[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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