[Congressional Record Volume 140, Number 33 (Tuesday, March 22, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: March 22, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
               CONGRESSIONAL BUDGET CONCURRENT RESOLUTION

  The PRESIDING OFFICER. Under the previous order, the Senate will now 
proceed to the consideration of Senate Concurrent Resolution 63, which 
the clerk will report.
  The legislative clerk read as follows:

       A concurrent resolution (S. Con. Res. 63) setting forth the 
     congressional budget for the United States Government for the 
     fiscal years 1995, 1996, 1997, 1998, and 1999.

  The Senate proceeded to consider the concurrent resolution.
  Mr. SASSER. Mr. President, I have some initial housekeeping 
unanimous-consent requests to take up prior to beginning debate on the 
resolution. Each of these has been cleared, I might say, with the 
Republican manager.
  First, section 305(b)(3) of the Congressional Budget Act provides, 
and I quote:

       Following the presentation of opening statements on the 
     concurrent resolution on the budget for a fiscal year by the 
     chairman and ranking minority member of the Committee on the 
     Budget of the Senate, there shall be a period of up to 4 
     hours for debate on economic goals and policy.


                      Unanimous-Consent Agreement

  Mr. SASSER. Mr. President, I ask unanimous consent that there be 
debate only on Senate Concurrent Resolution 63, the concurrent budget 
resolution, until the Senate resumes consideration of the concurrent 
resolution following disposition of S. 208, the park concessions bill.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.


                         Privilege of the Floor

  Mr. SASSER. Mr. President, I ask unanimous consent that the staff of 
the Committee on the Budget and its members be allowed to remain on the 
floor during consideration of Senate Concurrent Resolution 63. I send 
to the desk a list of the staff.
  The PRESIDING OFFICER. Without objection, it is so ordered.


     Correction in Typographical Errors in Report Accompanying the 
                               Resolution

  Mr. SASSER. Mr. President, there are minor typographical errors in 
the report to accompany the resolution. I send to the desk an errata 
sheet and ask unanimous consent that it be printed in the Record.
  There being no objection, the errata sheet was ordered to be printed 
in the Record, as follows:


                                 errata

       On page 18, under ``Function 550: HEALTH,'' change the last 
     word in the second paragraph from ``unfunded'' to 
     ``underfunded.''
       On page 19, move the fourth full paragraph (regarding Head 
     Start) to page 18, immediately before ``Function 550: 
     HEALTH'' (so that it may properly appear under the preceding 
     function, ``Function 500: EDUCATION, TRAINING, EMPLOYMENT AND 
     SOCIAL SERVICES'').

  Mr. SASSER. Mr. President, for the information of Senators, let me 
just take a moment to review the program for the next few hours under 
the unanimous-consent agreement just reached.
  The ranking Republican member of the Budget Committee and I will give 
our opening statements, to be followed by debate on economic goals and 
policies. The Senate will recess, under the previous order, for the 
party conferences between the hours of 12:30 and 2:30 p.m. At 2:30 
p.m., the Senate will proceed to vote on final passage of S. 208, the 
national park concessions bill. Amendments to the budget resolution 
will be in order after 2:50 p.m. this afternoon.
  Mr. President, when we met last year to consider the budget for the 
1994 fiscal year, the 1994 budget resolution, we faced a very 
formidable task. The deficit was spinning out of control, out of 
control in both the short term and the long term. This was an 
unfortunate legacy of many years of neglect and many years of evasion.
  At that time, deficits were projected to reach historic levels. The 
1995 deficit estimated at $305 billion was estimated to swell to $388 
billion by 1998, and then to nearly double by the year 2003.
  To recapitulate, the 1995 deficit in April 1993 was estimated to be 
$305 billion. And this deficit was to grow in 1995 from $305 billion to 
$388 billion by 1998. And then, shockingly, it was to nearly double by 
the year 2003. That is what we were faced with last year at this time.
  The larger economy was both a culprit in driving up the deficits and 
it was also a victim of the deficits. The Nation was vexed by 
lackluster economic growth and poor job creation. The weak economy was 
fueling larger deficits, and the uncontrolled deficits were undermining 
the confidence of consumers and also the financial markets.
  The President insisted that we break this financial downward spiral. 
And although there was apprehension as to whether we could withstand 
the fiscal contraction needed to reduce the deficit, we took the 
necessary step at the necessary time.
  Now, many of our colleagues, especially those on the minority side, 
did not believe the deficit reduction package would work, period. Not a 
single one of them voted for it. In my judgment, they were clinging to 
the wreckage of a failed economic philosophy. Instead of reduced 
deficits, instead of tax equity, instead of lower interest rates, 
instead of seeing a robust economy resulting from this lowering of the 
deficit, they saw the Four Horsemen of the Apocalypse coming over the 
horizon. The Congressional Record is full of their anxieties and 
prophecies of doom.
  It does no good to repeat the comments that were made at that time. 
The important thing, Mr. President, is that the right step was taken. 
We passed the largest single deficit reduction package in the history 
of the United States of America. The plan reduced the deficit by $500 
billion. It cut spending by $255 billion, allocated every new tax 
dollar to deficit reduction, restrained discretionary spending at a 
hard freeze level, and cut $90 billion out of entitlement spending.
  Now, Mr. President, as I have said earlier, we have not broken the 
back of the deficit problem, but we have certainly administered a very 
sharp crack to its vertebrae. If we do not stray from the path that we 
are on, the 1998 deficit will be $200 billion less than it otherwise 
would have been. And that is just the beginning.
  For the first time since Harry Truman was President of this country, 
we will have 3 years in a row of declining deficits. And bear in mind 
that Harry Truman was presiding over a budget and a country which was 
coming out of World War II. And the deficit as a percentage of gross 
domestic product, or national income, will reach 2.3 percent, the 
lowest level since 1979, before the deficits began to explode during 
the decade of the 1980's.
  Now, in testimony before the Senate Budget Committee on January 27, 
1994, the Congressional Budget Office Director, Dr. Robert Reischauer, 
said:

       The deficit picture is significantly brighter than it 
     appeared 1 year ago when the Congressional Budget Office 
     projected the budget deficit would soar above $350 billion by 
     fiscal year 1998. CBO now predicts that the Federal deficit 
     will fall from $223 billion in the current fiscal year to 
     below $170 billion in fiscal year 1996.

  Continuing, and quoting directly from Dr. Reischauer, he says:

       The dramatic improvement since last January is largely the 
     result in August of a major package of tax increases and 
     spending cuts--the Omnibus Budget Reconciliation Act of 1993.

  Now, Mr. President, some of my colleagues have tried to attribute 
this unparalleled deficit reduction solely to the economy. I would 
submit that is a very distorted picture, indeed. As Dr. Reischauer 
observed, it gives short shrift to the discipline, unified and 
carefully constructed strategy that brought the deficit down. And over 
the next 5 years nearly 75 percent of the total 5-year decline in the 
deficit will result from the deficit reduction plan presented by the 
President and passed by this Senate.
  The simple fact is that the improved deficit and economic picture 
represent a self-reinforcing knot. The improved economy bolsters the 
improved deficits and vice versa. And I think even our friends on the 
other side have to admit that that is infinitely better than a 
condition in which a weak economy drives us deeper into the deficit 
hole and vice versa.
  It was, Mr. President, the credibility of long-term deficit reduction 
to which the financial markets responded so favorably. The Chairman of 
the Council of Economic Advisers, Laura Tyson, told the Senate Budget 
Committee last month, and I quote Dr. Tyson:

       The decline in long-term interest rates since January of 
     1993 has tracked very closely the fortunes of the 
     administration's economic plan.

  The Congressional Budget Office Director, Dr. Reischauer, further 
underscored the relationship between interest rates tumbling, coming to 
their lowest levels in over 20 years, and the largest multiyear deficit 
reduction package in history.
  In testimony earlier this year before the Budget Committee, Dr. 
Reischauer said:

       I think certainly part of the reduction in interest rates 
     that we have experienced relates to this successful deficit 
     reduction effort.

  Now, since we took the steps to bring down deficits, the drop in 
interest rates caused sectors of the economy that rely on long-term 
financing to expand very rapidly. Let us just talk about a few things 
that the drop in interest rates brought about.
  First, housing starts, housing permits, housing sales all soared in 
the fourth quarter of 1993 at a more than 50-percent annual rate. In 
December, all three housing indicators stood at their best levels in 
the last 4\1/2\ years, and they are expected to rebound smartly after 
the return of normal weather in March.
  Sales of domestically produced cars and light trucks--that is, cars 
and light trucks produced in the United States--jumped at a more than 
50-percent annual rate over the last 5 months. They stood in February 
at their best level since 1986.
  Current domestic production plans indicate that first quarter 
assembly of cars and light trucks will be close to the record levels of 
the 1970's. Mr. President, that is real economic progress creating tens 
of thousands of jobs for auto workers, for those who supply the auto 
industry, for those who service the auto industry.
  What about other sectors of this economy? Real business investment 
spending advanced at a 22-percent rate in the fourth quarter of 1993 
and today stands at an all-time high. New orders for business equipment 
which always precede future production of investment goods shot up at a 
51-percent annual rate over the last 6 months. And each of these very 
pronounced improvements at the end of last year stands in marked 
contrast to the very modest gains that these interest sensitive sectors 
had shown over the past 4 years.
  Their strengthening propelled the real gross domestic product of this 
Nation to grow in the fourth quarter of 1993 at a 7.3-percent annual 
rate, well ahead of the pace that came earlier in the recovery. As a 
consequence of strong growth toward the end of last year, economic 
performance during the first year of the Clinton administration 
surpassed by a wide margin that seen in the 4 preceding years.
  Real gross domestic product--that is the gross domestic product 
corrected for inflation--grew more than 3 times as fast in the first 
year of the Clinton Presidency than it did during the preceding 4 
years. A total of almost 2 million private sector jobs, 1.901 million, 
to be exact, have been created since President Clinton was inaugurated. 
That is far more than the 1 million jobs that were added during the 
previous 4 years. In other words, during the first year of the Clinton 
administration, we created almost twice as many private sector jobs as 
had been created in the previous 4 years. If they continue at that 
rate, President Clinton will have created almost eight times more jobs 
in his 4-year term than were created in the preceding 4-year term of 
his predecessor.
  What is most heartening is living standards rose during the first 
year of the Clinton administration more than during the preceding 4 
years. Living standards are measured by per capita income, real growth 
in per capita income, and real growth in per capita income in 1993 grew 
more than in the preceding 4 years put together.
  Recent data indicate that this acceleration in economic growth will 
continue into 1994. The index of leading indicators rose for the sixth 
consecutive month in December, up at a 5.4-percent annual rate.
  This is the best 6-month performance of this economic growth index in 
over a decade. In fact, the Office of Management and Budget, the 
Congressional Budget Office, and the Blue-Chip Economic Consensus 
forecast all predict that real GDP for 1994, as a whole, will increase 
at its best rate in 6 years. Let me repeat that. The consensus of 
private blue chip economists, the Congressional Budget Office, and the 
Office of Management and Budget all predict that the gross domestic 
product of the United States will increase in 1994 at its best rate in 
over 6 years.
  Welcome as this pickup in current economic activity may be, the 
beneficial effect of last year's budget agreement on long-term economic 
performance is even more important. There is now a developing consensus 
that the economy's underlying rate of growth has accelerated.
  In his testimony before the Joint Economic Committee on January 31 of 
this year, the Federal Reserve Board Chairman, Dr. Alan Greenspan, a 
conservative economist appointed during the Reagan administration, 
said, and I quote him directly:

       I don't recall as good an underlying base in the long-term 
     economic outlook any time in the last two or three decades.

  Dr. Greenspan is saying that he does not remember, or he has not 
seen, the economic outlook look as good on a long-term basis, based 
only the fundamentals of this economy, anytime in the last 20 or 30 
years. Did you know that most economists share the optimistic outlook 
of the Chairman of the Federal Reserve Board?
  The projections of the administration, the Congressional Budget 
Office, and the 50 private forecasters surveyed by blue-chip indicators 
are all very similar. They foresee solid real GDP growth of about 3 
percent per year with hardly any rise in inflation.
  So, Mr. President, the verdict is in. The deficit reduction package 
that we passed in 1993 despite the dire predictions that it would cause 
the economy to drop, that it was nothing but a tax bill, that it was 
going to cause widespread unemployment, that it was going to accelerate 
us into a recession--the verdict is in, and the verdict is that we have 
dramatically changed the economic direction of the United States of 
America for the better. This economy is on the path to renewal with 
rising output, increased employment, and falling deficits.
  We might ask ourselves, and the question before the Senate now is, 
What action do we take at the present time? Mr. President, I would 
advise my colleagues that we simply stay the course that brought us to 
this point. It has served us well, and there is no reason to warrant a 
departure.
  We are in an economy with deficits coming down, with economic growth 
continuing in a sustained noninflationary manner. Those who argue for 
deeper cuts in both discretionary spending and entitlements that we see 
in the present budget, I say to them, let us stay this course for 1 
year, or perhaps 2. Let this deficit reduction package that we passed 
last year work its way through the full economy, and then come back and 
take another look to see if we should take further steps to reduce 
deficits. But unfortunately, the critics are once again not giving us 
credit for our cuts in spending and for our entitlement savings.
  Discretionary spending next year will fall below last year's level. 
That has not happened since Neil Armstrong was setting foot on the Moon 
in 1969. And coincidentally, Mr. President, the last time this Nation 
had a balanced budget was in 1969 as President Lyndon Johnson was 
exiting the Presidency.
  The President's budget called for the complete elimination of 115 
programs, cutting below last year's nominal level in more than 300 
programs. And discretionary spending, as a share of the economy, is 
lower than at any time since 1940. Let me repeat that. Discretionary 
spending, as a share of the overall economy, is lower than at any time 
since 1940 in this budget before us.
  I think we have made some truly remarkable achievements. If someone 
had come to me in January or February 1993 and asked if we could have 
achieved the deficit reduction that we have achieved, with the 
corresponding economic growth that is accompanying it, I would have 
said: I do not think we can do it.
  But we have done it, and it is a remarkable achievement indeed. But I 
expect we are going to hear a lot about the spending problem not having 
been solved. And we are going to hear a lot about deficits that will 
shoot upward again beginning in 1999 because of the alleged 
``uncontrolled growth in the entitlements.'' It is always amusing to me 
to see how our colleagues are so concerned about what is going to 
happen 4, 5, 6, or 7 years down the road. Somehow they cannot bring 
themselves to deal with problems that we have to deal with today and 
tomorrow.
  Parenthetically, I observe that the people who are making the most 
noise about unrestrained deficits in the outyears, almost without 
exception voted against a deficit reduction package that cut the 
projected deficit in the year 2003 from $655 to $343 billion.
  There is no denying that entitlements are a thorny issue. But I want 
to take just a moment to give credit where credit is due. I want to 
give credit to the distinguished ranking member of the Budget 
Committee, Senator Domenici, for his leadership some years ago in 
bringing about a budget process change, especially in the entitlement 
area. The paygo system he helped institute is working to control new 
entitlement growth, and I think it is a tribute to my good friend from 
New Mexico. In fact, we have legislated very little new entitlement 
growth since the paygo system was put in place. We certainly have not 
ignored entitlement programs when it comes to spending reductions--
especially in health care.
  In the old days when the cowboys would come into the saloon, many 
times they were required to check their guns at the door. Well, let us 
just check our rhetoric at the door as we look at this budget and see 
what has occurred to entitlement programs. In 10 of the last 13 years, 
we have passed bills reducing Medicare outlays. The aggregate since 
1980 comes to a 20-percent cut. Just by looking at Congressional Budget 
Office scoring of each of these bills, we can see that we have cut $165 
billion from Medicare since the paring back began in 1981.
  Last year's reconciliation bill made substantial entitlement cuts--a 
net reduction of $88 billion over 5 years--and total entitlement 
program reductions were $102 billion.
  Some of these savings were used to pay for an increase in the earned 
income tax credit. That is an effort, using the Tax Code, to try to 
encourage people to move from welfare to the work force. That is an 
effort to try to give all people who work for a living at least a 
modicum of a decent standard of living. The total of reductions were 
$13 billion more than had been achieved in the budget summit 3 years 
earlier and $26 billion more than had been proposed in the President's 
budget last year.
  Last year's bill, which cut Medicare by $56 billion, also achieved 
major reforms in other entitlement programs and with major savings. 
Here are some of the top savers in the entitlement area: Medicaid was 
reduced by $7 billion; civil service and military retirement was 
reduced by $10.7 billion; the student loan program was reduced by $4.2 
billion; the administration of Federal welfare programs cut by almost 
$4 billion; agricultural entitlement programs cut by $3.2 billion; 
veterans programs cut by $2.6 billion; and banking and housing program 
mandatory spending cut by $3.1 billion. Those are cuts in entitlement 
programs.
  I am not trying to argue that we have done all that needs to be done. 
I am simply reminding my colleagues that it is inaccurate to contend 
that we never touched the entitlement programs. We have been going at 
them for a decade, going at them very frequently, in a bipartisan way.
  The only accounts in this Federal budget that are growing faster than 
the gross domestic product of this country are in the area of health 
care. We have before us major reform proposals for both health care and 
welfare. As we stand on the cusp of major reforms in health care, I 
think it makes no sense to keep picking at the edges of Medicare and 
Medicaid. We already know that the past 13 years of tinkering with 
Medicare has helped contribute to the health insurance problems that we 
are now hoping to reform. And merely sprucing up health care, with a 
nip at Medicare here, and a tuck at Medicaid there, is no longer an 
option. We need a complete overhaul that will take into account the 
fundamental problems of coverage and cost containment in the overall 
system.
  Some contend that reform of the health care system will end up 
costing more money. I am not so cynical about our prospects about 
coming up with a meaningful health reform bill. The distinguished 
majority leader, put it best the other day when he said: ``No plan is 
perfect, but we cannot let the perfect be the enemy of the good.''
  So we will be working together to come up with the best approach to 
these reforms. I am confident that our tried and true paygo system, 
which has already undergone some real tests and has prevailed, will 
continue to serve us well.
  I want to sketch out the committee's budget resolution as reported. 
With one major exception, it tracks very closely the President's fiscal 
year 1995 budget. This budget resolution is necessary to sustain the 
historic deficit reduction that we passed last year. Over the next 5 
years, there will be in excess of $600 billion in reduced deficits, 
rather than the $500 billion for which we aimed. I want to repeat that 
so all of our colleagues will absorb this and understand it. We are now 
reducing the deficit, over the next 5 years, by $600 billion, rather 
than the $500 billion we anticipated last year.
  This same path of deficit reduction will sustain a robust and surging 
economy that continues to perform beyond our expectations.
  The 1995 budget resolution contains the following key components:
  The baseline we worked from for 1995 accepts all of the President's 
program cuts and all of the President's program terminations. This 
translates to some 300 programs which are either cut or terminated.
  (Mrs. MURRAY assumed the chair.)
  Mr. SASSER. The resolution also closes a $3.1 billion gap that opened 
up on the discretionary side of the budget for fiscal year 1995 because 
of differences between OMB and CBO scoring. That required the committee 
to cut $3 billion more from the President's budget.
  I would note that in the past we have not necessarily accepted the 
more conservative Congressional Budget Office scoring. I am reminded 
specifically of the budgets that were submitted by President Bush in 
fiscal year 1992 and fiscal year 1993 which used OMB's numbers for 
appropriations rather than CBO's numbers. But this year we will be 
totally scrupulous and we have filled the supposed gap to hit CBO's 
account targets.
  In addition to the reductions contained in the chairman's mark, the 
committee adopted an amendment making further cuts in 602(a) 
allocations reported to the Senate Appropriations Committee.
  For fiscal year 1995 budget authority would be reduced by $5.3 
billion and outlays would be reduced by $1.6 billion. Over the next 5 
years, budget authority for all discretionary spending, including 
defense, would be cut by $43.2 billion in budget authority and outlays 
of $26.1 billion. All savings would go to deficit reduction.
  The 1995 budget resolution falls below the caps by $1.6 billion in 
1995 and by more than $5 billion in each of the next 4 years. Over 5 
years, the budget resolution is below the legal spending limits by $26 
billion.
  Madam President, I want to stress that while I support the budget 
resolution, I do not think that this amendment we passed in the 
committee is particularly well advised.
  First, I think we already have exercised considerable fiscal 
restraint. But more important, we have administered the correct formula 
of fiscal contraction. The economy has been able to absorb the medicine 
and still grow at a very productive rate. There is a very delicate 
balance here and I do not want to upset it at this time.
  I am not saying we solved the deficit problem. I know we have not. 
The deficit is still a very real and profound problem. All of us know 
that there will be another round of deficit reduction, and I hope when 
it comes in 1 year or 2 that it will be a bipartisan round of deficit 
reductions this time.
  But I believe we need this interval to give the economy time to 
thoroughly digest last year's deficit reduction program before we 
embark on another course of cuts.
  This is not a time to be headstrong. This is a time, I think, to be 
prudent, a time to be cautious, a time to continue down the deficit 
reduction path, a time to flourish and nurture this economic growth 
that we are presently experiencing.
  We need to keep our priorities straight. We should cut those programs 
that do not produce and invest in those programs that perform well. I 
believe we can find bipartisan support to do exactly that. But that 
does not mean that we have to start hacking away at the good and the 
bad. It does not mean that we should squeeze additional deficit 
reduction from accounts that are already frozen.
  This amendment brings back into focus a nagging problem that plagues 
this body's efforts to engage in serious and credible deficit 
reduction. The amendment that was passed in the Budget Committee calls 
for making cuts in nonspecific areas.
  Interestingly enough during consideration of the budget resolution, 
the Budget Committee rejected 10 amendments, 10 amendments that made 
specific spending cuts. But when the vote came on this amendment that 
deals only in general amounts, a majority of the Budget Committee voted 
for it and what happens? We passed the buck on to the Appropriations 
Committee. And those who voted for it on the Budget Committee will say 
when the appropriators have to make these cuts, ``Well, I did not vote 
for cuts; I did not want those cuts to be made. It is the appropriators 
that made those cuts. I was not for them. I was for something else 
being cut.''
  That is what you get into with these nonspecific reductions. We are 
just going to cut $1.6 billion in outlays next year. We do not say 
where they are going to come from. We just say we are going to cut it. 
That is not serious budgeting. That is budgeting by headline.
  The action of many of my colleagues sustained something that the 
distinguished majority leader has long warned about. Senators are very 
fond of making cuts in general. They can go back home and tell the 
Rotary Club, and their constituents: ``Oh, I voted for cuts. I voted 
for cuts and the reduced spending in general in the abstract.'' But 
they are very reluctant to vote for specific spending cuts.
  The great writer Robert Louis Stevenson once said:

       Everybody, sooner or later sits down to a banquet of 
     consequences.

  And those who supported this amendment are going to sit down to a 
banquet table of their consequences if it is sustained, and they will 
be eating bitter fruit indeed.
  Well, no matter what clever complex, and arcane machinery the mind of 
human kind can come up with--and I think we have seen about all of them 
by now here--dealing with the budgeting process, the process of 
reducing spending, and bringing down the deficit comes down to one 
thing, and one thing only: You must have the courage to vote for 
specific spending cuts. And we very rarely see that.
  Last summer I was on the floor of this body trying to reduce 
spending, trying to phase out the space station. We failed. We tried to 
cut the superconducting super collider. Eureka, we succeeded in that, 
but not because we did it in this body, but because our colleagues in 
the House said we are just not going to spend any more money on it. And 
we fought desperately last year just to make a few cuts in the very 
expensive Star Wars Program.
  Mark my word, I am going to be back when the appropriations bills lit 
the floor this year, and I am going to add Milstar to my list of 
proposed cuts. I hope that many of those same Senators who supported 
reducing the 602(a) allocation in this committee will join with me in 
voting to cut some of these specific wasteful programs.
  I think one of the things that is going to be thrown overboard, 
whether we like it or not, if this amendment stands is the new nuclear 
aircraft carrier. It simply cannot be financed out the 602 allocation 
that is going to go to the Armed Services Committee.
  Returning now to the overall content of this resolution, we deal with 
the whole question of mandatory programs such as health care, welfare 
reform, GATT, and nutrition.
  The budget resolution is completely agnostic when it comes to which 
health care plan or combination of plans will be ultimately passed.
  The reserve clauses in this resolution are strictly enabling 
legislation and nothing more, which allows deficit neutral legislation 
to be considered on the floor.
  We have added back to the President's budget in a few areas which 
merit an additional note.
  The committee's resolution restores roughly 70 percent of the 
President's reduction in the Low Income Heating Assistance Program, so-
called LIHEAP.
  We also restored the administration's $202 million in cuts in mass 
transit operating grants.
  The committee resolution as reported rejects the proposed $63 million 
reduction in various Rural Electrification Administration loan and loan 
guarantee programs.
  And for Ryan White, we have added $182 million over last year's 
funding level.
  We have offset those adds and filled the $3.1 billion gap with a 
group of adjustments to the President's discretionary totals. The 
committee's resolution, as reported, assumes the ceiling contained in 
the Federal Work Force Restructuring Act, which recently passed both 
Houses.
  The resolution also assumes that requested funding for the 
acquisition of Federal buildings is reduced by $300 million. Budget 
authority still exceeds the 1994 funding level and the current services 
baseline.
  In addition, the resolution, as reported, assumes roughly a 3-percent 
across-the-board cut in agency overhead expenses. The cut does not 
apply to the Department of Defense or the Social Security 
Administration and excludes obligations for R&D and GSA rent and 
minimizes the application to program-related obligations.
  The cuts in overhead specifically affect purchases of land and 
equipment, supplies, transportation, consulting, and printing, and 
contracting-out services.
  There will be no reconciliation instruction because there are no tax 
increases in this bill or reductions proposed in the budget.
  On the mandatory side, the committee does not recommend any 
reductions for the simple reason that the major programs are all being 
scrutinized by the relevant committees, and major reforms are 
forthcoming.
  Well, Madam President, in conclusion, I believe we have made 
remarkable progress in the past year. The measure of our journey is not 
in time, nor difficulty, but in what we have achieved. We have achieved 
falling deficits. We have achieved an expanding economy. We have 
achieved a higher standard of living for working men and working women. 
The challenge we face today is whether we have the courage to stay the 
course.
  Madam President, I have here some graphic evidence of the progress 
which we have made during the past year.
  In April 1993, the Office of Management and Budget was predicting a 
budget deficit for fiscal year 1994 of $305 billion. The current OMB 
estimate, after the passage of the Deficit Reduction Act, is $236 
billion, and the current Congressional Budget Office estimate is $228 
billion.
  So, as a result of the Deficit Reduction Act we passed, and as a 
result of economic expansion, we now have seen the deficit reduced from 
$305 billion for 1994 to $228 billion.
  In April 1993, we were predicting for fiscal year 1995 a deficit of 
$302 billion. We are now anticipating, because of the Deficit Reduction 
Act that we passed, a deficit of $177 billion by OMB estimates and $179 
billion by CBO estimates, a very dramatic reduction.
  In April 1993, we were predicting for 1996 a deficit of $298 billion. 
Because of the Deficit Reduction Act we passed and the expanding 
economy, that is now predicted to be between $178 billion and $180 
billion, well over a $100-billion reduction; well over a one-third 
reduction in the so-called deficit. The same is true for 1997 and for 
1998.
  Look at 1998, Madam President. In April 1993, the Office of 
Management and Budget was predicting a deficit of $388 billion. The 
prediction now of both CBO and OMB for 1998 is a deficit of $187 
billion. By our action on this Deficit Reduction Act that we passed 
last year, we will reduce the deficit in 1998 alone by over $200 
billion.
  And look what is happening in the economy. This is real business 
investment in billions of 1987 dollars. Look at that line, going almost 
straight up, as this economy recovers. This real business investment is 
the best evidence we have that we have a robust economy on our hands 
for the coming year and for the outyears.
  Look too, at this index of leading economic indicators. These are 
what the economists rely on to predict economic growth in the years 
ahead and to predict whether we are going to be in a recession, have 
moderate growth, or substantial growth.
  Look at these leading economic indicators. Beginning in the fall of 
1993, that line is going almost straight up. That is an indication of 
robust economic growth to come.
  Well, what has happened to the deficit over the same period of time? 
These were the deficit projections in April of 1993. The deficit was 
predicted to be $310 billion in 1993, to stabilize; and then, in 1997, 
start going through the roof by the year 2003.
  What this line indicated was the bankruptcy of the Government of the 
people of the United States. Look at what has happened since we passed 
the Deficit Reduction Act. Instead of $310 billion for fiscal year 
1993, it is now $255 billion; coming down in 1995 to about $170 billion 
and staying flat until the outyears; and, of course, going up somewhat 
if nothing is done about health care costs.
  The blue line represents discretionary spending from 1995 to 1999 
with no cap on it. That is if we just let discretionary spending grow 
with inflation; in other words, no real increase in discretionary 
spending, but just let it go up with inflation so that you have the 
same purchasing power.
  You see that it grows from something akin to $550 billion to up to 
about $610 billion. Well, we placed caps on discretionary spending in 
our 1993 economic package that we passed, our deficit reduction 
package. And, rather than discretionary spending going straight up 
during this 4-year period, we see it remaining relatively flat for the 
whole 4-year period. That is somewhere in the neighborhood of $540 
billion to $550 billion.
  The red mark represents the amendment that was passed in the Senate 
Budget Committee. This amendment, as I said, reduces, over that period, 
budget authority by $65 billion and outlays by $26 billion. In 1995, 
the amendment passed by the Senate Budget Committee will reduce budget 
authority by $12 billion and outlays by $1.6 billion relative to the 
caps over the next 5 years.
  And you can see this is the red line which puts the domestic cap 
below the Budget Enforcement Act that we passed last year.
  The distinguished ranking member has been waiting patiently for his 
turn to speak and make his opening statement this morning. I want to 
defer now to Senator Domenici for his comments.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. DOMENICI. Madam President, I hope I did not cause my colleague to 
stop before he was ready?
  Mr. SASSER. No.
  Mr. DOMENICI. Madam President, the lack of interest in a budget 
resolution this year, it is fair to say, indicates that not very much 
is happening. I can assure my colleagues, the media was not very 
interested in the markup during the 2 days we were in session. Also, 
there is not a great deal of interest on the part of our fellow 
Senators because essentially the budget does nothing this year. In 
fact, it does precisely what we said it would do last year. I assume 
that, if this mode is continued, next year it will do exactly what it 
was told to do in the Budget Enforcement Act, passed in August of last 
year.
  I would like to take a few minutes today and discuss why that is not 
good enough. In the meantime, in my own way, let me describe some of 
the very, very difficult situations we face in terms of the people 
understanding what we are doing. Rather than proceed to talk about why 
we are doing nothing and why doing nothing is very, very frightening to 
this Senator in terms of our children and the legacy of debt we are 
going to leave them, let me talk a minute about the idea of who is 
fiscally responsible and who is not, who is willing to vote for hard 
cuts and who is not.
  My good friend, Chairman Jim Sasser whom I have grown to respect and 
admire--and it is a pleasure working with him. And right up front here 
I want to thank my excellent staff and indicate I observed his 
excellent staff worked very hard on this technical and difficult 
problem. I thank both sides, the Democratic staff and Republican staff.
  But let me just use one of the Senator's examples since a lot of 
Americans wonder who is for cutting and who is not. The Senator said he 
came to the floor and recommended cutting the space station, that we 
should not have that as an American program. And he says to the people 
listening: The people who did not vote for that must be for bigger 
deficits or for not cutting spending.
  Madam President, the truth of the matter is, whether the space 
station was cut or not made zero difference in terms of aggregate 
deficit numbers and how much we will spend each year as a nation. That 
is because we are now operating not on a program-by-program basis but 
by one overall expenditure cap that cannot be violated. I know this 
does not sound quite right to many Americans who do not believe we have 
a way of saying we will not spend any more than a given amount but we 
actually do have a way. This Senator does not think that those budget 
limits are low enough, but we do have a way.
  Since 1990, we finally invented and enforced a way to see to it that 
if we say you are only going to spend $540 billion in the year 1995, 
you cannot spend more than $540 billion. That is written into law. The 
law says if you have appropriated more than $540 billion at the end of 
the year, there is an automatic cut across the board to bring it down 
to $540 billion. That was thought up in the 1990 summit when many of us 
were meeting over at Andrews Air Force Base. Many think we did not come 
up with a very good product. Some think there are some components that 
are very good. This is a component that is very good.
  Consequently, if you cut the space station here on the floor in an 
appropriations bill, the real test of whether you wanted to cut the 
budget or not is not part of that vote. The important vote is the one 
that says, when you cut that money out of the budget, you reduce the 
spending cap by an equal amount. That occurred in the Senate, if I 
recall. Many voted to take the program out but said leave the cap right 
where it is.
  What does that do to spending? It only means you chose the space 
program to cut and you want to spend the money somewhere else. Spending 
gets filled back up to the cap in the ensuing weeks because there is no 
other rule around. You spend the money on other programs that you would 
have spent on the space station.
  So as a Senator who has understood this process since we started this 
budget process of mandatory binding caps that would be followed by an 
across-the-board cut if you exceed them--I do not think people ought to 
too quickly pass judgment on individual appropriation items as being a 
budget cutter unless the cutters are willing to lower the cap for total 
expenditures. Otherwise, the only thing the cut says is ``Spend the 
money someplace else.'' I do not think anybody can deny what I just 
said. Every time we have removed a program, Congress has proceeded to 
spend right back up to the cap, which means we have not saved anything.
  My last point is there are a lot of priorities that the Republican 
side might want and the Democrat side might not want, and vice versa. 
But if you just pick your priorities and vote on them, you are simply 
picking priorities. You are not cutting deficits, if you leave the 
total amount to be spent where it was to begin with. You have not saved 
anything.
  It is also interesting that the budget process has evolved to a point 
where--with regard to the budgeteers and people who are going to come 
to this floor and talk about what they are going to cut--the budget 
resolution does not have any individual programs in it to cut. That 
might surprise some people. It is just a lot of numbers. You see a 
whole bunch of numbers.
  So if somebody comes to the floor and says today I am offering an 
amendment that says I do not want to spend money for this program but I 
would like to spend it for this other program--if they leave the 
numbers in the budget resolution exactly where they were, that vote is 
nothing more than an expression of desire. They are in effect saying, 
``I would like the Congress to not spend money on this, and in turn 
spend it on that.'' When we are all finished with this, what controls 
what is really spent are, the dollar numbers we give to the 
Appropriations Committee. They divide it up, and they spend it and 
bring it to the floor in 13 separate bills.
  So while we will have a lot of rhetoric--some of it will be great, 
some of it will make a very good point in terms of what ought to be and 
what people think they want to do, frankly, to simply move money 
around--unless you change the caps you have not changed the budget one 
bit.
  Let me now refer to a couple of charts for a minute. I know the first 
discussions here are supposed to be about the economy, but I choose to 
weave the economy into the next 30 or 40 minutes and not separate it 
out. I want to make sure everybody who is looking at the American 
fiscal policy understands what we are leaving for our children as the 
legacy of indebtedness. Professor Tribe once expressed it this way: 
America is kind of a revolutionary country where we are opposed to 
taxation without representation. But the deficit and its enormous size 
is taxation of our youth and the next generation and the next 
generation, without any representation, because assuredly they will 
have to pay more taxes to pay it off. So in a very real sense the 
deficit is taxation of generations yet unborn without representation.
  Here is the reality of the ``stay the course,'' ``do nothing in 
addition to what we did last year'' approach to fiscal policy. In 1995, 
the deficit will be $178 billion. That will be the number if we stay 
the course.
  The deficit does not come down anymore. It starts going up and in 
1998--that is not very far from now--the fifth year of this budget, it 
rises further. And if those who look at budgets are right--and I 
believe they are--and if current policy is left unchanged, deficits 
will exceed $350 billion by the year 2004. I do not think anybody 
really thinks this Nation is going to have sustained recovery with this 
reality. And it is a reality, it is just not yet fixed in the minds of 
the American people and policymakers.
  Let us look at where this deficit comes from, and maybe we will all 
understand why it is not enough to stay the course.
  In 1990, the budget of the United States was made up of $184 billion 
in net interest and $185 billion in nondefense discretionary. That 
means what we spend on education, what we spend on housing, what we 
spend on highways and the like. Defense, $319 billion; and entitlements 
and mandatory expenditures, like the health care programs--Medicare, 
Medicaid, Social Security, and a lot of others, hundreds of them--the 
amount was $567 billion.
  We go to 1995--the budget year we are going to vote on--the interest 
is now up to $212 billion; nondefense discretionary has gone up almost 
$70 billion, which many people would be shocked by because we are 
always telling them how much we cut. In fact defense is the only one 
that went down. It went from $319 billion to $291 billion. Next, the 
entitlements and mandatory programs of our land, go from $560 billion 
to $843 billion, almost a $300 billion increase.
  Frankly, it is these entitlements and mandatories that nothing is 
being done about.
  Then let us look at what the projections are for 1999. These are from 
the Congressional Budget Office. Lo and behold, stay the course. Do you 
think that after looking at these spending increases Americans would 
say: ``Well, you told us we are cutting programs and that we are 
spending less at home and less on defense and less on foreign affairs, 
everything is just getting cut all over the place''?
  Let us look at nondefense discretionary from 1995 to 1999. That is 
the one I explained a while ago--education and the like. It does not go 
down. It goes from $249 billion to $283 billion. If my quick arithmetic 
is right, practically a $50 billion increase. Not down, up.
  Defense, again, comes down. It will then go to $280 billion. It was 
once $319 billion. But then consider what happens. Mandatories and 
entitlements, goes up to $1.099 trillion from $843 billion in 1995. 
Some quick arithmetic: $250 billion more in these next 5 years.
  The point of this is very, very simple: When, how and where will we 
finally control this budget? When will we get these upward trends 
turned around?
  Madam President, there are no cuts in this budget--no new cuts, to 
this increase of $250 billion.
  Point No. 1, frankly, I do not believe we can sustain this trend for 
very long. Point No. 2, in my opinion, the best time to make real 
changes in domestic programs, both from the political standpoint and 
from the reality of economics is when the economy is growing. You will 
never change the spending habits of a nation in any permanent and 
significant way when the economy is coming down. It does not work. 
People are frightened. It does not make good sense from the standpoint 
of wanting to do things that are not adverse to economic growth. So, it 
seems to me, that now would be the time to take a serious look at some 
new and different ways to approach the mandatory and entitlement 
programs of this land.
  A great deal has been said about the buoyant state of the American 
economy. Hopefully between now and 12:15 or so, and throughout the next 
15 to 20 hours, we can speak some more about how the economy got to 
where it is. But I think it is important that as part of this debate we 
talk about something that is now getting a little worrisome and yet it 
is being held up as the most single positive phenomenon that should 
cause success to continue and the American economy to grow and prosper; 
and that is lower interest rates.
  In August 1993, the Democrats in the Senate and House, led by 
President Clinton, passed a deficit reduction package. I am sure that 
many Americans will be shocked to learn that that was not the beginning 
of this recovery; that was not the beginning of the interest rate 
declines.
  Before I go on with the rest of my thoughts, let me say the economy 
is doing splendidly, especially when you consider the rest of the 
world. I am very pleased. I am glad it is happening. If I were on the 
other side of the aisle, I would be bragging about it, too. I would be 
trying to say we did it; it is our economic recovery. But I think it is 
our job to be a little realistic and make sure we understand all that 
surrounds those kinds of statements.
  The 10-year T-notes are very, very important for many reasons, partly 
because most of our debt is evidenced by 10-year T-notes. Three-month 
Treasury bills are an indication of how the short-term market on 
interest rates is going. They are very important, too, although not 
terribly relevant to the business community. Nevertheless, they 
indicate downward trends in interest.
  In 1990, these 3-month bills started coming down. By 1992 they were 
below 3 percent. What has happened since then? Instead of coming down 
further, they have gone up. And today, as we speak, without any recent 
change in policy by the Federal Reserve, they are inching up so that 
now they are back to 3.5 percent.
  That means that interest rates have been having a healthy effect on 
this economy for about 2\1/2\, almost 3 years, rates have been coming 
down during that period of time.
  The 10-year notes follow the same pattern. I believe it is not just 
interest rates that are making the economy go but a lot of other things 
that came together midyear of last year and really buoyed the economy, 
which had been growing at a very slow pace.
  The downward spiral in the trend of interest rates started about 3 
months into 1990 and, with ups and downs, continued downward, and, 
believe it or not, during the Clinton administration they came down a 
little bit more. But for everyone it is obvious they are going back up 
again. In fact, they have gone up more than 1 full point, from a low of 
almost 5 to 6.5 percent today, a rather clear upward trend and a clear 
signal.
  Now, that only means to me, if it is interest rates that concern us, 
we better be worried about all the trends coming back together at the 
wrong time moving in the wrong direction. When the markets and everyone 
else find out this deficit is on the way back up and not up just a 
little bit but substantially and significantly, that this deficit is 
moving up and the debt will grow rapidly, it would seem to me we will 
not add to the quality of things going on in the American economy that 
would cause interest rates to come down.
  So I believe the time is now to do some major surgery on mandatory 
and entitlement programs, and later I will present, hopefully in behalf 
of most Republicans, an approach to doing that, to getting that $365 to 
$400 billion deficit down dramatically and reducing the deficit over 
the next 5 years substantially more than is proposed.
  Having said that, let me talk a little bit about the successes we 
have had so far. And again I say to Senator Sasser, who has done a 
marvelous job, sometimes I appreciate very much how difficult it is for 
him to get all of his Democrats together on something and to make it 
move. I had to do that once for 6 years, and it is tough. I believe it 
is not as difficult this year because of what I have already explained. 
We are really just enforcing the caps that were imposed heretofore as 
part of a 5-year program.
  But I think it is worth stating again that, if you look at July 1993 
when the so-called big deficit package was passed, let us analyze two 
things.
  First, I am not trying to deny the President or Democrats the joy of 
claiming great success, but I do think we ought to talk about a little 
realism. When the U.S. Government makes a major policy change which 
will affect the economy, I think it is general consensus among most 
economists, in fact, I would say almost everybody on the joint economic 
advisory group that advises the President would say it takes about 1 to 
1\1/2\ years for the economy to react to major policy changes, be it 
tax cuts or be it investment tax credits of the Kennedy era. It just 
does not happen overnight.
  Well, just think a minute. The largest quarter of GDP growth in the 
last 4\1/2\ to 5 years was the last quarter of 1993 when the GDP, gross 
domestic product, grew at 7.5 percent. That was 1 month after the 
passage of the package that was heralded as the reason for the pickup. 
Now, having said that, CBO reported in their economic and budget 
outlook fiscal years 1994-98, ``Although monetary actions operate 
powerfully on the economy, they do so only indirectly and with an 
uncertain lag, perhaps more than a year.''
  The deficit in the year 1998 is projected still to be $201 billion 
and at the same time the 5-year program in the document before the 
Senate, assumes constant growth of over 2.7 percent, for the next 4 
years, and assumes these interest rates do not go up but actually stay 
level or in some cases decline from current rates.
  After 1998 deficits skyrocket, and I believe the question is: Should 
we do something about that this year or not? I think we should. It is 
not easy. In fact, it is very difficult to do that. But I would submit 
that at least we are going to try. We are going to offer, either today 
or early tomorrow, an alternative. It will get the deficit to $99 
billion by 1998, and we will also be able to turn the tax tables so 
that they favor families with children and homemakers, part of a thrust 
to change the Tax Code to do a better job of recognizing how expensive 
and difficult it is to raise children these days, especially on the 
economic side when the Government has dramatically reduced the 
deduction that you can take for dependent children.
  Madam President, currently our economy is growing, we are creating 
jobs for our people, and our businesses, by and large, are prospering. 
This is good news. The Federal deficit is declining from $255 billion 
last year to an estimated $225 billion this year. With continued growth 
the deficit will decline again in the coming fiscal year to about $180 
billion.
  President Clinton is fortunate to have come into office inheriting an 
economy in the recovery stage of the current business cycle expansion--
the ninth expansion of the post-war era. It is this upswing in the 
business cycle that, more than anything else, has contributed to the 
recent decline in the deficit. However, the work of the Budget 
Committees over the past 4 years has also contributed--through 
establishing caps on discretionary spending first in 1990 and then 
extending them again last year.
  But the job is far from done. And the resolution before us today 
leaves the job undone. Now is not the time for us to be taking a break 
or putting the budget process on automatic pilot.


                              the problem

  First, the low interest rates which began coming down 4 years ago and 
have stoked recent economic growth are creeping back up. Ten-year 
treasury-note interest rates--representative of long-term rates--are 
now at 6.4 percent, down from 8.9 percent in September 1990. This 6.4 
percent is approximately equal to the 6.6-percent level reached last 
January when President Clinton assumed office.
  The administration has been quick to take credit for interest rate 
declines that occurred last year, but rates are not back to about the 
level when President Clinton took office. This increase has, according 
to economists, already had a dampening effect upon consumer activity.
  Simply stated, economic growth is not a certainty. The average peace-
time expansion has lasted but 14 quarters, only 11 if one removes the 
exceptional 1980's expansion, the longest peace-time expansion on 
record. The current expansion is in its 12th quarter. The 
administration and the Congress must now rely on more than just the 
momentum of the business cycle to keep the economy strong and vibrant. 
We must continue to structure policies that increase net national 
savings for investment and growth.
  Second and related to the economics discussed above, is the deficit 
trend after 1996. It is not good. Because, as we all know, after fiscal 
1996 the deficit begins turning upward again and embarks on a 
relentless upward spiral, driving past the $300 billion mark shortly 
after the turn of the century.
  The resolution reported by the committee does not do anything to 
change this long-term trend. Even including the impact of the Exon-
Grassley discretionary cut amendment adopted in committee, the deficit 
will still rise throughout the next 5 years growing back to $200 
billion by 1999. These estimates assume 10 years of uninterrupted 
economic growth averaging over 2.5 percent annual real growth.
  During last year's budget debate, we were repeatedly told by the 
White House and members of this committee that health care reform would 
bring down the deficit in the outyears. But CBO dashed that myth. The 
secret is out--there is no deficit reduction in the Clinton health care 
reform plan.
  More importantly, the Senate-reported resolution at best would only 
reduce spending $36 billion over the next 5 years, $20 billion of that 
$36 billion occurring in 1999--in other words ``back-in loaded''. And 
all of these reductions would come from that area of the budget known 
as discretionary programs, annually appropriated. The real culprit of 
spending growth--mandatory spending is left untouched in this 
resolution.
  What is more interesting, the resolution before us today does not 
accept the President's spending cuts for LIHEAP, mass transit, REA, 
Impact Aid part B, Ryan White grants, and Head Start. While adding back 
real spending for these Presidential cuts, the resolution finds 
questionable real offsets in the form of delaying obligations for the 
Head Start Program, delaying obligations for the National Institutes of 
Health, delaying obligations for Federal Building Programs, assuming 
different outlay rates for housing programs, and cutting agency 
overhead rates by 3 percent.
  I do not think anybody can argue that the resolution before us today, 
including the discretionary savings from the Exon-Grassley amendment, 
does anything to address the real spending problem of this country.


                              the solution

  We cannot fool people anymore. We cannot simply say we did the work 
last year--we're taking this year off. We cannot duck our 
responsibilities simply because it's an election year. It is clear that 
the President's budget and the House-passed budget resolution along 
with the one before us today are really designed to hold the course. 
They are do-nothing budgets.
  But Republicans are not satisfied with the direction this course will 
take in the longer run. We have much more to do if we are to keep our 
economy moving forward.
  Republicans are willing to work to make that happen. Contrary to the 
opinion of some, Republicans want this President to succeed. 
We particularly want this Nation to succeed. We want to bring our 
deficit down--cut it in half by the end of the President's term as he 
promised--to help create jobs, and to provide some security to our 
people. Republicans want to help the President meet his campaign goal 
of providing a middle-income tax cut to hard-working American families 
with children.

  After many weeks of work and development, Republicans offered in 
committee a comprehensive Republican alternative to the Clinton budget 
as embodied in the chairman's mark. It was a principled budget.
  It was a budget designed to provide real security to the American 
people. Moreover, the GOP alternative budget helped President Clinton 
achieve his two campaign promises--to cut the deficit in half and 
provide a middle-class tax cut.
  And the Republican alternative would have provided real security to 
the American people. It would have enhanced their national security, 
their personal security, and their future security.
  Our alternative began by providing for current and future security by 
achieving real deficit reduction. The Republican alternative budget 
would have reduced the deficit $318 billion over the next 5 years. This 
is $322 billion more in deficit reduction than the President proposes 
and $303 billion more in deficit reduction than the House-passed 
resolution contains and $280 billion more than the Senate-reported 
resolution.
  It reduced the deficit to $99 billion in 1999. It cut the deficit in 
half that year compared to the Clinton policies. The $99 billion 
deficit in 1999 would be $106 billion less than the deficit projected 
under the Clinton budget.
  The alternative budget then sought to enhance the personal security 
to middle-class families by providing promised tax relief to American 
families and small business:
  Provided tax relief to middle-class families by providing a $500 tax 
credit for each child in the household. The provision grants needed tax 
relief to the families of 52 million American children. The tax credit 
would have provided a typical family of four $80 every month for family 
expenses and savings.
  Restored deductibility for interest on student loans to assist our 
young people seeking to advance their education.
  Indexed capital gains for inflation and allowed for capital loss on 
principal residence; and
  Created new incentives for family savings and investments through new 
IRA proposals that would have allowed penalty free withdrawals for 
first-time homebuyers, educational and medical expenses. It also would 
have created an IRA for homemakers.
  Furthermore, we sought to help small business and spur job creation 
by extending the R&E tax credit for 1 year, providing for a 1-year 
exclusion of employer-provided educational assistance, and adjusting 
depreciation schedules for inflation.
  The Republican alternative budget sought to ensure the personal 
security of Americans by fully funding the Senate crime bill trust 
fund--providing $22 billion for anticrime measures over the next 5 
years. The Clinton budget does not. The House-passed budget does not.
  Our alternative ensured our national security by increasing funding 
for President Clinton's defense request by the $20-billion shortfall 
acknowledged by the Pentagon. By rejecting the Republican amendment to 
restore the firewall between defense and nondefense spending, the 
committee-reported resolution as modified by the Exon-Grassley 
amendment to cut discretionary spending $43.2 billion in budget 
authority, can only be considered a further risk to national security 
funding in the future.
  The alternative budget addressed the largest and fastest growing 
component of Federal spending--the non-Social Security mandatory 
spending programs. The alternative was willing to reduce the projected 
rate of growth in the Medicare Program from 10.6 percent annually to 
7.8 percent annually over the next 5 years. The alternative was willing 
to reduce the rate of growth in the Medicaid Program from 12 percent 
annually to 8.1 percent annually over the next 5 years.
  While the alternative budget was austere, Federal spending would 
still continue to grow. Total spending would increase from $1.48 
trillion in fiscal year 1995 to more than $1.7 trillion in fiscal year 
1999.
  The GOP alternative budget did not paper over the problems 
confronting us. Rather, it responded to the fears and concerns of the 
American people. It gave workers a break, it gave families a break, 
and, most importantly, it would have given our children a break from 
having to pay our bills.
  Unfortunately the alternative bright-line vision for America's future 
was rejected on a straight party line vote in the committee. I believe 
the full Senate will have an opportunity to vote on the Republican 
alternative before this debate ends.
  The administration projects that the economic expansion currently 
underway will continue in coming years. I do not believe there is a 
person on either side of the aisle that doesn't hope that that's the 
case. In fact the administration's projections of benign deficits ahead 
crucially hinge on this assumption--and of course the assumption of 
significant savings from the administration's healthcare reform. 
Unfortunately this rosy scenario is based on a ``Sun is shining now'' 
attitude about the economy. Yes, we had strong growth in the fourth 
quarter of 1993, but we must put this in economic context.
  President Clinton was fortunate to come into office inheriting an 
economy in the recovery stage of the ninth business cycle of the 
postwar era. Owing to underlying conditions that had been steadily 
improving for a number of years, the economy continued the expansion in 
1993 that had begun a year and a half earlier in the spring of 1991.
  Important components of this expansion include 3 years of improving 
household and business balance sheets, declining interest rates since 
1990 and declining inflation that goes all the way back to the early 
1980's when inflation peaked at 12 percent or so.
  Low inflation and interest rates have set a solid foundation for 
economic growth, reflecting a determined and successful Federal 
Reserve--though I believe they have not been receiving the credit they 
deserve. Here are the facts:
  Following a declining trend that began in 1990, interest rates 
reached their lowest levels since the 1960's. Three-month Treasury bill 
interest rates--representative of short-term rates--declined from 7.8 
percent in April 1990 just before the recession began to 3.0 percent by 
the beginning of 1993. The 3-percent rate was reached before President 
Clinton came to office and short-term rates have done no better since 
then.
  The 10-year Treasury note rates--representative of long-term rates--
are now at 6.4 percent, down from 8.9 percent in September 1990. Almost 
all of that decline occurred before President Clinton took office. 
Rates declined further last year but have now risen nearly back to the 
6.6 percent levels of early 1993.
  Part of the interest rate reductions we have seen reflects 
expectations of lower inflation ahead than previously thought. 
Inflation averaged 12 percent in the late 1970's and in 1980, 4 percent 
during the mideighties, and 3 percent in 1992 and 1993. Inflation 
partly reflects the costs of production and growth in these costs has 
moderated because of large gains in worker productivity in recent 
years. During 1992, nonfarm business productivity, the best measure of 
economywide worker productivity, rose 3.6 percent. That's the biggest 
1-year increase since the early 1960's. productivity growth in 1993 was 
a slower 1.9 percent.
  Following a downward trend that started in 1990, household debt 
burdens have receded to levels last seen in the mid-1980's. Household 
debt service as a percent of disposable income declined from a high of 
19 percent in late 1989 to nearly 16 percent by the end of 1993--about 
equal the level in 1985. Payment delinquencies on consumer loans fell 
sharply in 1992 and the trend continued in 1993. They are now at a 
level not seen in 6 years.
  As a result of improving conditions, real GDP advanced at an average 
rate of 3.2 percent over the four quarters of 1993, higher than the 2.7 
percent pace of the first seven quarters of the expansion and slower 
than the pace in 1992. Over the four quarters of 1992 real GDP rose a 
strong 3.9 percent, the fastest pace since 1987.
  Partly owing to the strong GDP advance in 1992, disposable income per 
capita after adjusting for inflation rose 3.8 percent or an average of 
$527 per person during 1992--the largest 1-year rise since 1984. In 
1993, income per person held to the high level achieved at the end of 
1992.
  While this administration was quick to take credit for interest rate 
declines that occurred during part of last year, rates have now risen 
back up to about the level when President Clinton took office. It 
appears now that they wish to have their economic plan take credit for 
the pickup in real GNP in the fourth quarter. Again, it is important 
that we understand what is going on in terms of the economic cycle and 
the recovery that began in 1991. Alan Binder, a member of President 
Clinton's Council of Economic Advisers has written:

       Rapid economic growth always follows on the heels of a 
     steep recession. I call it the Joe Palooka effect, after 
     those inflatable toys on which young boys worked out their 
     aggressions a generation ago. Because Joe Palooka was 
     weighted at the bottom, he always snapped back after being 
     pummeled to the ground.

  Herbert Stein, Chairman of Richard Nixon's Council of Economic 
Advisers has always said:

       The business cycle was more important than any President's 
     acts.

  Taking credit for the pickup in growth that began in October of last 
year, the administration has pointed to OBRA 1993, the Budget 
Reconciliation Act completed a little more than a month earlier in 
August. But, this is what economists have said about the delay between 
policy and the economy. Nobel Prize winner Lawrence Klein wrote in 1991 
that a fiscal policy GNP ``multiplier reaches a high * * * after four 
or five quarters.'' CBO reported in their ``Economic and Budget 
Outlook: Fiscal Years 1994-1998'':

       Although monetary actions operate powerfully on the 
     economy, they do so only indirectly and with an uncertain 
     lag, perhaps more than a year.

  We should ask, is it likely that the substantial declines in interest 
rates between 1990 and 1992 stimulated real GNP in 1993? In my 
estimation, that lagged effect makes eminent sense. Could the August 
1993 OBRA affect October 1993 growth? That just doesn't fly no matter 
how many times it is asserted.
  Based on such flimsy support, we cannot rely on the speed up of 
growth in the fourth quarter to justify a sanguine view of our future 
economy. In fact, Democrats in Congress have joined the administration 
in carrying the logic of crediting President Clinton's economic plan 
for strengthening the fourth quarter a dangerous, yet erroneous, step 
further. They advocate a stay the course path to sustain healthy 
economic growth. It makes no sense to me. The Shadow Open Market 
Committee, a group of eminent academic and business sector economists 
declared in their most recent public statement:

       Although the administration takes credit for improved 
     economic performance, recent growth mainly reflects past 
     Federal Reserve policy.

  Moreover, even lower interest and inflation rates, and the benefits 
they produce, may now have ended. Declines in interest rates that 
occurred in 1993 have all but disappeared. The economy is approaching 
capacity levels not seen since 1988 and this puts pressure on prices.
  Unfortunately, economic growth during this expansion, or any other, 
is not a certainty--the average peace-time expansion lasts but 14 
quarters, only 11 if you remove the exceptional 1980's expansion, the 
longest peace-time expansion on record. The current expansion is in its 
12th quarter.
  At this point, we must now rely on more than just the momentum of the 
business cycle to keep the economy strong and vibrant--we must rely on 
good policies. Assuming a ``Sunny day'' scenario because the Sun has 
been shining is not enough to bank our future economic growth and 
budget prospects on.
  It is funny that I should say this, but candidate Clinton advocated 
what I thought was ``good policy'' during the campaign. He said he 
would cut the deficit in half in 4 years, and cut taxes for the middle 
class. That sounded like a pretty good goal then, and it is the goal we 
should aim for today.
  Might I ask our chairman, I intend now to suggest to our Republicans, 
Mr. President, that anyone who has amendments at least get me familiar 
with them so we will begin to compare how many amendments we have 
because I gather most Senators would like to see us move expeditiously 
with this resolution, and I for one want to accommodate many who have 
said this on my side and I know the Senator wants to do the same.
  So I am asking Republicans to give us their amendments so we begin to 
make some order on our side. Is that a fair way to proceed?
  Mr. SASSER. I think that is an excellent course to pursue, and I wish 
to join with the distinguished Senator in asking that all Senators from 
the Democratic side who are contemplating offering amendments to bring 
those amendments to us, let us know what they are so that we can make 
arrangements to bring them up in an orderly way.
  As all Senators know, we are operating under, I think, a 30-hour time 
agreement. So, if we are going to entertain amendments of everybody and 
give them adequate time, we need to get the amendments early. If we do 
not and all the amendments come in at the end of the day, then Senators 
ought to understand there will be little or no time for debate and 
there will not be a fair airing of their amendments.
  So I urge all Senators on our side to bring their amendments to me in 
the Chamber or to our very able Budget Committee staff here and let us 
begin the orderly process of trying to align them for taking up.
  I thank the Senator.
  Mr. DOMENICI. Madam President, might I ask, is there anybody on our 
side who wants to speak before we go out for policy luncheons?
  Would the Senator from Iowa like to speak?
  Mr. GRASSLEY. Is it possible to speak for 20 minutes?
  Mr. DOMENICI. I am going to take 5, and then I will yield.
  Does the chairman have other time requirements?
  Mr. SASSER. Yes. The distinguished Senator from Washington wishes to 
speak.
  Mr. DOMENICI. How does the Senator want to do that?
  How much time did the chairman use this morning and how much did I 
use?
  The PRESIDING OFFICER. The Senator from New Mexico has used 28 
minutes; the Senator from Tennessee has used approximately 56 minutes.
  Mr. SASSER. Since we are ahead on time, perhaps we will yield and let 
Senator Grassley go next.
  Mr. DOMENICI. Can I use 5 additional minutes before I do that on my 
time?
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Madam President, I ask unanimous consent to insert in 
the Record a statement that I would entitle ``A Budget Process 
Concern.''
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                        A Budget Process Concern

       The Congressional Budget and Impoundment Act of 1974 
     celebrates its 20th anniversary this July. It is particularly 
     ironic in this anniversary year that critical public policy 
     issues with major fiscal policy consequences now before the 
     Congress are being ignored by the Budget Committees. The most 
     important public policy issue confronting the Congress this 
     year--health care reform--an issue that affects one-seventh 
     of our economy is delegated to a ``reserve fund'' in the 
     committee-reported resolution.
       In addition to health care reform, the reported resolution 
     contains 10 other reserve funds for future legislation 
     ranging from trade-related legislation to the ``nanny'' tax. 
     The expanding use of reserve funds, many of which are for 
     broadly defined purposes, erodes this committee's budgeting 
     role and the importance of a budget resolution for setting 
     fiscal policy.
       The 1974 Budget Act requires Congress to write binding 
     outlay, revenue, and deficit totals in the budget resolution. 
     Section 2(2) of the Budget Act states in part ``that it is 
     essential to provide for the congressional determination each 
     year of the appropriate levels of Federal revenues and 
     expenditures''.
       A reserve fund provides for a procedure to adjust the 
     aggregate spending and revenue levels in the budget 
     resolution. With the eleven reserve funds in the budget 
     resolution, we have no idea what the levels of outlays and 
     revenues will be.
       The first such reserve fund was established in the FY 1984 
     budget resolution. However, this reserve fund was for 
     specific initiatives and was limited to specific amounts. 
     Through FY 1991, reserve funds were used sparingly, usually 
     limited to defined amounts, and specific in purpose. 
     Beginning with the FY 1992 budget resolution, reserve funds 
     have grown in number and have been broadened in scope.

                        Number of reserve funds

Budget resolution:
  Fiscal year:
    1984..............................................................1
    1987..............................................................2
    1988..............................................................4
    1989..............................................................3
    1990..............................................................2
    1991..............................................................1
    1992..............................................................5
    1993..............................................................5
    1994..............................................................7
    1995.............................................................11

       When the Budget Committee simply sets discretionary funding 
     right at the statutory caps and provides open-ended reserve 
     funds to cover every conceivable mandatory spending 
     initiative that the Congress will face over the next year, 
     then this committee has given up its budgeting role to a 
     significant degree. We have become simply a deficit 
     enforcement committee that takes no meaningful actions on 
     fiscal policy.
       One of the chief purposes of the 1974 Budget Act was to 
     bring ``backdoor'' (or mandatory) spending under control. 
     During the debate on the Budget Act, then Senator Bentsen 
     gave an eloquent description of the purposes of the 
     congressional budget process:
       ``Piecemeal reductions in Federal programs, which is more 
     or less what the Congress presently does, fail to provide a 
     permanent solution to the problem of regaining and retaining 
     congressional control over Federal spending. Congress has to 
     have a means for making an independent judgement on the 
     amount of Government money to be spent each year and we need 
     the machinery for insuring coordination among the various 
     committees incurring obligations and making outlays.''
       Reserve funds erode our control of spending and revenue 
     levels and put us back on the path of making piecemeal 
     decisions. It is ironic that 20 years after the Budget Act 
     became law, the budget resolution, which was intended to 
     control mandatory spending, is being used to facilitate open-
     ended expansions of such spending.
       Finally, we gained adoption of an amendment to the health 
     care reserve fund in this resolution to make it applicable to 
     amendments. For the other ten reserve funds, a deficit-
     neutral bill reported by a committee will be exempt from 
     Budget Act points of order pertaining to spending and revenue 
     levels. However, a deficit-neutral amendment that changes the 
     mix of revenues and outlays in the reported bill would be 
     subject to a 60 vote Budget Act point of order.
       If a budget resolution is going to contain this many 
     reserve funds that are so broadly defined, it is unfair to 
     put individual Senators at such a disadvantage relative to 
     the committees in writing legislation.

  Mr. DOMENICI. Madam President, we have 11 reserve funds in this 
budget resolution. I am concerned about the growing number of reserve 
funds, and I have a history of how that evolved from almost none to 11 
in 1984, the first time we ever used a reserve fund, and it was very 
precise and specific.
  I think to say that reserve funds are an adaptation of the pay-as-
you-go, which was kind of invented and thought up in 1990, is probably 
a fair statement. But I do not think it means that everything is going 
to be all right so long as we have pay-go on new programs. So let me 
try to give an example to the Senate of why that concerns me.
  If you look at this major component of the components of the budget, 
the real problem with this budget is that the entitlements and 
mandatory expenditures, which in 1995 would be $1,843.9 billion, and it 
will grow to $1 trillion in 1999 just 4 years later, the real problem 
with the way we are headed is something like this: The biggest 
component of that is Social Security. Let us set that aside for a 
minute. The next biggest component, without any question, is the 
health-care programs of the U.S. Government: big, growing 
precipitously, one might even say somewhat out of control.
  If they are out of control and are growing at 2\1/2\ times inflation, 
then the President of the United States was right in his campaign. I 
was right, the Senator from New Mexico was right 6 or 7 years ago when 
the statement was made that without controlling health care costs you 
will never control the Federal deficit. That is pretty obvious. If you 
let things continue as they are, those two occur.
  Since everybody has been saying you have to control health care to 
get the deficit under control, I am very concerned about starting a 
health care debate with language in a resolution that says it does not 
matter whether there is any reduction in the tremendous surge in costs 
of these programs. What really matters is that when you do the new 
program that you put enough taxes in, cut other programs someplace or 
another, but you do not have to really reduce the costs of the 
spiraling programs.
  Let me put it another way.
  If in fact we were supposed to get the deficit under control by 
getting health care costs down, then we do not get the deficit under 
control by leaving health care costs alone and spending all of the 
money we might save on new health-care programs. It just will not work. 
So we have gone from ``without health care savings we cannot balance 
the budget'' to saying ``it is OK so long as we do not spend any more 
than what health care costs are today'' That will never work.
  The President was mistaken when he sent his package up here. He was 
trying to tell us he would get some deficit reduction along with new 
programs. Then the Congressional Budget Office said, ``Wait a minute. 
That is not true. It may be true in 10 years. But for the time being, 
you are going to spend more, not less.''
  So to merely say about health care so long as it comes out deficit 
neutral it is all OK, it seems to me to acknowledge we are not going to 
reduce the costs and apply any of those savings to the deficit of the 
United States. I will have to conclude you will never get the deficit 
under control because you have given up the ingredients that were there 
to be used.
  Having said that, I would also suggest that I very much would like to 
start the debate on health care with the budget on Medicare and 
Medicaid having assumed the position in a budget where there are 
already savings built in that are applied to the deficit. Then I think 
you have a realistic picture of where you are going to end up, not the 
kind of situation that I envision occurring now as I look at the 
spiraling costs of health care and the fact that we are not going to 
get any contribution to the deficit from health care costs to the U.S. 
Government.
  Madam President, I yield the floor. I understand Senator Grassley 
desires to speak. How late are we going to go, I ask the chairman? We 
have a policy lunch at 12:30 and a leadership meeting at 12:15.
  Mr. SASSER. Madam President, 12:15 or 12:30. The chairman would be 
most accommodating to the distinguished ranking member. We can do 
either one.
  Mr. DOMENICI. Thank you. I think we can go to 12:15. I have to go to 
another meeting. Senator Grassley might be able to stay 10 minutes or 
so. We will ask him. If not, we will ask to recess at 12:15.
  Mr. GRASSLEY. Madam President, I yield myself such time as I might 
consume. I am thinking in terms of roughly 20 minutes.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Madam President, I want to address the so-called $20 
billion inflation problem. This deals with the outyears of the 
Department of Defense's future year defense plan [FYDP].
  We have had a parade of witnesses before the Budget Committee in 
recent weeks, including Secretary of Defense Perry, and they all tell 
the same story. They tell us how inflation is a culprit. It is very 
difficult to predict what inflation is going to be, and, consequently, 
they cannot supply definite figures for the outyears for the future 
year defense plan.
  I do not know why the Department of Defense cannot predict inflation 
for 5 years out and do it for budgetary purposes, because every other 
agency of the Federal Government must do that, and does do it. So I 
just do not buy the excuse that it is very difficult and impossible to 
predict for 5 years out.
  We are just starting our analysis of the fiscal year 1995 future year 
defense plan. So I cannot make final judgments today about the 
problem's cause, and I cannot about its true size. However, I do have 
some preliminary conclusions based on available information.
  First, the mere existence of a $20 billion future year defense plan 
budget disconnect constitutes a violation of section 221, title X of 
the United States Code. This law was passed by Congress in 1987. Under 
section 221, the Department of Defense must submit a future year 
defense plan to the Congress, and they must do it each and every year, 
and they must do it so that it is fully consistent with the President's 
budget.
  The purpose of this law is simple. It forces the Department of 
Defense and the Secretary to make some very hard decisions to squeeze 
all of the programs into the President's budget. That means they would 
be forced to make tradeoffs, to make tradeoffs when it is very 
necessary to make tradeoffs, because decisions not made today mean 
spending lots of money and obligating lots of money down the road.
  Of course, in the process of making the decisions, that means the 
Secretary of Defense must eliminate unaffordable programs. The question 
we must ask is: Does the fiscal year 1995 future year defense plan 
comply with that 1987 law?
  I want to take a few moments to examine the facts as we know them.
  This chart with the three lines of figures is the President's budget 
for Defense. The President's budget is the top line, totaling $1.2355 
trillion for 5 years. This is what the President says the Department of 
Defense is allowed in fiscal years 1995 through 1999.
  The second line shows the numbers in the fiscal year 1995, future 
years defense program at $1.2557 trillion.
  The third line--the line that is the point of my remarks--shows the 
difference between the budget and the future years defense program: 
$20.2 billion.
  DOD's future years defense program exceeds the President's allowance 
by $20.2 billion. The future years defense program is over budget, 
then, by that $20.2 billion. In other words, it is overprogrammed.
  To hide the overprogramming and to make the books balance, as 
required by law, Pentagon bureaucrats inserted negative funding wedges 
or plug figures. The use of such budget gimmicks is inconsistent with 
the spirit and intent of the 1987 law. The Department of Defense got 
caught with a $45 billion negative funding wedge in 1989. So Congress 
amended the law in 1989 to specifically outlaw such devices--devices 
like are being used here. The amendment allowed for management 
contingency accounts, like potential funding requirements, but only if 
such accounts are included in both the President's budget and in the 
future years defense program--meaning that these two lines should 
balance. Obviously, they do not.
  Madam President, I ask unanimous consent to have printed in the 
Record sections from page 666 of the conference report on the fiscal 
year 1990 defense authorization bill of House report 101-331, because 
it explains the rule on negative funding wedges.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

 Conference Report on Authorizing Appropriations for Fiscal Year 1990 
  for Military Activities of the Department of Defense, for Military 
 Construction, and for Defense Activities of the Department of Energy, 
  to Prescribe Personnel Strengths for such Fiscal Year for the Armed 
                     Forces, and for Other Purposes

 Consistency in the budget presentations of the Department of Defense 
                              (sec. 1602)

       The House bill contained a provision (sec. 1202) that would 
     amend the existing provision of law (10 U.S.C. 114 (f) and 
     (g)) that requires the submission of the Five Year Defense 
     Program to Congress by April 1 of each year. The House bill 
     would eliminate the provision of law that allows 
     inconsistencies between the President's budget and the Five 
     Year Defense Program if such inconsistencies are explained in 
     detail. Under the House bill, no inconsistencies would be 
     permitted. The House bill would also change the date for 
     submission of the Five Year Defense Program from April 1 to 
     be at or about the time that the President's budget is 
     submitted to Congress.
       The Senate amendment contained no similar provision.
       The Senate recedes with an amendment that provides that the 
     use of management contingency accounts is not precluded, 
     provided such accounts are included in both the President's 
     budget and the Five Year Defense Program. The conferees 
     understand that the Department of Defense may not be able to 
     submit the Five Year Defense Program in support of a new 
     budget request at precisely the same time as the President's 
     budget following years when the Congress has failed to 
     provide full year authorizations and appropriations in a 
     timely fashion for the previous fiscal year.

  Mr. GRASSLEY. Secretary Perry's prepared testimony before the Budget 
Committee on March 9 tells us why the funding wedge was inserted in the 
future years defense program.
  Late last year, he testified, after the Bottom-Up Review was 
completed, that DOD discovered that the future years defense program 
exceeded the President's budget authority by a very substantial 
margin--much more substantial than this, in fact. More money was 
needed, is what he said. So the President weighed in in December on a 
major policy decision, as far as this funding wedge is concerned.
  President Clinton decided to provide extra money for pay raises over 
the future years defense program period, and that was all he was going 
to do--money for pay raises, period, nothing else. In fact, he said 
``no'' on extra money for inflation. In other words, the President was 
not going to give anymore money to the Defense Department because they 
had what they thought was a potential inflation problem that they had 
to deal with. I quote from Secretary Perry's testimony to the Budget 
Committee: ``The President opted not to budget for the multiyear 
inflation bill.''
  Since the President opted not to budget for the multiyear inflation 
bill, why are those costs then presented in the Department of Defense 
future years defense program?
  In other words, why is this figure here? Why has Secretary Perry 
failed to make hard decisions, then, to bring his top line down, as 
required by law? Twenty-billion dollars is less than 2 percent of the 
$1.2 trillion future years defense program. A good business executive 
like Secretary Perry should be able to solve such a modest problem in a 
flash. I am baffled by his failure to do it.
  Secretary Perry and others say it is no big deal. The problem is, as 
they would want you to think, all in the outyears. They tell us, ``Do 
not worry.'' They tell us that we can fix it tomorrow. At least, that 
is what I hear them saying.
  I see this as an attempt to disguise the significance of the 
outyears. At the Pentagon, the outyears are the whole enchilada, and I 
think Secretary Perry knows that.
  You know how it works. The military buys complex weapons and 
equipment that can take years to build and, consequently, years to pay 
for. There are frequently multiple buys for the same piece of 
equipment. These can extend over 5 or 10 different budgets.
  The budget must be hooked up to the outyears, and the outyears and 
the budget should be in sync. You should not have $20 billion of 
overprogramming.
  The $1.02 billion of advance procurement money in the 1995 budget, 
for example, is a direct link to the outyears. When we approve that in 
this budget, we are merely making a downpayment, and obligating money 
for outyears. But when there is overprogramming in those outyears, like 
now, advance procurement could be a downpayment on a dead horse. 
Advance procurement dollars could be hooked up to programs that must be 
axed down the road, with a concomitant waste of taxpayers' dollars that 
has been spent before that time. In fact, this is how the really big 
money gets wasted. This is how the military does not get what it needs.
  That brings me to the second major point. I think it may be 
misleading and inaccurate to characterize this $20 billion in the 
future years defense program/budget mismatch as strictly an inflation 
problem. That is what the Secretary of Defense says it is--an inflation 
problem.
  The $20 billion inflation problem, I fear, is a smoke screen for a 
much bigger problem out there, a problem that could be $50 billion or 
$100 billion--a real blivet. A blivet, of course, is 5 pounds of manure 
in a four-pound sack. Like on the chart here, you cannot quite get it 
in there. You try to push that $20 billion in there, and you just 
cannot get it in. The Department's handling of this whole problem makes 
me very suspicious.
  This sack is not big enough for that $20 billion.
  The first sign of trouble came with Mr. Ted Warner's testimony before 
the House Armed Services Committee on February 4 of this year. He is 
the Assistant Secretary for Strategy and Resources. He testified that 
amounts allocated in the future year defense program would exceed the 
President's budget authority by $20 billion.
  Next we discovered a gaping hole in the President's budget: more, new 
defense budget blanks.
  I want to show you those blanks are right here.
  Madam President, these are the blanks that I was referring to in the 
President's budget for the outyears of the defense budget, the future 
year defense program. No figures here for that.
  This is also in table 5.1 of the Budget of the U.S. Government, 
fiscal year 1995, Historical Tables on page 69.
  There is no breakdown here of the DOD budget by a major appropriation 
account for fiscal years 1996 through 1999. No data whatsoever for 
military personnel; for operations and maintenance; for procurement; 
for research, development, test and evaluation; for military 
construction, for family housing; for allowances; and for all others. 
Where is that data?
  After the fuss over the missing budget data, the Department of 
Defense Comptroller sent the committee two tables. Those two tables lay 
bare the plan for concealing the future year defense program/budget 
mismatch. Their integrity rests on the plug figures that I referred to 
moments ago.
  Mr. Perry's inability to resolve the so-called $20 billion inflation 
problem tells me that the inflation problem is hooked up to a much 
bigger problem. In other words, this $20 billion is nothing more than 
the tip of an iceberg.
  Sources in the Pentagon confirm that. They say there is at least 
another $20 billion to $30 billion in overprogramming, and maybe much 
more. So we are really looking at perhaps even as much as a $50 billion 
problem--minimum. The Congressional Budget Office says it is a $50 
billion problem.
  The last future year defense program given to Congress was back in 
February 1991. So for 1992 and 1993, no future year defense program. 
And that one that we received in 1991 gives us a clue about the size of 
the blivet I have spoken about.
  It assumed $172 billion in savings from the proposed program 
terminations, management efficiencies like the defense management 
review, and base closures.
  Were those savings realized? Do you think so? I doubt it, I doubt it 
very much.
  If these savings did not happen, then we are dealing with really a 
megablivet.
  Madam President, I leave my colleagues with this question: How did 
the Department of Defense move from $172 billion overprogramming in 
1991 to just $20 billion of overprogramming in the outyears for the 
period of time now through 1999? Did efficiency do it? Did the 
Department of Defense really save that much money?
  Secretary of Defense Perry has promised to make the future year 
defense program honest. I hope that Secretary Perry is right; that he 
does that. But I think we are off to a bad start. The new plug figures 
given to the committee point to more future year defense program monkey 
business down the road.
  Madam President, there is one person in the Defense Department I 
think who knows how to handle that problem, and that is a budget 
analyst by the name of Chuck Spinney. At the Perry hearing, I 
recommended that he be invited to brief the committee on the results of 
his latest analysis on future year defense program/budget mismatch. 
Senator Domenici suggested that we have side-by-side testimony from 
both Mr. Spinney and Mr. Perry. I think that that is very definitely an 
excellent idea. Between the two of them, we should get to the bottom of 
this problem.
  So on March 11, I wrote to the chairman of the committee to formally 
request that such a hearing be scheduled. I asked that the hearing take 
place after the General Accounting Office completes its analysis of the 
new future year defense program. The GAO analysis should be done in 
May, provided GAO gets access to the data and provided our Pentagon 
bureaucrats do not conduct some stonewalling operation.
  With the GAO assessment in hand, we should have a much better 
understanding of what this problem is, so that we get real numbers and 
we take care of this overprogramming problem that we have at the 
Defense Department. So that the 1987 law, as amended in 1989 --so that 
we cannot have and do not have this mismatch which we have now, 
contrary to law--so that that law is abided by.
  I hope that we can get directives from this Congress respected by the 
Department of Defense. The $230.4 billion plug figures that are 
inserted in this budget at the last minute do not meet the intent of 
Congress in that law.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Breaux). The Senator yields the floor.
  Who yields time?
  Mr. SASSER. Mr. President, I yield such time to the Senator from 
Washington as she may consume.
  The PRESIDING OFFICER. The Senator from Washington is recognized.
  Mrs. MURRAY. Thank you, Mr. President.
  I have to say, I am delighted to be back in the Chamber today talking 
about the President's budget. These are good days to be a member of the 
Budget Committee. I am not an economist, but I know it has been a good 
year for all of us. It has been good for America, good for America's 
kids, and good for my home State of Washington.
  During the next few days, we are going to see a lot of charts and 
hear a lot of statistics. I could add to the debate by telling you how 
my region leads the country in consumer confidence; how unemployment 
has decreased across the State of Washington, despite the layoffs by 
the Boeing Co.; how the construction industry and businesses associated 
with international trade each employed an additional 12,000 people 
during 1993; and how housing starts in our Tri-Cities and in Spokane 
were among the top five in the country.
  But I do not want to talk about baselines and outyears and caps. I 
want to talk today about something average Americans understand about 
budgets. I want to talk about courage and tough choices.
  I have not been here long, but I have learned a great deal in this 
body. I have seen how easy it is to score political points while 
holding up the Nation's business. I have learned how some of our 
colleagues demand more and more cuts because it sounds good.
  Do not misunderstand. I agree with them. As long as we have a 
deficit, we need to keep cutting spending. But the method that I have 
seen used in this body is a sham and everyone knows it.

  I have watched as some Senators offer amendments which call for 
massive unspecified cuts--or vague, across-the-board reductions. And 
then I am astounded as they vote against every amendment which calls 
for a specific cut.
  I saw all that happen in the Budget Committee last year and again 
last week. And I am sure we will see it on the floor again in the next 
few days.
  But the people of this country will not be fooled. They are demanding 
honesty and courage in the budget process, and that is what they 
deserve. I would remind those who criticize the President's plan, it 
contained over 300 specific budget cuts and it eliminates more than 100 
specific programs.
  The President was not afraid to name the names of the programs he 
thought were wasteful. He showed courage and he made tough choices. He 
went to the White House and I came to the Senate at a time when it is 
better to cut than receive.
  Mr. President, you and I and our friends here voted for a tough 
budget, with real cuts, and the plan is working. And this year we are 
going to trim more.
  We have changed our priorities and given our children hope. Every 
child, no matter who he or she is, or where they come from, must have 
the opportunity to succeed. I know that as well as anyone.
  I come from a low-income family of nine. And because of education and 
the kinds of opportunities found in this budget before us today, I 
stand here as a U.S. Senator.
  I know Government cannot do it all. I know spending does not solve 
every problem. Throughout my life I have had to make tough decisions on 
what to spend, what to buy, and what to invest in. As a school board 
president, I have voted to close schools. As a mother with limited 
resources, I have told my kids no more often than yes when they asked 
me to buy them something. And as an appropriator and a member of the 
Budget Committee I have told my friends and my neighbors, the Federal 
Government cannot fund every project that comes before us.
  But I believe the Federal Government can create opportunities. And 
there is no group in this Nation more deserving than our children, all 
of our children: Children who need help learning through Head Start; 
children who need to escape the violence of our inner cities; children 
living with AIDS and other debilitating diseases; children whose future 
is darkened by poverty; children who need nutritional assistance 
through the WIC program; children who go to bed and dream of a home, 
and a job, and a better life. And this budget recognizes all of those 
children.
  Our colleagues talk on this floor a lot about violence. I have spoken 
personally with young violent offenders, and they tell me over and over 
again, adults do not care about them. They learned that lesson when 
they were very young.
  We need to give those kids not only the skills they never learned, 
but also hope for the future. That is why I support this budget. It 
invests in our kids and it takes people into account.
  We cannot assume that our work ended last year. We have to keep on 
target. Otherwise we will go back to the days of out-of-control 
spending and mortgaging our children's future. We will abandon a 
generation of youth to more crime, more violence, unskilled jobs, and 
no health care.
  It is time for us as a nation to send a message to children that they 
are our top priority. This budget sends that message.
  I thank the chairman of the Budget Committee, Senator Sasser, for his 
work and diligence on this budget and I look forward to working with 
him toward its passage.
  The PRESIDING OFFICER. Who yields time?
  Mr. SASSER. Mr. President, I yield myself such time as I may consume.
  Mr. President, I thank the distinguished Senator from Washington 
[Mrs. Murray], for her very perceptive statement here on the floor of 
the U.S. Senate today. I might say, the Senator from Washington [Mrs. 
Murray], has become one of the most valuable members of our Senate 
Budget Committee in a relatively short period of time. She has 
developed and demonstrates a solid grasp of budget issues. And she has 
the courage of her convictions.
  She will stand and vote for specific budget cuts to make savings in 
the overall budget, and she is quite correct. She has analyzed this 
thing, I think, appropriately, when she says some of our colleagues 
come here and vote for large, nonspecific spending cuts that they know 
are going to fail. But when it comes time to vote for the specific 
budget cuts, then they wither like summer soldiers when the frost 
comes--they are nowhere to be found.
  But the distinguished Senator from Washington is always there. She 
has the courage of her convictions. She has been a stalwart on the 
Senate Budget Committee. Speaking as the chairman, she has been a very 
substantial asset. I am very pleased she serves on our committee and 
she does an outstanding job--not just for herself, but for her 
constituents in the State of Washington, and I think for all Americans 
who are concerned about a fair and equitable distribution of the 
Federal budget, and who are concerned about trying to get these 
deficits under control.
  Mr. President, I see no other Senators who wish to speak. I suggest 
the Senate recess for the various conferences.

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