
officers to State and local governments. In just 10 minutes' time, that
$5.5 million that we are spending in interest would pay to immunize
more than 45,000 children. It would provide a year of Head Start for
almost 1,500 kids.
In the 4 days that the Senate has debated the balanced budget
amendment, we have paid $3.2 billion in interest. That $3.2 billion
could have reduced taxes $40, $40 for every taxpaying family, $10 a
day. We are talking real money.
George Washington and Thomas Jefferson feared that this day might
come. In his Farewell Address to the Nation, President Washington
warned Congress to cherish public credit, to use it as sparingly as
possible, avoiding occasions of expense. And Thomas Jefferson, one of
our Founding Fathers, who believed so strongly in a balanced budget,
said that it was so important 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.
Mr. President, in the roughly 1 year that I have been a Member of
this body, I have seen a number of occasions when we have had
opportunities before us to cut the size of the Federal Government, when
we have had opportunities to reduce taxes, and on virtually all of
these occasions, we just miss. We come close. Then we have another
opportunity to vote to reduce the size of the Federal Government, and
it is a different coalition of Senators that forms, so that in time we
establish a record that, yes, we have all been supportive of trying to
reduce the Federal Government, trying to reduce taxes. But the net
result is, it is not happening; it is not working.
The balanced budget amendment as offered by Senators Simon, Hatch,
and Craig is tough medicine; it is not necessarily easy; but the
illness of the national debt requires that type of medicine. We need to
do it because in all of the other efforts--and we have heard them
eloquently discussed--we always come just a little bit short. And so we
need to have the balanced budget amendment so that the law of the land
is that we do not live beyond our means as a government. Families
cannot do that, individuals cannot do that because, if they do, then
they find themselves on the brink of bankruptcy.
I would just like to add that as I have listened to the argument and
the points raised by the Senator from Nevada, I respect the Senator
from Nevada. I respect everyone that is taking part in this debate
because at least we are focused on the fact that something has to
happen. But please let us reject the status quo. Let us make a
difference. Let us not walk away from this opportunity to do what the
American people are asking us to do as the representative body, and
that is to vote for the balanced budget amendment as offered by the
Senators from Illinois, Utah, and Idaho. That is the medicine that is
required to cure this national debt.
I yield my time.
Mr. REID addressed the Chair.
The PRESIDING OFFICER. The Senator from Nevada.
Mr. REID. I yield 15 minutes to the senior Senator from Tennessee.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. SASSER. Mr. President, I thank my friend from Nevada for yielding
to me.
Mr. President, I rise today in support of the Reid alternative
amendment. I think Senator Reid offers a different, a fairer, and a
more enforceable balanced budget amendment. The amendment offered by
our friend from Nevada excludes the Social Security trust fund from the
budget, and, in so doing, he exempts Social Security from any program
cuts that might be needed to enforce the balanced budget stricture.
This balanced budget amendment vests in the Congress and the
President the exclusive responsibility for implementing legislation
that produces the necessary deficit reduction. It removes the
ambiguities that might create a court-ordered fiscal policy. I think it
would be the height of irresponsibility for this U.S. Senate to hand
over to the judicial branch the decisions about how the budget of the
United States and the business regarding the budget of the United
States are to be conducted.
As a matter of fact, Mr. President, I think that would be a gross
violation of the balance of powers in the Constitution. But the Reid
amendment mandates that the Federal Government balance its books. It
mandates that it do so in the same way that the States do--separating
operating budgets and capital budgets.
This process safeguards needed investments that will yield long-term
benefits to the Nation. And the Reid amendment provides flexibility to
prevent the Government from converting minor economic slumps into
recessions, or from converting recessions into major depressions. This
protects us from unintended counterproductive fiscal actions that
without the Reid amendment I think our economy would be subjected to.
But today I want to focus my remarks almost exclusively on the
importance of protecting the Social Security Program under the balanced
budget amendment.
As my colleagues know, Social Security was established in 1935 to
protect the economic security of working people. And millions of our
senior citizens, millions of disabled workers, and their survivors
depend on Social Security for a major portion of their income.
Social Security touches the lives of virtually every American of all
generations. More than 41.5 million people in this country currently
receive Social Security. Twenty-five percent of all of the families in
this Nation receive Social Security. And the overwhelming majority of
these people are citizens of very modest means indeed.
The Social Security Program, perhaps more than any other program of
this Government, represents a solemn trust obligation between American
workers and the Government of the United States. Social Security is
widely perceived as a successful program and has tremendous popular and
political support as well it should.
There are some who, because they mistake Social Security for a so-
called ``entitlement'' program, believe that Social Security ought to
be cut; that its benefits ought to be reduced to reduce the Federal
budget deficit. I categorically disagree with that characterization,
both with the statement that Social Security is a simple Government
transfer program, and with the notion that it is part of the deficit
problem.
Make no mistake about it. Social Security is not a simple entitlement
program. It is part of our fundamental social insurance system. Social
Security is an earned benefit. You have to work. You have to pay into
the system to earn Social Security. There is no entitlement. You have
to work for it, pay for it, and pay into the system.
Social Security is not a welfare program. People who work pay into
this system. In return, those workers and their families are guaranteed
benefits upon retirement, injury or death. Employee and employer
contributions are paid into a special trust fund, and those funds are
to be used only--only--to pay Social Security benefits.
Social Security is almost entirely self-financed from these
contributions coming in from workers and employers. The program
receives virtually no Federal subsidy. The Federal Government only pays
into the program the Federal Insurance Contributions Act taxes that are
owed for Federal employees, and it repays interest that is owed to the
program when the Treasury borrows from the Social Security fund. Even
the administrative costs of running the program are paid for from the
employee and employer contributions.
Let us be clear about this. Social Security is not contributing to
the budget deficit in any way whatsoever. The reverse is true. Social
Security is building up reserves. Social Security pays out every year
less than it takes in by way of contributions. And this is no accident.
Congress intentionally created this surplus in Social Security in
response to funding concerns and because we recognize that our
population was aging, putting new strains on the Social Security
system.
In 1983, Congress and President Reagan appointed a blue ribbon
commission, chaired by now Federal Reserve Chairman Alan Greenspan, to
review the problem that Social Security was perceived to be developing
in the outyears, and to make recommendations. At that time, significant
changes were made to the program, and it was restored to financial
solvency.
Since that time, in 1983, when we adopted the report of the blue
ribbon commission on Social Security, we have been building up
surpluses, or reserves, in the Social Security system, to make sure
that funds will be available to pay benefits.
The Social Security Board of Trustees projects that these reserves
will grow substantially over the next decade, accumulating more than $1
trillion in assets by the year 2003.
These funds are going to be needed to pay retirement benefits for the
baby-boom generation. The large group of Americans born after World War
II will begin to retire in the middle of the next decade and start to
draw down the reserves that we are building up now in Social Security.
So the reserves continue to build until the year 2003, and then they
will be needed to meet the program's obligation to retirees of the
future.
Under current projections, reserves should be able to pay benefits
through the year 2036. It is true that spending under Social Security
continues to grow for the foreseeable future, but its growth should not
be a subject of law, because the growth in Social Security spending is
projected to be steady relative to the economy as a whole. Contrast
that to health care spending, which is one area of the budget that is
predicted to grow faster than the economy as a whole. Over the next few
years, in nominal terms, the economy is slated to grow at about 5.5
percent; that is in nominal terms, not real terms corrected for
inflation. In nominal terms, health care is subjected to growth by 11
percent. So that is where your problem is--in health care growth. That
is what is driving these deficits.
It is also true that the reserves are currently being borrowed to
finance other Federal spending. In fact, one major reason to bring the
budget into balance is so that we will actually be able to save the
Social Security funds in order to meet the obligations to future
retirees. That is why I worked very hard to obtain budget agreements in
1990, and again in 1993, to bring about significant deficit reductions,
and that is one of the primary reasons I support a balanced budget
amendment. But, Mr. President, make no mistake about it, these deficits
are coming down. They are going to continue to come down both in
nominal dollars and in relation to our debt and in relation to the
gross domestic product.
We will reduce the deficit by 40 percent from projections over the
next 3 years. And for the first time, we will have a string of deficits
coming down for three successive years--the first time since Harry
Truman was President. Bear in mind that Harry Truman, as President, was
presiding over a nation coming out of World War II, a time in which we
ran absolutely unprecedented deficits in proportion to our gross
domestic product.
Let me give my colleagues an example of what I am talking about. In
1945, for example, the national debt of this country stood at 110
percent of gross domestic product. We had accumulated that
extraordinary debt over a period of 4 or 5 years as we successfully
fought to the conclusion of World War II. As I speak to you today, debt
stands at about 52 percent of gross domestic product. It has been
coming up in recent years after having been going down for a number of
years, until we reached the oil shocks of the 1970's, and finally the
irresponsible fiscal policy that we engaged in during the 1980's.
But we must not try to deal with the deficit problem by reducing
Social Security benefits, by cutting Social Security, or robbing the
Social Security trust fund. We have to look at the Social Security
Program as a long-term commitment to the working people of this Nation.
It is shortsighted to view it only in the context of our current
budgetary situation. While the Social Security Program is solvent now,
and will be well into the future, we have to make sure that it will be
able to pay benefits for the 132 million people who are paying into the
system today. We must not do anything to jeopardize the confidence of
the American people that the Social Security Program will be there for
them when they need it. We want it to continue to be there, because it
has worked.
We hear a lot about Government efforts that fail. Nobody talks very
much about Government efforts that succeed. I want to recite some
positive numbers about the Social Security Program. Over the last 35
years, poverty among the elderly has been reduced from 35 percent at
the poverty line or below, to just 13 percent. That is progress. That
is a program that works. The actual number of seniors living below the
poverty line has declined by nearly 2 million since 1959. That has
occurred even though the elderly population has nearly doubled to more
than 32 million people. Even Pete Peterson, the Secretary of Commerce
in the Nixon administration, and President of the Concord Coalition,
and has written extensively on entitlement programs, concedes that
entitlement spending prevents some 20 million Americans--half of them
elderly--from falling into poverty. The program that protects the
majority of the elderly from poverty is Social Security.
In fact, the American Association of Retired Persons estimates that
nearly 45 percent of all seniors--nearly 45 percent of the elderly in
this country--would live in poverty if there were no Social Security
Program. In the past, some people have suggested we could save money by
eliminating or cutting back on the cost-of-living adjustments, the so-
called COLA's. I have steadfastly resisted those efforts to cut back on
the cost-of-living adjustments. These are the payments that make up for
the loss of purchasing power that occurs because of inflation and price
increases. Eliminating these cost-of-living adjustments would push a
half-million of our elderly into poverty and reduce the standard of
living for more than 41 million of our fellow citizens.
On the other hand, some have advocated means testing for Social
Security; that is, the benefits would only go to those in the low-
income bracket. If Social Security is subjected to a balanced budget
amendment, I submit that means testing would be a very likely outcome.
What would this mean for the future of the program and its ability to
reduce poverty among the elderly and disabled and their families?
Advocates of means testing argue that because we are running a budget
deficit, we can no longer afford to pay benefits from the Social
Security fund to middle-income people.
I dispute that argument on four separate points.
First, Social Security is not causing the deficit. It is fully self-
financed and is in fact running a very substantial surplus.
Second, The average Social Security benefit is not making people
rich. It barely helps most retirees make ends meet.
Mr. REID. Parliamentary inquiry. How much time does the Senator from
Illinois and the Senator from Nevada have?
The PRESIDING OFFICER. The Senator from Nevada controls 6 minutes.
The Senator from Illinois controls 15\1/2\ minutes.
Mr. REID. I yield 5 more minutes to the Senator from Tennessee.
Mr. SASSER. More than 70 percent of all Social Security beneficiaries
have annual incomes of $30,000 or less. Asking these people--the
retired elderly, 70 percent of whom make $30,000 or less--to give up
some of their benefits could create very real hardships. Even middle-
income seniors rely heavily on Social Security as their primary source
of retirement income. More than half of all the people over age 65 rely
on Social Security for at least half of their income, and nearly one-
quarter of them rely on Social Security for 90 percent or more of their
income. Without that income from Social Security, many would have a
very difficult time meeting their expenses indeed.
Third, the reason I would oppose means testing for Social Security is
the benefit structure is very strongly progressive so that lower income
beneficiaries receive a significantly higher percentage over their
earned income back in benefits. The program provides much greater
returns to those who are at the lower end of the economic ladder. Also,
as of 1984, the benefits to wealthier recipients are subject to a
Federal income tax. Just last year the portion of benefits that is
taxed increased from 50 percent to 85 percent, and this has had the
effect of reducing the benefits for wealthier beneficiaries. One in
five beneficiaries currently pays taxes on benefits.
Fourth, the reason I would oppose means testing for Social Security
is that if higher income beneficiaries no longer receive any benefits
from Social Security, then they may no longer be willing to pay into
the system. If these individuals demand to opt out of the system, the
program would experience a serious funding shortfall and replacing this
revenue would be very difficult, involving either major tax increases
or cuts in other programs. Finding an alternative way to support lower
income seniors and disabled individuals and their families would be
very, very difficult indeed.
I predict, if we moved into a program of means testing Social
Security, over the long run that would mean the death of the program.
It would mean the death of Social Security. Upper income individuals
would say, since we do not pay into it any longer, we do not like the
program, we think it ought to be abolished. It would take on the
character of a welfare program, and sooner or later Social Security
would disappear from the American economic scene.
Then the young people would have the obligation of going back to
where we were at the turn of the century--taking care of their elderly
parents. I wonder how many young people now have thought about what
would happen if Social Security were to disappear overnight and what
would happen to their parents and what would happen to their obligation
to pick up part of the support of their parents. I think that is
something we ought to think about when we talk about means testing
Social Security and ultimately, I think, destroying the program.
Finally, I think we must look to the future when we contemplate
changes that affect a program with as broad a scope and as long a time
horizon as Social Security. Our population is aging as more people are
living longer. Americans aged 80 years and older are the fastest
growing part of our elderly population. The number of those over age 85
increased by 38 percent, by 38 percent; almost one-third from 1980 to
1990, while the population of under age 65 increased by only 8 percent.
This older group tends to need most help with health care as well as
economic and other kinds of physical support. The retirement of the
baby boom generation will exacerbate this trend.
So let me summarize the following, Mr. President: Social Security is
not a welfare program. Social Security is the single most successful
example of broad-scale social insurance in this Nation's history.
Its very success explains why it has become a target for ideologues
and cynics. We cannot let the deficit problem--which Social Security
actually reduces--be used to undermine this fundamental covenant in our
social contract.
Congress has long recognized Social Security's unique nature and
granted the program differential budgetary treatment as a matter of
law. Many of my colleagues on the Budget Committee and others who
support a balanced budget amendment to the Constitution, have supported
a number of efforts to protect the Social Security program. I think it
might be useful at this point to review recent legislative history in
this area.
As I discussed earlier, reserves have been accumulating in the Social
Security trust funds so that the Federal Government can meet its
obligations to current and future retirees. Those reserves, while
necessary, create a large and growing budgetary surplus that, when
combined with the rest of the Federal budget, has the effect of masking
the true size of the deficit in the operating budget.
Minimizing the deficit leads the Nation to run larger operating
deficits than it otherwise would. Economists tell us that deficits
amount to negative saving. Before the 1990 budget agreement, the
deficit calculations included the surpluses in the Social Security
trust funds. A number of us in Congress, including my distinguished
colleague from South Carolina, Senator Hollings, and my colleague from
New York, Senator Mohnihan, recognized that this practice detracted
from the national saving necessary to finance capital formation and
build the Nation's productivity and wealth.
We also understood that making sure that our economy will continue to
grow in the future is essential if we are to meet the obligation to
future retirees. The Government needs to develop real saving--after
taking into account the deficits run by the operating budget--in order
for the Nation to have the capacity to support the retirement claims of
the baby boom generation without imposing unbearable fiscal burdens on
its children and grandchildren.
So, the 1990 Budget Enforcement Act, among other things, restored
budget honesty by taking Social Security out of the calculation of the
deficit. Accurately displaying the true size of the Nation's deficit
problem helps protect the fiscal integrity of Social Security trust
funds and provides the Nation with an accurate assessment of the fiscal
policies needed to eliminate the deficit.
This was not the first time Congress had debated the budgetary
treatment of the Social Security system. Before fiscal year 1969, the
Government generally used the administrative budget, which did not
include trust funds but focused on the movement of funds into and out
of the general fund of the Treasury. In October 1967, the President's
Commission on Budget Concepts--the first major review of the budget
since the Budget and Accounting Act of 1921--recommended that the
Government move to a ``unified'' budget, showing trust funds together
with the rest of Government spending.
The Commission acknowledged that trust funds were a legitimate and
complementary budgetary concept and recommended maintaining separate
accounting procedures to allow their activities to ``be reported on in
a way which allows the identity and integrity of trust fund
transactions and balances to be preserved.''
In the wake of that recommendation, the President's budget submission
started including Social Security and other trust funds in the budget
beginning with fiscal year 1969. With the adoption of the Congressional
Budget and Impoundment Control Act of 1974, Congress adopted the
unified budget approach.
In the 1970's and early 1980's, controversy arose over the inclusion
of Social Security in the budget. Various deficit reduction proposals
included cuts in Social Security benefits. Congress and the President
eventually did cut the Social Security minimum benefit, student
benefit, and lump-sum death benefit, among others. Defenders of Social
Security saw inclusion in the budget as a threat to the program.
On July 29, 1981, as part of the debate on the Economic Recovery Act
of 1981, the Senate passed by a 97-to-2 vote an amendment offered by
Senator Eagleton--for himself and Senator Stennis--that would have
required a special statement on the outlays, revenues, and surpluses of
Social Security as part of the President's budget submissions. The
conference committee dropped the provision, but Senator Eagleton
offered it again on October 14, 1981, as an amendment to the Social
Security Amendments of 1981, and the Senate agreed to the amendment by
a voice vote. Once again, the conferees dropped the provision, but the
issue remained highly visible.
In January 1983, the report of the National Commission on Social
Security Reform stated:
A majority of the members of the National Commission
recommends that the operations of the OASI, DI, HI, and SMI
trust funds should be removed from the unified budget.
In the legislation that would become the Social Security Amendments
of 1983, first the House Ways and Means Committee and then the House
responded to the Commission's recommendation with a bill that would
display the Social Security trust funds separately but in the budget
through fiscal year 1988 and remove them from the budget beginning in
fiscal year 1989. The Senate bill had no such provision, and the Senate
rejected two floor amendments that would have added similar language.
By a vote of 56 to 41, the Senate tabled a motion to waive a point of
order raised by Senator Domenici under the Congressional Budget Act
against an amendment by Senator Heinz that would have displayed the
Social Security trust funds separately but in the budget through fiscal
year 1988 and removed the Social Security trust funds--but not the
Medicare trust funds--from the budget beginning in fiscal year 1989.
The Senate then tabled an amendment by Senator Riegle that would have
kept Social Security on budget but exempted it from reconciliation. The
conference committee agreed to a modified version of the House bill,
ordering more prominent display of Social Security and Medicare through
fiscal year 1992, and then their removal from the budget in fiscal year
1993. The conference committee's recommendation became the Social
Security Amendments of 1983.
The 1983 law also included provisions to speed up implementation of
increases in the payroll taxes which pay for the Social Security
program in order to put the program on a more sound financial footing.
The result of this action was to move from the existing ``pay-as-you-
go'' system to one that built up reserves to provide a cushion for
annual spending and prepare for the retirement of the baby boom
generation. Concerns about protecting these reserves caused the issue
of budgetary treatment to remain an issue.
The 1985 Gramm-Rudman-Hollings law amended section 710 of the Social
Security Act to take Social Security out of the budgetary totals
beginning with fiscal year 1986. Social Security was also exempted from
any across-the-board cuts--or sequestration--that might be required
under the new law. The conference report explains:
The Conference Agreement leaves unchanged from the House
and Senate amendments the budgetary treatment of the Social
Security trust funds. The conferees note that Section 201
includes the receipts and disbursements of the trust funds in
the Federal budget for Fiscal Year 1986 through 1991 only for
the purpose of the deficit estimates required to determine
whether the Federal deficit is within the maximum deficit
amount targets required in the emergency balanced budget act.
The Gramm-Rudman-Hollings law created another, separate protection
for Social Security by amending the Congressional Budget Act to
prohibit congressional consideration of language in reconciliation
legislation that would change Social Security benefits. That law set up
a requirement for the affirmative vote of 60 Senators to waive the
point of order for violating that prohibition.
On the other hand, Gramm-Rudman-Hollings amended the definition of
the term ``deficit'' to include Social Security within the calculation
of the deficit for purposes of determining whether across-the-board
cuts would be required. Once again, the conference report to accompany
Gramm-Rudman-Hollings explains:
The conference agreement leaves unchanged from the House
and Senate amendments the treatment of the social security
trust funds. This provision allows the yearly income and
outgo of the social security trust funds to be included in
the Federal budget only for purposes of estimating the total
deficit amount which must be addressed through sequester or
Congressional action in order to reach the maximum deficit
amount target. The scope of this provision is limited to that
purpose of comparison with the maximum deficit amounts, and
does not otherwise abrogate or contradict the effect of other
amendments in this act that remove the operations of the
social security trust funds from the unified budget. It is
anticipated that the estimating agencies named in other
provisions of this Act will in all other tasks related to the
budget and legislative process adhere to the requirements of
Section 261 of this Act, and remove the trust fund operations
from the Federal budget as required.
Now, it is important to recognize that the circumstances of the
Social Security trust funds has changed dramatically since all of these
actions occurred. For the entire period between the President's
Commission on Budget Concepts and Gramm-Rudman-Hollings, during which
Social Security was on budget, the surpluses and deficits of the Social
Security trust funds that Gramm-Rudman took off budget were relatively
modest. In other words, while Social Security was on budget, the actual
difference between the unified budget deficit and the operating budget
deficit was relatively minor.
For fiscal years 1967 through 1975, the trust funds ran small
surpluses of from $0.5 billion to $5.9 billion, averaging just under $3
billion a year. Including them on budget for the years beginning with
1969 decreased the deficits in the operating budget for those years
modestly. Indeed, for the first year of inclusion, 1969, a $3.8 billion
surplus in funds now off budget transformed a $0.5 billion operating
deficit into a $3.2 billion unified surplus, the last surplus recorded
by the Government.
For the period from fiscal year 1976 through 1982, the funds ran
relatively modest deficits of from $1.1 billion to $7.9 billion, so
that inclusion of Social Security in the unified budget actually
worsened the deficit during those years by an average of a little less
than $4 billion a year.
In the wake of implementation of the recommendations of the National
Commission on Social Security Reform, however, the reserves in the
Social Security trust funds began to grow, as intended, with fiscal
year 1985. The Congressional Budget Office projects that these
surpluses will be $62 billion in fiscal year 1994, $70 billion in
fiscal year 1995, and will reach $100 billion in fiscal year 1999.
Consequently, beginning with fiscal year 1988, increasing surpluses in
the Social Security trust funds have fundamentally changed the meaning
of the unified budget deficit and its relationship to the deficit in
the operating budget.
A number of bills introduced in the Senate in the 100th and 101st
Congresses sought to address this change by repealing the provision
that included Social Security in the definition of the deficit for
purposes of Gramm-Rudman-Hollings.
The Committee on the Budget held a hearing on March 24, 1988, on
``Social Security, Deficits, and the Baby Boomers' Retirement.'' During
the debate on the fiscal year 1989 budget resolution shortly
thereafter, Senator Chiles offered an amendment that would have stated
the sense of the Congress that ``the Congress should enact legislation
that makes the definition of the deficit exclude the surplus--or
deficit--from the Social Security trust fund for all purposes.'' After
substantial debate and amendment of the amendment, the Senate adopted
by a voice vote an amendment offered by Senator Domenici stating the
sense of the Congress that the National Economic Commission should
``study the budgetary treatment of Social Security.''
The report of the National Economic Commission, issued March 1, 1989,
recommended validating the Social Security surplus, that is, ``running
a unified budget surplus equal to the Social Security surplus,'' or
``balancing the non-Social Security budget.''
In October 1989, the Committee on the Budget and the Committee on
Governmental Affairs held two joint hearings on the budget process.
During the hearing of October 18, 1989, the committees discussed the
budgetary treatment of Social Security in the context of the testimony
of Senator Heinz on his bill, S. 1752.
During the 101st Congress, a number of Senators engaged in sometimes
lengthy discussions on the Senate floor calling for consideration of
legislation to remove Social Security from the calculation of the
deficit. Indeed, on June 19, 1990, the Senate voted 96 to 2 to adopt an
amendment offered by Senator Heinz that would create a point of order
against considering a debt limit extension ``if Congress has not acted
to remove the OASDI revenues and expenditures from the calculation of
the deficit.''
In 1990, Senator Hollings introduced the Social Security Preservation
Act to remove Social Security from the calculation of the deficit. This
was important because those calculations trigger sequestration as part
of the Budget Enforcement Act of 1990. In August 1990, the Senate
Budget Committee, on a motion offered by Senator Hollings, reported the
Social Security Preservation Act, after defeating a number of
amendments. The final vote in committee was 20 to 1 with Senator Gramm
of Texas the only member of the committee voting in opposition.
Later that year, during debate on the legislation that would become
the Budget Enforcement Act on October 18, Senator Hollings offered an
amendment to remove the Social Security trust fund from the calculation
of the deficit. The Senate adopted the amendment by the overwhelming
vote of 98 to 2. Only Senators Armstrong and Wallop opposed the
amendment.
The Budget Enforcement Act, which was adopted in November 1990,
following the Senate amendment, included a provision stating that the
receipts and disbursements of the Federal old-age and survivors
insurance trust fund and the Federal disability insurance trust fund
shall not be counted as new budget authority, outlays, receipts, or
deficit or surplus in the budget submitted by the President, in any
budget resolution agreed to by the Congress, or as part of the Gramm-
Rudman-Hollings deficit reduction law.
Plainly, nearly every Senator who has served in the Senate for at
least 4 years is on the record favoring the separate treatment of
Social Security. If we adopt an amendment to the Constitution that once
again exposed Social Security to further cutting, we would break faith
with that earlier commitment. We were right at that time. We should
stick by the pledge we made them to protect this most important trust
with the American people.
The PRESIDING OFFICER. The time of the Senator has expired.
Senator Reid controls 1 remaining minute; Senator Simon controls
15\1/2\ minutes.
Mr. SIMON. Mr. President, just in response to one item mentioned by
my friend from Tennessee. He and I agree on Social Security. We differ
on the Reid amendment. When he talks about 110 percent of debt versus
GDP in 1945 after World War II, what that ignores is there was no
corporate debt and no consumer debt, for all practical purposes, then.
We now have $4.3 trillion in corporate debt and $3.7 trillion in
consumer debt, and we have a very different situation.
I yield 1 minute to the senior Senator from Idaho.
The PRESIDING OFFICER. The Senator is recognized.
Mr. CRAIG. Mr. President, let me ask unanimous consent to print in
the Record a letter from a former Secretary of Defense, Dick Cheney.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
March 1, 1994.
Hon. Larry Craig,
U.S. Senate,
Washington, DC.
Dear Larry: As you know, I have been a long-time supporter
of a balanced budget amendment to the Constitution. I think
it offers the best prospect of forcing Congress to carry out
its Constitutional responsibilities and bring some discipline
to the Federal budgeting process.
I know that a number of individuals are concerned that
somehow such an amendment will lead to unwise cuts in
defense. Obviously, there is no reason why that has to be the
case since Congress will still be free to set priorities. And
clearly providing for our national security must continue to
be an urgent priority.
I would urge all of my friends in the Senate to support the
proposed amendment to the Constitution.
Best regards,
Dick Cheney.
Mr. CRAIG. Former Secretary of Defense Dick Cheney spoke of his
support for a constitutional amendment to balance the budget and says:
I know that a number of individuals are concerned that
somehow such an amendment will lead to unwise cuts in
defense. Obviously, there is no reason why that has to be the
case since Congress will still be free to set priorities. And
clearly providing for our national security will continue
must continue to be an urgent priority.
I yield back my time.
Mr. SIMON. Mr. President, I yield 8 minutes to the Senator from
Colorado [Senator Brown].
The PRESIDING OFFICER. the Senator is recognized for 8 minutes.
Mr. BROWN. Thank you, Mr. President. I thank the distinguished
Senator from Illinois for not only the time but his distinguished
leadership on this, as well as the senior Senator from Idaho, who has
spent such a great deal of congressional career battling the waste and
fighting for a responsible budget amendment.
Mr. President, this is a moderate proposal. This is not a strong
balanced budget amendment. It is one that is designed to make it easy
to work with and work through. I want to make a forecast for my friends
in the Chamber, and then I am willing to stand behind and perhaps
answer for later on.
I believe a balanced budget amendment to the Constitution will pass
within the next decade. Mr. President, if it is not the one that is
before us, it will be much stronger and much tougher than what the body
votes on today. Let me be specific.
The measure that is before the Senate today has a long phase-in
period, making it easy for Congress to adjust to it, and in reality
does not require Congress to cut spending at all to make the targets.
It merely requires Congress to slow down the rate of increase in
spending. If we do not adopt this, we will adopt one that is much
tougher in that regard.
Second, to waive this requirement to move toward the balanced budget
only takes 60 percent of the votes. I can tell my colleagues that a
good number of us who are sponsors of this would prefer it would be a
much higher percentage. At least two-thirds, or perhaps higher. If this
measure does not pass, my guess is eventually we will have one that is
much tougher.
Third, this only involves a constitutional majority, a simple
majority to raise taxes. A good many of us would strongly prefer a
measure that requires two-thirds to increase taxes.
So if this measure does not pass, I believe one will pass. It is
likely it will be much tougher and much more strict than this. Some
Members have come to the floor and said in so many words, there is not
a problem. I invite anyone who feels that to take a simple look at a
graph of our deficits and our debt over recent periods. This chart goes
since 1950, but I think Senators would see an equally dramatic
continual rise in prior years.
Those who believe we have this problem licked and solved with our
current actions, let me simply mention that on this chart where we see
the red rising, as it goes off, by 1997 the debt will not only have
continued to rise but will literally have gone off the top edge of this
chart by 1997. What we are into is a curve that is rising at a rate
near the vertical. It is a train wreck waiting to happen, and every
Member of this body must know it. Some may choose to close their eyes,
and I suspect future generations will wonder how in the world their
Congress could have done that.
Each Member who votes, I think, and speaks on this floor, perhaps
will give them the answer of what their own thoughts were as they move
forward. But I, for one, believe this is a major problem that faces our
economy and our Government. The simple fact is we cannot continue as we
have, and in reality everyone knows it.
I want to deal with some of the things that have been suggested. One
is a comment by the Washington Post. Today they urge Members of the
Senate to vote against the balanced budget amendment, and they conclude
their editorial with this line:
The Senate should kill the amendment [that is the balanced
budget amendment] and get on with the difficult task that the
amendment only obscures [i.e., cutting the deficit].
The Washington Post is composed of bright people. For them to
advocate getting on with cutting the deficit, to this Member, is a bit
of surprise. The Washington Post endorses candidates every election. If
Members can come to the floor and tell me when the Washington Post
endorsed candidates most likely to control spending, I would be
interested in hearing it. At least my perception is that the Washington
Post has been a champion of those who want to increase spending, not
cut it. For them to suggest that the real answer is simply to control
the deficit by getting on with the difficult work of controlling
spending, strikes me as a bit unusual. I hope it is a new policy on
their part and I hope it is one that translates to whom they endorse,
because my own feeling is that until people cast their votes based on a
willingness to control spending and confront the issue, real progress
is not going to be made.
This morning I heard the President of the United States talk about
this problem. He said ``we are solving the problem now.'' I want to
express a difference of opinion on that subject.
The PRESIDING OFFICER. The time allocated to the Senator has expired.
The Senator from Illinois has 8 minutes and 30 seconds.
Mr. SIMON. I would like to yield further time but Senator Robb also
wants some time. I will yield 1 additional minute to the Senator from
Colorado.
The PRESIDING OFFICER. The Senator is recognized.
Mr. BROWN. Mr. President, the fact is the President's own budget
forecasts the biggest deficit in the history of our country. It
forecast a deficit that is rising in the outyears, not dropping, and a
debt as percent of GDP rises, not falls.
There is only one way to get the deficit down or begin to control it,
and that is to control spending and to control our appetite. This is a
moderate approach. If we do not adopt this, we will adopt one much
stronger and under much more difficult circumstances in the years
ahead.
I yield the time.
The PRESIDING OFFICER. The Senator from Illinois.
Mr. SIMON. Mr. President, I yield the remainder of my time to the
Senator from Virginia, Senator Robb.
The PRESIDING OFFICER. The Senator from Virginia is recognized for 8
minutes.
Mr. ROBB. Mr. President, many debates in the Senate are called
important. Today's debate lives up to that characterization. The action
we take later today, in voting on the Reid and Simon proposals, may not
turn out to be important. But this may well be the most important
debate we will undertake this year.
I rise as an original cosponsor of the underlying Simon resolution
which requires a balanced budget. I oppose the Reid substitute with
reluctance, and do so with my eyes wide open, acknowledging the
shortcomings of both proposals. Whatever the outcome today, I will
continue to support serious responsible proposals to achieve the goal
of a balanced budget.
I think it is important that we have been having this debate. If
nothing else, this resolution has provided the public focus on the need
for long-term fiscal responsibility. I, for one, do not think we have
had enough of that.
The Reid substitute amendment, is a noble attempt, but I fear that it
sounds more effective, than it would prove to be in practice. It will
not instill the same fear of God into policymakers that the Simon
resolution will and is, in my view, too easy to circumvent. While the
Simon amendment may not be perfect, at least it has enough teeth to
scare folks into making more responsible decisions.
I support the tougher Simon amendment not because I believe it is a
cure-all for our budget woes, because in and of itself, it is not going
to bring our budget into balance, but because this amendment
establishes a destination. It is still up to the President and the
Congress to plan a detailed route to get there.
In truth, I have supported the balanced budget amendment and a line-
item veto for over a decade. That support followed an evolution in
thinking which may not be uncommon in this body. When I was chairman of
Democratic Governors' Association, Dick Thornburgh, then my Republican
counterpart, proposed that the National Governors' Association throw
its support behind the balanced budget amendment. I resisted it
initially, because, like most Americans, I was, and I remain, reluctant
to seek solutions in the Constitution for transient problems. I
promised, however, that if the Federal Government did not get serious
about fiscal responsibility, I would support the amendment the next
year.
Unfortunately, there was talk about a balanced Federal budget, but
tax cuts were far more appealing politically, so the problem only got
worse. In the absence of a Federal commitment to real fiscal
responsibility, I endorsed the balanced budget amendment, and the NGA
officially changed its policy and came out in support of the amendment.
I have never claimed that the amendment alone would solve the
problem. But it compels a solution, by eliminating the most convenient
excuse for avoiding tough choices. It requires a chief executive and a
legislative body to establish priorities. And it raises the specter of
remedies that are so harsh that it may give the President and the
Congress the political cover necessary to make the tough choices
required.
I can tell you that a balanced budget will not cause our economy to
collapse. The former Governors in this body know this well. As
Governors, we were required to submit balanced budgets every year, and
we did. That provision in our constitutions was not a hindrance, it was
an invaluable help. It lent weight to our efforts to curtail less
important spending while preserving funding for essential programs such
as education initiatives. And while a State's balanced budget
requirement differs from the constitutional amendment we are
considering today, a balanced budget amendment still takes away the
excuses for irresponsible spending.
Mr. President, I have supported a number of proposals to cut and
raise revenues that were not very popular, from entitlement caps to $94
billion of additional specific budget cuts. I am willing to continue to
do so in the future.
But the vote on the Kerrey-Brown amendment makes that point very
clear. Each of us has very different ideas on how to achieve a balanced
budget. Forging a consensus on common action, however, is extremely
difficult. We only have to look back to last summer's budget bill
debate to see just how intractable cutting Federal spending can become.
Mr. President, I submit that Congress by its nature tends to be
shortsighted when dealing with our fiscal problems, and that it always
finds plenty of excuses why not to cut today and why tomorrow would be
better. We are rewarded for spending. As long as we name courthouses
and highways for spending money rather than saving money, spending will
continue to dominate. Spending programs have strong constituencies. By
contrast, those of us who want to say ``no'' find that our bleachers
are nearly empty.
I personally encouraged the President to embark on meaningful deficit
reduction when he took office. I applaud him for what he's
accomplished. He deserves real credit for taking tough politically
unpopular steps to achieve meaningful deficit reduction.
But we need to do even more, and we certainly can't afford to stop
now and rest on our laurels. The lowest interest rates in two decades
have lulled us into a sense of complacency. Unfortunately, because of
these very low rates, the costs of continued fiscal irresponsibility
are lost on many policy makers. The Simon amendment makes those costs
very clear and very real.
It seems to me that the arguments against the balanced budget
amendment amount to conceding that we can't live within our means. I do
not accept that. Those with concerns about the possible negative
consequences of the amendment simply have to come to grips with the
underlying problem: we are spending more than we are taking in, and we
are unwilling to make the choices to correct it.
A commitment to principled choices is the only cure for the long run.
My concern is that most feel we have bitten the bullet and everything
is getting better. The truth is, even under a much tougher disciplinary
framework, we are still going to increase the debt by at least three
quarters of a trillion dollars over this next 5-year period. If
interest rates go up significantly, we could be in very serious
trouble. So I am going to continue to press for fiscal sanity.
Mr. President, we have come to an unhappy pass. Amending the
Constitution is harsh medicine. And if the executive and legislative
branches were living up to our full responsibility, we would not need
it. But everything else has failed or been thwarted. And this
discipline reluctantly is required in order to truly serve the people
we represent.
It is a cry for help--to stop us before we spend again. We just
cannot keep doing this to future generations.
I yield back the remainder of my time.
The PRESIDING OFFICER. The Senator from Nevada has 57 seconds. And
the Senator from Illinois has--all time has expired.
Mr. REID. Mr. President, this is a balanced budget amendment that
Senators Reid, Ford, and Feinstein have offered. It treats the Federal
Government like the family is treated in America, like the State
governments are treated, where they balance their budgets.
It is also very important because it excludes Social Security. As Mr.
Ball said about this amendment, the Simon 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 an approach
to retirement income that is working well.''
I think it is wrong that those who support the Simon amendment do not
cross over and support the Reid amendment, the only one that has the
opportunity to pass.
This is not horseshoes. Coming close is not the answer. We need to do
what is right for this country. You cannot leave this Chamber tonight
and say, ``Well, I voted for a balanced budget amendment; it is
somebody else's fault.'' The only fault lies with those who refuse to
support the Reid amendment, the only one that has the opportunity of
passing these Chambers.
Mr. HOLLINGS. Mr. President, I could offer my colleagues 3.5 trillion
reasons for a balanced budget amendment to the Constitution; that is
the number of deficit dollars added to the national debt since 1981.
But I will rest my case with one simple reason: It ought to be a
minimal moral obligation of our national government to match its income
with its expenditures on an annual basis, barring an emergency
situation, so that additional debt is not passed on to future
generations.
The wisdom and necessity of such a policy has been driven home by the
deficit-spending binge of the last decade and a half. I recall the
words of James Madison in the Federalist No. 51:
But what is government itself but the greatest of all
reflections on human nature? If angels were to govern men,
neither external nor internal controls on government would be
necessary. In framing a government which is to be
administered by men over men, the great difficulty lies in
this: You must first enable the government to control the
governed; and in the next place, oblige it to control itself.
The Federal Government's profligacy, over the last decade was indeed
a reflection of the profligacy and speculation rampant in the larger
American economy. Today, however, the excesses of the private economy
have largely been tamed. The unfinished task is to accomplish Madison's
imperative: to oblige government to control itself. This is exactly the
purpose of the balanced budget amendment to the Constitution.
The wisdom of a balanced budget requirement has been fully vindicated
by State governments across this land. All States but Vermont have a
balanced budget requirement. As Governor of South Carolina in the early
1960's, my State's balanced budget requirement obliged me to work with
the legislature to balance the books each year. Thanks to those
balanced budgets, South Carolina became the first Southern State to win
a triple-A credit rating on Wall Street. At the same time, that 4-year
record of fiscal discipline laid the foundation for a boom in
investment and economic growth that has continued to this day.
Mr. President, let me be clear that I support the balanced budget
amendment knowing full well it alone will not balance the budget. I
object to the cynical selling of this amendment by politicians who have
no intention of following through with the nasty, wrist-slashing work
of actually balancing the Federal budget. Absent this followthrough, a
balanced budget amendment is the moral equivalent of thigh cream.
Recall that Congress has passed a balanced budget amendment once
before. It was called Gramm-Rudman-Hollings. Like today's balanced
budget amendment, the 1985 Gramm-Rudman-Hollings amendment boldly
promised a balanced budget in 5 years' time. It, too, was embraced by
big, bipartisan congressional majorities and enjoyed public support.
Gramm-Rudman-Hollings cut the deficit to a low-water mark of $150
billion, but was later gutted and gelded by a succession of budget
summits. The deficits exploded once again.
A wise man once observed that history repeats itself, the first time
as tragedy and the second time as farce. The balanced budget amendment
could prove to be the ultimate farce unless we learn from the mistakes
of the past.
Mr. President, the deficit this fiscal year, $223 billion, is nearly
the same as when we began the Gramm-Rudman-Hollings exercise in 1985.
The difference is that, after 8 years of steady economizing, we have
already stripmined the easy budget cuts. What is more, Congress last
year took the unprecedented step of imposing a hard freeze on
discretionary spending for the next 5 years. A balanced budget
amendment on top of this will require cuts of nearly $600 billion
between 1995 and 1999.
Using the Congressional Budget Office's most recent projections, to
balance the budget by 1999 without new taxes we would have to cut all
Federal spending--excepting mandatory spending for judges' pay and
interest on the debt--by $26 billion in 1995, $73 billion in 1996, $119
billion in 1997, $162 billion in 1998, and $205 billion in 1999. This
includes cutting Social Security by $130 billion by 1999, which could
require not only the elimination of COLA's but major benefit cuts as
well.
Of course, Congress would not dare cut Social Security by $1, much
less $130 billion. So exempt Social Security from cuts: now the
required across-the-board cuts rise from 10.7 percent to 14.2 percent
in 1999.
Inevitably, other programs--including veterans' benefits, military
pay, the Women, Infants and Children nutrition program--would also be
sheltered from cuts. As the burden of $600 billion in cuts falls on a
smaller and smaller share of the total budget, reductions of 20 percent
and up will be required in unprotected areas such as law enforcement,
education, and environmental protection.
Are we willing to follow through with cuts of this magnitude? I
remind my colleagues that 61 Senators and 271 Representatives hitched a
ride on the Gramm-Rudman-Hollings bandwagon in 1985. But later, when
those same politicians were asked to cast tough votes to actually cut
the deficit, they lit out for the tall grass. For example, in 1990 in
the Senate Budget Committee, I proposed a strict spending freeze to
meet that year's Gramm-Rudman-Hollings deficit-reduction target; the
most zealous supporters of Gramm-Rudman-Hollings joined forces to kill
the freeze.
Face it, most Members of Congress view a ``yea'' on the balanced
budget amendment as a free vote. They get to preen their deficit-hawk
feathers in an election year, comfortable in the belief that doomsday
will not arrive until 1999, if ever.
Indeed, conventional Washington wisdom says that Congress can pass
the balanced budget amendment, give itself the good government award,
and then count on State legislatures to kill it off--after all, State
governments supposedly are addicted to billions in Federal aid. This
analysis overlooks the obvious: State politicians will see the same
short-term advantage in posturing as antideficit tough guys. Leaders in
the South Carolina General Assembly tell me the balanced budget
amendment would pass by acclamation in Columbia. I predict a similar
reception elsewhere, and easy ratification by the required three-
quarters of the States.
We must be beware, too, of the many dodges and subterfuges that can
be used to subvert the balanced budget amendment. Bear in mind that the
theory of the balanced budget amendment is identical to that of Gramm-
Rudman-Hollings: If you put a gun to Congress' head, Congress will get
discipline. The reality, however, is that when you put a gun to
Congress' head, Congress gets creative.
Bear in mind that both Gramm-Rudman-Hollings and the balanced budget
amendment are strictly process-oriented mechanisms. Process can always
be defeated by more process. The process of Gramm-Rudman-Hollings was
defeated by the counterprocess of the budget summits.
Recall that by 1987, it was clear that huge tax increases and budget
cuts would be required to meet the ambitious Gramm-Rudman-Hollings
deficit-reduction targets. This was seen in Washington not as a budget
problem to be solved, but as a political problem to be finessed. So
Democratic and Republican leaders huddled in summits--annual bipartisan
love-ins with a single purpose: To yank the skeleton out of Gramm-
Rudman-Hollings.
At the summits, Dick Darman and friends cooked up an ingenious
jambalaya of gimmicks--excuse me, process reforms. One year the
summiteers saved $2.9 billion by moving a Pentagon payday from October
1 back to September 29 of the previous fiscal year. Another year they
lopped $36 billion off the deficit simply by penciling in absurdly
optimistic economic assumptions. Finally, in 1990, the summiteers
killed Gramm-Rudman-Hollings outright, replacing it with a fudgeable
framework of floating targets that actually increased the deficit.
History now repeats itself with the balanced budget amendment.
Already the cloakroom conspirators are talking about process reforms
that will assist in balancing the budget: moving more programs off
budget; creating a separate capital budget to finance investments with
deficit spending. What is more, the balanced budget amendment expressly
allows Social Security trust fund surpluses to be siphoned off to help
balance the budget; in 1999 alone, we will be robbing $100 billion from
Social Security. Balanced budget, indeed.
So let us debate, pass, and ratify the balanced budget amendment. But
let us avoid the gamesmanship and duplicity that betrayed Gramm-Rudman-
Hollings. If you are not for massive cuts in Federal spending, or for
making up the difference with new taxes, then hold the hypocrisy; vote
``no'' on this amendment.
CBO Director Robert Reischauer on January 27 told the Senate Budget
Committee that it is inconceivable the budget could be balanced without
new taxes as a significant component. Warned Reischauer: ``If Congress
adopts an amendment requiring a balanced budget beginning in 1999, it
should not ignore the need to enact a package of tax increases and
spending cuts to provide some hope of achieving that goal in an
orderly, gradual way.'' In other words, we should match our process
vote with an actual vote on substance. Exactly.
I have long advocated a national value-added tax as the ideal vehicle
to simultaneously pay for health care reform and balance the budget.
Alternative plans to stick small businesses with the bill for health
care reform are grossly unfair. After all, we do not stick small
business with the bill for education or national defense or welfare, so
why do so for health care reform? As a universal benefit, health care
should be financed by a universal VAT on consumption. Most important, a
VAT will raise sufficient sums at relatively low rates, while boosting
the competitiveness of U.S. producers.
Balancing the Federal budget--while simultaneously paying in full for
universal health care--calls out for an American version of shock
therapy. So pick your poison: VAT, higher income tax rates, draconian
budget cuts, and/or reduced benefits. And spare us the process reforms
and pixie dust that suffocated Gramm-Rudman-Hollings.
By writing a balanced budget amendment into the basic law of the
land, we will compel Washington to do its job. No more weaseling. No
more excuses. Just make the hard choices and balance the budget. And do
not be surprised when a balanced U.S. budget turns out to be the best
economic growth program this country has ever seen.
Mr. AKAKA. Mr. President, I have listened closely to the balanced
budget debate over the past week. I wish to commend the senior Senators
from West Virginia [Mr. Byrd], Illinois [Mr. Simon], Utah [Mr. Hatch],
and Nevada [Mr. Reid] for their effort to bring this debate to a vote.
They have focused the Nation's attention on the critical need to reduce
the Federal deficit by an amendment to the U.S. Constitution.
The question is not whether the dire predictions that have been
offered by both sides of the debate would come true if this resolution
was or was not adopted. The questions are how are we going to keep
Federal spending from outpacing receipts, and will Congress accept the
responsibility for Federal spending that already is granted by the
Constitution?
I have reservations about the need to amend the U.S. Constitution to
dictate fiscal policy. I oppose amending the Constitution to deal with
our Nation's economic problems.
Last summer, Congress adopted the President's budget proposal by
instituting tough deficit control measures. Through the tireless work
of President Clinton and Congress, the largest deficit reduction
package in the Nation's history was adopted. Partly in response to
these events, the economy in 1993 grew at an annual growth rate of 2.8
percent. The Congressional Budget Office projects that the Federal
deficit will fall from $223 billion in the current fiscal year to below
$170 billion in 1996.
The recent economic data confirm that the difficult choices adopted
last year are paying off and lowering the Federal deficit. The proposed
fiscal year 1995 budget builds on the work of last summer by
maintaining discretionary spending levels, calling for the enactment of
the National Performance Review, offering a new rescission package, and
proposing to limit the growth of Medicare and Medicaid through
comprehensive health care reform.
If the balanced budget amendment offered by the Senator from Illinois
[Mr. Simon] is enacted, CBO Director Reischauer predicts that $204
billion in deficit reduction would be required to balance the budget by
1999, the initial date of this proposed amendments implementation.
Although the Senior Senator from Illinois will amend his measure by
pushing back the implementation date to 2001, enactment of this
amendment will require large tax increases and spending cuts to meet
the requirements of the proposed amendment.
Why should Congress amend the Constitution when the ability to meet
specified spending levels already exists? We do not have to alter the
Constitution to implement fiscal policy. What we need to do is make the
tough choices that are before us today, take charge of our
responsibility to implement our President's budget proposals, and
demonstrate that Congress is able to act in behalf of the Nation's
interests.
I believe adoption of Senate Joint Resolution 41 is likely to damage
the economy more than strengthen it. There is no guarantee how long the
current period of economic growth will continue. We should not forget
that when the economy slows, greater deficit spending would be
required. Moreover, Congress must have the flexibility to deal with
emergencies. We cannot rely on assurances today that there would be the
60 votes required under the Simon proposal to override a balanced
budget amendment during a disaster some time in the future.
The Simon amendment also has the potential of limiting public
investments that are critical to long-term growth. Senate Joint
Resolution 41 makes no distinction between investments, such as
education and training and early intervention programs for children,
and other types of government spending. These investments are necessary
in ensuring that the United States remains competitive with the global
community.
I also wish to make a few remarks about the Reid amendment. Although
it too would amend the Constitution, I view the Senator from Nevada's
proposal to be more reasonable in its approach to mandating fiscal
policy. The Reid amendment minimizes the potentially devastating impact
of Senate Joint Resolution 41. It is a reasonable alternative to the
original amendment because it acknowledges that the Federal Government
has capitalized assets and allows for capitalization of annual costs.
Moreover, the amendment preserves Social Security as a separate trust
fund and does not jeopardize our senior citizens. This is an important
difference, which should not be pushed aside in the rush to balance the
budget. The working men and women of America have contributed to their
retirement and should not worry that, in the future, the Government of
the United States may be forced to balance a budget on their backs.
Although I will not vote in favor of either proposal that would
require a constitutional amendment to balance the budget, I am pleased
that the Senate is debating the matter in the light of day. A budget is
only a plan of spending, the responsibility for which, rests with the
Congress and the President. Congress is already addressing the need to
balance the budget and reduce the Federal deficit. A balanced budget
amendment is not an appropriate precept to include in our Nation's
Constitution.
Mr. President, Congress already has the ability to bring down the
deficit with the eventual goal of balancing the Federal budget.
Congress should not be handcuffed in its ability to respond to the
fluctuations of national and global economies. Rather, Congress must
continue to rein in unnecessary spending in order to guarantee our
children's future prosperity.
Mr. GORTON. Mr. President, I support the Reid balanced budget
amendment. I believe that Senator Reid's balanced budget amendment,
like the Senate Joint Resolution 41 sponsored by Senators Simon and
Craig, will put this country on the right budgetary road. I believe
that without a balanced budget amendment, Congress will never come to
grips with deficit spending. That is why I support both of these
efforts to bring Federal spending in line with Federal receipts. At
this time, I want to review why I support Senator Reid's effort to
amend the Constitution.
I support Senator Reid's amendment because I know that legislative
efforts to balance the budget will never succeed. I have been a part of
such efforts. These were honest efforts, by honest men and women. Each
time, when the choices got tough, however, the President and most
Members of Congress blinked. The budget deficits grew. Our children and
grandchildren went deeper and deeper in debt.
I also support Senator Reid's amendment because the Clinton
administration has no, repeat no, plans ever to bring the budget into
balance. Laura Tyson, Chair of the President's Council of Economic
Advisers, told me that the administration has done all that it intends
to do to bring the budget into balance. Even under the best case
scenario, the Clinton administration's budgets for the rest of the
decade will bring hundreds of billions of dollars per year in new
deficits.
I support Senator Reid's amendment because it is better than doing
nothing. And I support his amendment because it is clear that the
Clinton administration has no plans ever to lead this country toward a
balanced budget. I am happy to support Senator Reid in his efforts.
Mr. KOHL. Mr. President, this is a red letter day for me and for the
Congress. We have two votes on constitutional amendments requiring a
balanced budget today. And I will have the honor of voting for both of
them.
That this debate is even occurring is progress. When I first came to
the Senate, I offered an amendment to recommit the budget resolution
because it included numbers that were dishonest and out of balance. I
lost. This Congress, we have enacted spending caps to enforce a hard
freeze on discretionary spending, we have received from the President a
fiscally conservative budget, and we may today pass a Balanced Budget
Amendment. That is progress.
But it not enough. It is now time to move beyond talking about
balancing the budget, and just start doing it. Currently, our national
debt exceeds $4.3 trillion, that is $17,495 for every man, woman, and
child in the United States. We ought not to kid ourselves, though, that
the burden of the debt will be so evenly distributed. It is the
children of this country who will pay for our borrowing now. If
Government does not change its fiscal policies, future generations will
have to pay 87 percent of their income just to clean up the debts we
leave them. In other words, our children will owe 87 percent of their
income to the Government to pay for services we received. We generously
have left them 13 percent of their own income for Government services
from which they might benefit.
The Balanced Budget Amendment represents an idea understood by every
family that ever had to balance a checkbook--pay now for what you need
now; save for what you need later. Unfortunately, our Government has
forgotten this basic maxim--we have spent what we don't have; and we
have saved nothing for future generations. It is time to write the
basic American values of thrift and fiscal responsibility into this
Nation's most basic statement of values--the Constitution.
I support both Senator Reid's and Senator Simon's approach to
balancing the budget. Senator Reid's amendment recognizes explicitly
some principles not explicitly stated in--but certainly not excluded
by--Senator Simon's approach.
First, Senator Reid explicitly exempts the Social Security trust fund
from the strictures of his amendment. I was an original sponsor of the
successful proposal to take Social Security off budget, and I have
introduced legislation that segregates the trust funds from other
budget accounts. The Reid amendment is in line with what I have always
strongly believed: The Social Security trust fund is not Government
money--it is working Americans' money held in trust until their
retirement. It is a savings plan that is available to all who are
willing to work. As long as Social Security remains this sort of
contributory savings program, it ought to be treated differently than
the other spending and tax programs of our Government.
That said, I believe strongly that the biggest threat to the Social
Security system is our mounting Federal debt. As long as Social
Security runs a surplus, and as long as that surplus is invested in
U.S. Treasury bonds, the retirement savings of our working families
will be invested in Government debt. And the way to insure that debt is
paid off, paid off in full, and paid off with a decent return, is to
make sure that the U.S. economy is strong. That, of course, means that
the Government must stop consuming such a large percentage of this
country's valuable resources.
Both the Simon and the Reid amendments will protect Social Security
by reducing the deficit, eventually balancing the budget, and
strengthening the U.S. economy. Senator Reid makes that protection more
explicit by specifically exempting the Social Security trust fund from
the balanced budget amendment.
Another difference cited between Senator Reid's amendment and Senator
Simon's amendment is, in my mind, not nearly the issue it has been made
on the floor. Senator Reid's amendment requires that the operating
budget of the Government be balanced, but allows debt-financed capital
spending. This is a budgeting approach I have long favored, and it is
one that closely parallels the approach taken by many State
governments. It is also an approach that is consistent with the Simon
amendment.
Those of us who have supported Senator Simon's balanced budget
amendment never thought that balance would be achieved by uniform or
across the board spending cuts. There is no mechanism in the amendment
that requires or even suggests this sort of draconian and senseless
budget cutting. Instead, I have always believed that a constitutional
balanced budget amendment would force Congress to make difficult and
reasoned choices about spending. Of course, we should continue to
invest in the capital improvements that make this Nation strong.
Senator Simon's amendment would allow that. It would encourage it, in
fact, by requiring Congress to look more closely at its spending
decisions and choosing only those that have a real return for this
country.
Mr. President, I hope we finish today's work by passing on to the
House a constitutional amendment requiring a balanced budget. Fiscal
responsibility is an American value worth enshrining in our basic
document of government--and a congressional responsibility worth
writing into our highest law.
Mr. MATHEWS. Mr. President, fiscal discipline is without doubt one of
the most critical concerns on the Nation's agenda. A balanced budget
amendment to the Constitution is the single most serious step--perhaps
even a dire step--that Congress can take to achieve that discipline. I
believe that step is necessary.
Senator Simon has done the Nation a service by making us face our
failings. I cosponsored the amendment by Senator Simon, and I salute
the courage and wisdom he has shown.
But as the debate has proceeded, another amendment--the Reid
amendment--appears to chart a clearer path.
The Reid amendment provides effective fiscal restraint without
placing the Nation in a straitjacket.
I have spent 40 years in public service as a State treasurer and as
chief executive financial officer. I have operated under a balanced
budget provision in the Tennessee constitution. I know what it takes to
balance a budget. I know why it works, and I know how it works.
I am convinced that the Reid amendment creates in the Federal budget
process the fundamental conditions that make a balanced amendment work
for the States.
Matching expenditures with income is the first essential of balancing
a budget. The principle of pay as you go has to be inviolate for a
balanced budget to work.
Cash on the barrel head is the way to pay as you go with an operating
budget. It is not prudent to pay in part or pay later for something
that won't be around later. We've gotten ourselves in a great deal of
trouble because we've violated that principle.
Like the Simon amendment, the Reid amendment requires the Federal
Government to balance operating expenses with current revenues.
But pay as you go doesn't mean the same thing for an operating budget
and a capital budget. With a capital budget, pay as you go means
matching the duration of expenditures with the duration of assets. You
set aside part of today's income to amortize assets over their
serviceable life. If you pay for long-term assets today, you totally
miss the point of matching expenditures with income.
Congress has a legitimate responsibility to finance expenditures that
build the Nation's resources. Capital assets created by those
expenditures remain in service beyond a single budget cycle, and they
should be paid for over the period that they're in service. A separate
capital budget is the appropriate way to finance capital assets, and
that's what the Reid amendment gives us.
I have more than a little experience dealing with State and municipal
debt--not as much experience, thank heaven, as other State treasurers
have had--but I have had the experience of borrowing money.
Mr. President, many times during this debate, I've heard the same
question: What right to we have obligating future generations to pay
for our spending? My answer is that we have every right, provided that
the benefits extend to future generations.
Again, the distinction lies between current operating expenditures
and capital investment expenditures. The Reid amendment imposes a
three-fifths vote requirement for deficit spending in the operating
budget. It would take 60 percent of this Chamber to spend tomorrow's
money on today bills.
That is serious and necessary discipline. Some might say it is
hamstringing discipline--too tough. I reply that it ought to be tough
to do the wrong thing.
But it would not--and rightfully would not--hamstring our ability to
raise money for capital assets that span generations. The Reid
amendment is the proper framework through which we can separate
obligations we incur for ourselves and for future generations. And
while doing that, the Reid amendment enforces the required discipline
on current operating expenditures
By the same token, the Reid amendment retains the flexibility to use
fiscal policy as a tool of countercyclical economic policy. It enables
us to react to national emergencies and national threats. These, too,
are legitimate duties of Government and legitimate reasons for
temporarily setting aside the stern requirements of budgetary
restraint.
Many of us in this Chamber and millions of Americans have seen
expansionary fiscal policy save us from economic calamity. With our
budget the way it is, we virtually have forfeited any chance to recover
from recession using fiscal policy.
A balanced budget will restore fiscal policy as an economic tool. But
after we've wrung decades of excess from the budget, we must assure we
still have the option of expanding spending in an economic emergency.
The Reid amendment preserves this option.
War and emergencies are exceptional and uncommon. They touch the
lives of all Americans only rarely. The same cannot be said for the
programs that operate under Social Security.
Senator Reid has already offered us impressive statistics
illustrating the importance of Social Security not only to retirees but
also to families and children. We need no statistics to tell us
something we all know: the American people want our hands off of Social
Security. They do not trust Congress to preserve this vital program in
ways that serve them. Whatever we reassure them to the contrary, they
believe we will gut Social Security to balance the budget if we have
to.
And I must say that at some future date--as spending swells--as
pressures mount from years of abuse, as the relation between taxes and
spending grows ever more strained, their fears could be proved right.
The comingling of Social Security funds and general revenues
increases the likelihood of this happening. What's more, the comingling
of Social Security funds into the general fund disguises the real size
of the problem we're facing. It is time to do what needs doing, make
Social Security the separate, secure, and self-sustaining entity it was
intended to be.
Social Security is not the reason we're in this budgetary problem, so
let's separate it from the budgetary problem by separating it from the
budget.
This is a good idea on its own merits irrespective of the balanced
budget debate. Pension programs routinely are segregated into separate
accounts in State and corporate finance. Many times, it's not accurate
to draw that parallel with Federal programs, but in this case the
comparison is apt. Social Security is a contributory program that is
separate and distinct from general government programs. It should be so
on our ledgers as well.
Mr. President, throughout this debate our colleagues have referred
repeatedly to the budgetary standards and practices that State
governments have adopted. They have called upon the Federal Government
to implement similar standards and practices because they see what
those methods have achieved. I would say, in all respect to my
colleagues, that my four decades of service as a State financial
officer have given me extra insights into our debate.
All of my years and all of my experience convince me that Senator
Reid's amendment creates the kind of discipline that has worked for
State governments. It takes the crucial step of dividing operating
budgets from capital budgets. It enables us to make the distinction
between approval for responsible and irresponsible debt. It allows
flexibility to meet fiscal emergencies, and it takes the wise step of
safeguarding the Social Security trust fund.
Mr. President, this has been an emotional issue and an issue that
invites political posturing.
I believe we should set aside the emotion and take an approach
dictated by rationality. And if we do what's rational, I believe we'll
not merely support a balanced budget amendment but actually pass one.
On the basis of every principle that's made State constitutional
fiscal restraint amendments work, Senator Reid's amendment is the one
we should pass.
Ms. MOSELEY-BRAUN. Mr. President, the fact that Illinois ranks 48th
among the 50 States in the rate of return on the tax dollars
Illinoisans send to Washington may, in an ironic way, explain why
Senators from the State of Illinois are able to see the forest for the
trees, and thus support a balanced budget amendment to our
Constitution.
The trees are the horror stories of economic and fiscal catastrophe
that opponents so earnestly argue. Social programs, they say, will be
cut so dramatically as to cause public suffering and chaos.
Social Security, the most sacred of entitlements, is threatened by
the balanced budget amendment, they say. It is, of course, not lost on
anyone that the Social Security constituency is the most powerful in
the Nation. This list of horribles which is pointed to by opponents
then goes on to span the gamut from defense cuts to child welfare
programs. By making a lot of good caring people nervous about what can
happen to them--to go back to the forest and trees analogy again--the
opposition has taken log-rolling to new heights.
On a more scholarly note, opponents also cite the dangers inherent in
not being able to deficit spend in times of economic contraction. The
Government's ability to pump money it doesn't have to stimulate the
economy saves us, they argue, from the severity of economic downturns,
and allows fiscal policy to serve when monetary policy can not.
None of this is lost on the proponents and supporters of the balanced
budget amendment. The forest, we maintain, is in crisis precisely
because of the incapacity of the Congress and successive Presidents to
make the choices needed to put our Nation on a sound financial footing.
Between 1978 and 1992, the annual deficit grew more than sixfold, from
$54 billion to $340 billion. Over the same period, our overall national
debt grew nearly as fast, increasing more than fivefold from less than
$800 billion to over $4 trillion. And we are today spending well over
$230 billion, or over $600 million each day, just to make the interest
payments on that growing national debt.
In this same time period, most families had to resort to two, instead
of one, worker in the household, largely because the buying power of
their earnings declined. And it is worth keeping in mind that, even
with two-worker households, many American families did not keep up with
inflation; their standard of living declined even as they worked
harder.
Persistent Federal deficits, and the infiltration they helped
inspire, hit the poorest Americans even harder. Their real income
dropped by roughly 40 percent, in spite of the fact that nondefense
Federal spending more than tripled over the 1978-1992 era--rising from
$354 billion in 1978 to $1.082 trillion in 1992.
This is directly attributable to our fiscal imprudence. Each and
every member of each American family now owes over $18,000 to pay for
decisions long forgotten.
The real insult of this habitual resort to debt is in what it is
doing to our children. We are essentially living off a credit card,
with the bills being saved to present to our children and
grandchildren. The ``Analytical Perspectives'' volume of this year's
``Budget of the United States Government'' makes the point clearly. In
a frightening table, it concludes that, even with health care reform,
generations of Americans born after 1992 will have to pay an incredible
73.9 percent of their lifetime income in taxes. Is that really the
legacy we want to leave our children?
Mr. President, I first ran for public office on a platform of
providing more help to Americans that so need Federal help. I want to
see us do more in areas like education, housing, health care, and
economic development. I want to deal with the root causes of
homelessness and the root causes of crime. My entire political career
has been about helping people and communities; no one is more concerned
about these problems than I am.
I did not run for the Senate because I thought that Federal deficits
and the national debt make helping people and communities impossible.
And I do not believe that acting on a balanced budget constitutional
amendment makes action on a strong social agenda impossible now.
Instead, what the deficits and the debt present us with is a
challenge--a challenge to rigorously set our budget priorities, a
challenge to spend smarter and more efficiently, and a challenge to set
our budget priorities, a challenge to spend smarter and more
efficiently, and a challenge to concentrate Federal resources where
they are really needed. The Government will have to reinvent itself in
regards to domestic programs--and that reinvention is critically needed
with or without a balanced budget amendment. In fact, any reasonable
look at the conditions we currently confront compels the conclusion
that we need to revisit our approach to these domestic problems in any
event.
The Constitution shouldn't be lightly tinkered with. True. But the
requirement of a balanced budget amendment is an item specifically
called for by the Framers of the Constitution, including Thomas
Jefferson. Indeed, it was advocated by the Father of our Country,
George Washington himself. However, to that generation, it was thought
to be so basic a tenant of prudent policy that it was unnecessary to
make it a part of the Constitution.
Moreover, the balanced budget amendment is not a rigid, mechanical
requirement that would preclude Government from acting in the national
interest. For example, it has a safety valve, in case of war or a
situation that threatens the national security of the country, the
Congress would be free to spend and borrow as necessary. In all other
cases, however, a three-fifths vote would be required to spend more
than we have.
The last time the budget was balanced was in 1969, 25 years ago. We
have been through recessions since then, and periods of strong economic
growth. Only one thing has been constant--the Federal red ink.
Mr. President, I believe that the Federal Government has a
responsibility to help Americans who want to work, but who, because of
temporary economic conditions or other reasons, find themselves out of
work. But the Federal Government needs to act in a way that doesn't
hurt working and poor Americans--and that is where the Federal fiscal
policy has failed. It has hurt working Americans; it has hurt poor
Americans. Only the wealthiest Americans have been able to benefit from
continuous Federal deficits.
Keynesian economics says that Federal deficits can help stimulate the
economy in recessions. But Keynesian economics also calls for balancing
Federal budgets over the business cycle. The evidence of the last 25
years suggests that the Federal Government is currently unable to
balance its budget in either good times or bad. The balanced budget
constitutional amendment is designed to change that.
No specific cuts are dictated by the amendment, and it will still be
possible to run deficits in a recession if that is what the President
and Congress think makes sense. Rather, the most fundamental thing the
amendment does is to change the political calculus required in making
Federal fiscal policy decisions. It builds in greater political
accountability. The President and Congress will have to explain to the
American public why a deficit is needed in a particular year. The
current situation, where everyone involved, including past Presidents
and the Congress, acts as if the Federal budget is uncontrollable and
takes no responsibility for deficits, is what will be ended.
Making the President and Congress more accountable for deficits is
perhaps the most important reason the balanced budget amendment is
needed. To see why, all anyone has to do is look at Government from the
viewpoint of ordinary Americans. Congress is held in the lowest public
esteem at any time in my lifetime. Federal deficits are headed down,
but the public does not even believe the numbers. Past failures and
past short-term budget trickery have created a kind of public cynicism
that actually undermines the ability of the Government to work--and
which actually prevents the Federal Government from helping people.
This cynicism is corrosive. The benefits of ending the corrosion are
incalculable. With public support, there is a lot we can do to make the
future brighter and to open up opportunities for every American. The
cost of not acting, however, is equally incalculable. Continued
pervasive cynicism and distrust of Government jeopardizes the ability
of Government to act in the public interest, and indeed, undermines the
very foundation of our political system.
Mr. President, we must act; we cannot afford not to act. I decided to
run for the Senate when my 15-year-old son said: ``Mom, your generation
has left this world worse off than you found it.'' I am determined to
prove him wrong. Unless we act, ours will be the first generation of
Americans to bequeath a lower standard of living to our heirs and
successors. Unless we act, our political legacy to the generations that
will follow is will be one of distrust and cynicism. They, and we,
deserve better.
WHAT A BALANCED BUDGET AMENDMENT WOULD MEAN TO AMERICA'S VETERANS
Mr. ROCKEFELLER. Mr. President, I want to take a few moments to talk
about the uniquely negative impact a balanced budget amendment to the
Constitution would have upon the brave men and women who have defended
this country. Veterans of the U.S. Armed Forces make up a select group
within American society, and our Nation could never have enjoyed the
strength and security it is blessed with today without the tremendous
contributions they have made. As chairman of the Committee on Veterans'
Affairs, I cannot ask America's veterans to forsake the benefits and
services they earned through military service because of the Federal
deficit.
Mr. President, I support the idea that each American must do his or
her part to help solve our economic problems. Everyone's belt must be
tightened. This year's budget submitted by the President does just
that. We have an obligation, however, to ensure that veterans of this
country don't bear an undue burden from our effort to get the
Government's fiscal house in order. Many of America's veterans depend
on VA's programs and services, much like America once depended on them.
To reward the loyalty and service veterans have given with a hollow
promise is unacceptable.
What would this balanced budget amendment to the Constitution mean
for the men and women who have given so much of themselves to their
country already? It would mean, Mr. President, that they would be
forced to give of themselves again.
It is impossible to predict with complete accuracy how this
amendment, if adopted, would impact America's veterans. However,
Secretary of Veterans Affairs Jesse Brown has estimated in recent
testimony that this amendment would result in an 11.4-percent cut in
veterans' services, totaling $4.3 billion--$2.3 billion in entitlements
and $2 billion in discretionary programs. These figures assume that
Federal revenues would not increase through taxation, and that cuts
resulting from this amendment would be spread equally across the board,
Governmentwide. While some supporters of the amendment claim that they
do not intend to make further cuts in veterans' services, the fact is
that there is nothing in the amendment before the Senate that would
shield veterans' programs from the indiscriminate budget policy
inherent in this amendment. If defense spending or Social Security
benefits were exempted, as has been proposed, the impact to veterans
would increase substantially above these 11.4-percent figures.
Mr. President, $4.3 billion is a lot of money, and I want to explain,
in real terms, how cuts of this magnitude would affect veterans
everywhere. The proposed amendment would take effect in fiscal year
1999, but for purposes of illustration, I will use fiscal year 1995
figures since they will undoubtedly be more accurate. There is no way
to be sure how much higher these figures would be in fiscal year 1999.
This amendment would cripple the VA health care system, and could
result in the closure of approximately 20 VA medical centers. This
would lead to denying nearly 325,000 of America's veterans VA health
care, and employment at VA medical centers would be reduced by 24,500
full-time employees. Additionally, VA would be forced to eliminate over
3 million outpatient visits and over 142,000 inpatient stays annually.
The activation of newly constructed medical facilities would be
eliminated or postponed, and VA's ability to compete under health care
reform would be close to impossible. And all this at a time when the VA
health system is only serving about 10 percent of our veterans.
Mr. President, the average annual compensation paid to the 2.2
million veterans with service-connected disabilities would be reduced
by $634, from the current amount of $5,602 to $4,968. In the case of a
totally disabled veteran requiring aid and attendance in order to avoid
admission to a hospital or nursing home, the veteran's annual
compensation would decline by $2,495, from the current amount of
$24,444 to $21,949.
Veterans with service-connected disabilities who seek vocational
rehabilitation would have to wait 4 to 5 months for an initial
interview, and no followup on the veteran's progress would ever ensue;
surviving spouses of veterans would be forced to wait 6 months for the
proceeds from their spouse's insurance policies--long after funeral
homes would begin demanding payment for services; and VA home loan
foreclosures would increase substantially due to the forced
discontinuance of loan processing within VA.
For the 342,000 veterans receiving educational assistance under the
GI bill, the average benefit would be cut by $287, from the current
amount of $2,427 to $2,140. These benefits were earned through a
combination of dedicated service and a $1,200 payroll deduction from
each veteran's pocket. Such a reduction would prove detrimental to many
veterans' prospects for a higher education, particularly in an era when
tuition costs continue to rise.
Mr. President, it is even more symbolic that the cuts resulting from
a balanced budget amendment would deny VA burial to more than 12,000
veterans annually. Cemeteries would have to be closed--35 of VA's 58
cemeteries which still offer full services to first interments would be
closed to meet the required reductions in full-time employees. This
amendment would also reduce VA's ability to mark the graves of our
Nation's veterans by 35,000 headstones.
Mr. President, this amendment would impose cuts upon many more
programs and services for veterans than I can mention here today, and I
stress to my colleagues that the other cuts would be equally unjust and
harmful. It might seem tempting to think that we can control the
Federal deficit by using a simple formula written into the
Constitution, but we cannot. It requires skilled leadership and the use
of tools already available to the Federal Government. With this year's
budget legislation, the President and Congress have begun to exercise
that leadership. This is no time to pretend there is some easier way.
Mr. President, certain benefits and services were promised to the men
and women who helped to defend our country. By passing this amendment,
we are not only sending all Americans a message that we are unable to
exercise leadership, but also that Government is unwilling to honor its
obligations to those individuals who have brought honor to their
Nation.
Mr. DOLE. Mr. President, poll after poll has shown that the majority
of Americans support a balanced budget amendment to the Constitution.
That makes the Senators who want to vote for more spending and against
the balanced budget amendment nervous. So instead of resolving to make
the tough choices, they have put forward a balanced-budget-lite-
amendment to give themselves political cover.
Two weeks ago, one budget expert predicted and I quote--``There are
going to be some Members who are going to have to have an alternative
proposal that they can vote for in order to give them cover to come out
against the Simon proposal.'' He added, ``If you just allow people to
say `are you for or against a balanced budget,' you'll lose it.''
That's not Bob Dole talking--That's President Clinton's Budget Director
Leon Panetta.
Let's face it, this amendment is political fig leaf, and a pretty
skimpy one, at that. Let no one be fooled into believing that this so-
called balanced budget amendment will come anywhere close to balancing
the budget. For starters, this amendment only requires that the
operating budget be balanced. That means all spending for Federal
Investments would be outside the reach of this constitutional
amendment.
Now what exactly would be counted as an off-budget Federal
investment? Scientific research and development? The construction of
Government office buildings? The purchase of military hardware? Human
capital investments, such as job training and education? Or even social
investments in national health care and drug abuse treatment?
If the big spenders have their way, the definition of Federal
investment could be as broad enough to include almost everything the
Federal Government does. That won't leave much Federal spending subject
to the discipline of a balanced budget amendment.
Another big loophole in the Reid alternative is the recession waiver.
This provision would suspend the balanced budget requirement if the
Director of the Congressional Budget Office declares a recession.
How long do you think it would take for the big spenders in Congress
to pressure CBO to predict convenient annual recessions? That is an
additional burden the Congressional Budget Office does not need or
want. If Congress decides the economic situation warrants deficit
spending, then let us come up with 60 votes to waive the amendment.
That is what the Simon-Craig amendment requires and I don't think it is
unreasonable.
The ultimate failing of the Reid amendment is that it does not
require a supermajority vote to raise the debt limit. Senator Simon
included this requirement as a protection against misestimates. With
the Reid amendment, there is nothing to keep congressional budget
estimators honest. As long as a balanced budget is predicted, no cuts
are required, even if we later learn the predictions were nothing but
smoke and mirrors.
No doubt about it, the Reid balanced budget amendment substitute has
so many loopholes, you could drive a $300 billion deficit through it.
So, if you support real budget discipline, as most Americans do, save
your ``yes'' vote for the only real balanced budget amendment to the
Constitution--the Simon-Craig amendment.
Mr. COATS. Mr. President, I rise today in opposition to the Reid
substitute amendment. The Simon-Hatch-Craig balanced budget amendment
is the product of hundreds of hours of debate; thousands of hours of
testimony; years of consensus building in Congress and in the States.
The Reid constitutional amendment has not had the benefit of any
similar careful review.
Over the last several days, Members have come to the floor and
expressed their grave concerns about amending the Constitution with the
Simon amendment. I admit that amending the Constitution is serious
business--the most serious act of which the Congress is capable. But I
wonder if any of those Senators who have been reluctant to amend the
Constitution will now find it acceptable to vote for the Reid
constitutional amendment.
And, let there be no mistake. A vote for Reid is a vote for the
status quo or worse. The Reid amendment calls for the balancing of the
operating expenses of the Federal Government but exempts so-called
capital investments. By keeping capital investments out of the mix, the
amendment creates a huge loophole that will likely cause deficits to
rise. It would allow the Federal Government to fund programs to its
heart's content by classifying them as capital investments and thus
moving them off-budget.
Moreover, the Reid substitute does not even define capital
investment, and there is no commonly held Federal budget concept of
this term. President Clinton's fiscal year 1995 budget, for example,
contains five broad categories of spending totaling $234 billion that
may or may not be defined as a capital expenditure.
With today's votes, we hold our credibility in our hands. We can
prove our commitment to deficit reduction to a nation that doubts it,
or we can maintain the status quo and continue to mortgage our Nation's
fiscal future.
The Simon amendment is an opportunity--a chance to leave our children
a legacy other than monumental debt. It is also a chance to restore
some needed trust in this institution. The trust of our citizens, just
like their tax dollars, has been spent and wasted as though it would
never end. But that supply, too, has run out.
If Congress kept its commitments, no constitutional amendment would
be required. Yes, it is a shame that an amendment is necessary. But it
is necessary because Congress has lost its shame.
The PRESIDING OFFICER. All time has expired on the amendment.
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