[Congressional Record Volume 140, Number 52 (Wednesday, May 4, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: May 4, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                              THE DEFICIT

 Mr. SIMON. Mr. President, James Glassman, who writes on 
economic affairs for the Washington Post, had a column on Friday of 
last week titled ``How to Make the Deficit Vanish as an Issue--and a 
Reality.''
  What underscores his article is simply that the deficits that he 
estimates in his article are, in fact, going to be higher because 
interest rates have already risen.
  I also agree with his statement that the language of budgeting, where 
we in fact ``index'' our expenditure, then talk about reductions, is 
totally unrealistic.
  I am pleased that the Senate Budget Committee adopted language to 
change that, and he refers to the House Budget Committee doing the 
same.
  I ask to insert the James Glassman article in the Record at this 
point.
  The article follows:

       How To Make the Deficit Vanish as an Issue--and a Reality

                         (By James K. Glassman)

       What a difference a year makes! Last spring and summer, the 
     federal deficit was just about the hottest topic in 
     Washington; now the pressure is off.
       The Harris Poll found in June 1993 that Americans ranked 
     the deficit as the second more important issue ``for 
     government to address,'' narrowly behind health care. By this 
     month, the deficit had dropped to a tie for sixth place. Only 
     8 percent of the 1,255 adults polled rated it one of their 
     top two concerns, down from 24 percent.
       ``It's as though we were encircled by an army in a siege, 
     and then all of sudden the army disappeared,'' said one 
     Senate aide.
       That's a shame, because--if we really want to fix the 
     deficit--now is the time to do it. The economy is strong 
     enough to absorb the short-term adverse effects of spending 
     cuts and maybe even higher taxes.
       In fact, slowing the economy would be an added benefit of 
     deficit reduction. It would ease the need for the Federal 
     Reserve to tighten monetary policy, and might calm recent 
     jitters in the bond market. Rather than relying solely on the 
     Fed to apply the monetary brakes, how about some fiscal 
     brakes, too?
       President Clinton and most members of Congress have been 
     bragging about the $500 billion in deficit cuts they enacted 
     last year. But these are ``cuts'' only in the fairy-tale 
     language of government, which holds that you've reduced the 
     deficit if your deficit projections are lower than the 
     projections you made earlier in an imaginary number called 
     the ``baseline.''
       The baseline is a moving target. Back in 1990, the budget 
     deal between then-President Bush and Congress called for 
     deficits totaling $528 billion for the five years starting in 
     1992. Those deficits comprised the baseline three years ago.
       But shortly thereafter, the baseline was moved, and deficit 
     projections for the five years soared to well over $1 
     trillion. It was those new baseline figures that became the 
     starting point for the half-trillion dollars in ``cuts'' 
     produced in 1993.
       Even so, the budget that a House-Senate conference will 
     report next week will give the nation deficits from 1995 to 
     1999 that will total more than $900 billion. And for the five 
     years after that, the Congressional Budget Office (CBO) sees 
     deficits totaling $1.5 trillion. Some cut!
       Americans probably wouldn't be so complacent if they 
     understood this nasty state of affairs. As it is, they're 
     giving the White House and Congress a free ride.
       The truth is that, if the President decided to get serious, 
     the deficit could be eliminated--and without much difficulty. 
     Bill Clinton could go down in history for something actually 
     worthwhile.
       How to cut the deficit? The best place to start is a fat 
     book the CBO publishes every year, listing sensible--if 
     politically difficult--budget cuts. The new volume, issued 
     last month, lists 197 possible spending and revenue measures 
     that would turn the trick, if politicians could summon the 
     will.
       For example, we could save $2 billion over five years 
     (everything in budget-talk is over five years) by killing 
     operating subsidies for Amtrak, $1 billion by abolishing the 
     Bureau of Mines and $7 billion by eliminating federal grants 
     for local wastewater treatment plants.
       We could save another $7 billion by reducing federal aid to 
     mass transit, $3 billion by halving federal aid to the arts 
     and humanities and $8 billion by axing the Low Income Home 
     Energy Assistance Program, a vestige of high oil prices 13 
     years ago.
       Making tiny adjustments in the $85 billion annual federal 
     payroll could save $10 billion by 1999, and lowering target 
     prices for farmers in agricultural commodity programs could 
     cut the deficit by $11 billion.
       Then there are items that the CBO doesn't cite--for 
     example, the astounding $193 million that has been budgeted 
     next year for Howard University here in Washington, 
     ostensibly a private institution. Howard has received $1 
     billion over the last five years, covering more than half of 
     its operating costs.
       Big savings could come from small changes in entitlements. 
     For example, the CBO estimates that the deficit can be cut by 
     $109 billion over five years if the government limits 
     increases in benefits for programs such as Social Security to 
     the rise in the consumer price index minus 2 percentage 
     points.
       Here are a few reasonable revenue-raisers:
       Increase the gasoline tax by 10 cents a year for five 
     years. CBO estimates we could raise $127 billion this way, 
     and our prices at the pump will still be less than half what 
     Europeans pay.
       Limit all itemized deductions to 15 percent, instead of as 
     much as 39.6 percent for rich taxpayers. That would raise 
     $274 billion over five years, estimates the CBO.
       Limit mortgage interest deductions to $20,000 a year for a 
     joint return and $12,000 for an individual. That would cut 
     the deficit $32 billion.
       Suspend the indexing of tax brackets for just one year. 
     Deficit cut: $46 billion.
       The problem with raising more revenue, of course, is that 
     the government just spends the new money. That's what 
     happened, for example, from 1987 to 1993. Revenues rose $300 
     billion, but spending rose $400 billion.
       Still, it's clear from the numbers that, with strict 
     controls, the federal deficit can be wiped out by the year 
     2000. There will be some pain but, surprisingly, not a great 
     deal.
       But we have to change the fraudulent language of budgeting. 
     In a good first step, Reps. Christopher Cox (R-Calif.) and 
     Charles W. Stenholm (D-Tex.) added a nonbinding measure to 
     the budget resolution that replaces baseline budget 
     comparisons with real, year-to-year actual vs. budget 
     comparisons--just like every business uses. Let's make that 
     measure binding, and get on with the cutting.

                          ____________________