[Congressional Record Volume 140, Number 57 (Wednesday, May 11, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: May 11, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
CONCURRENT RESOLUTION ON THE BUDGET FOR FISCAL YEAR 1995--CONFERENCE
REPORT
The PRESIDING OFFICER. Under the previous order, the hour of 10 a.m.
having arrived, the Senate will now proceed to the consideration of the
conference report accompanying House Concurrent Resolution 218, which
the clerk will report.
The legislative clerk read as follows:
The committee on conference on the disagreeing votes of the
two Houses on the amendment of the Senate to the concurrent
resolution (H. Con. Res. 218), setting forth the
congressional budget for the U.S. Government for fiscal years
1995, 1996, 1997, 1998, and 1999, having met, after full and
free conference, have agreed to recommend and do recommend to
their respective Houses this report, signed by a majority of
the conferees.
The PRESIDING OFFICER. Without objection, the Senate will proceed to
the consideration of the conference report.
(The conference report is printed in the House proceedings of the
Record of May 4, 1994.)
Mr. SASSER addressed the Chair.
The PRESIDING OFFICER. The Chair recognizes the Senator from
Tennessee.
Mr. SASSER. I thank the Chair.
Mr. President, we are ready to proceed with the conference report to
the fiscal year 1995 budget resolution.
Mr. President, the eminent British statesman Edmund Burke wrote once
that, ``All government--indeed, every human benefit and enjoyment,
every virtue and every prudent act--is founded upon compromise and
barter.''
Now, the conference report before us today is just that: A fair
compromise that makes the Government go, a fair compromise that
provides for order rather than chaos, and allows us to proceed
expeditiously with the business of this people's Government.
But this budget resolution is not a compromise simply for compromise
sake. Like its predecessor, the budget resolution which we passed
earlier this year, this one hews to the principle of deficit reduction,
it hews to the principle of fiscal responsibility, and it propels us
down the path to greater economic growth.
Make no mistake about it, this economy of ours has flourished since
we made a commitment last year to serious and credible deficit
reduction. I wish to commend those Senators who last year cast their
lot with serious deficit reduction.
I believe that as we consider this budget resolution conference
report, it bears repeating the major accomplishments of last year's
Budget Reconciliation Act, accomplishments that have a direct impact on
the working men and women of this country, accomplishments that we
build upon with this budget resolution conference report.
Last year's deficit reduction plan reduced the deficit by nearly $500
billion, cut spending by $255 billion, and allocated every new dollar
to deficit reduction. It constrained the discretionary spending at a
hard freeze level, and cut $90 billion in entitlement spending.
As an example of how real last year's budget-cutting effort was, or
deficit-cutting effort was, and how real the legislation was that we
passed last year, we now find that the legislation we passed, which was
calculated to reduce the deficit by $500 billion, is now calculated to
reduce it by well over $600 billion in the same timeframe as a result
of primarily increased economic expansion and activity, part of which
was attributable to the deficit reduction efforts that we took.
Given the extra lift provided by the rising tide of a strong economy,
as I said, the package that we produced last year will actually come in
in the neighborhood of $650 billion in deficit reduction over the next
5 years; $150 billion, almost, over what we had originally predicted.
What a difference from other deficit reduction packages.
I remember years past when we would try to reduce the deficit. We
would come in with various gimmicks and plans. Invariably, the deficit
would be larger than we had anticipated. In this case, we have the
welcome and refreshing and heartening news that the $500 billion
deficit reduction package that we passed is not just $500 billion. It
is going to come in at somewhere in the neighborhood of $650 billion in
deficit reduction.
If we do not stray from the path we are on, if we pass this budget
resolution for fiscal year 1995, the 1995 deficit is going to be $100
billion below the Congressional Budget Office projection of just last
spring, just a year ago.
In fact, Mr. President, the deficit in 1995 will be lower than any
year since 1979.
And that is not all. The 1998 deficit will be $200 billion less than
before last year's plan was passed. And projections are that the 1999
deficit will be cut in half.
Let us look at this critical deficit reduction from another angle.
Let us look at it from the point of view of percentage of gross
domestic product.
I think most knowledgeable economists would say that the most
accurate way of measuring a deficit's impact on an economy, and on an
economy's future health, would be to put it in proportion to the gross
domestic product.
The deficits from 1995 through 1999 will average about 2.4 percent of
gross domestic product; 2.4 percent of gross domestic product for 1995
through 1999. Contrast that with 4.2 percent of GDP during the 1980's,
almost cutting the deficit in half as a percent of GDP from where it
was in the 1980's. How about the 1970's? In the 1970's, we were
averaging a deficit as a percent of GDP at 2.5 percent.
So what we are seeing as a result of this deficit reduction program
we are on, we are almost halving the deficit as a percent of GDP from
where it was in the 1980's, and bringing it below where it was as a
percent of GDP on the average in the 1970's. That is quite an
accomplishment.
The legacy of a growing debt burden will also be reversed. The
national debt as a percent of the economy grew to an alarming 52
percent by 1994. What we are doing is halting the growth of the
national debt as a larger percentage of the economy, arresting it, and
starting to reduce it.
A little brief history might be in order here for our colleagues.
When we emerged from World War II, the national debt as a percent of
the gross product or national wealth stood at about 110 percent of the
gross domestic product at that time. We began reducing it, and reduced
it down to an area of somewhere in the neighborhood, at its lowest
level, of about 30 percent of GDP. It began growing again in the
1970's, and exploded in the 1980's, moving up to a point where it was
in excess of 50 percent of GDP. We are now halting that growth,
arresting it, and starting it down in the other direction.
We often call last summer's budget resolution and reconciliation bill
the ``historic'' deficit reduction plan. We do so for good reason.
History gives us a benchmark against which to measure. What we did last
summer, and what we continue to do with this resolution, measures up, I
think, with the best of them.
Discretionary spending as a share of our overall economy and the
total budget will be the lowest, in this budget resolution, than it was
when Franklin Delano Roosevelt was last in the White House. For the
first time since Harry Truman was President, there will be 3 years in a
row of declining overall deficits. And discretionary spending next year
will be lower than the preceding year. This is the first time that
happened since President Nixon took office in his first year. In
President Nixon's first year in office, we were starting to reduce the
spending that had been going into the Vietnam War that elevated
discretionary spending. And that is why discretionary spending in his
first year in office was more than it was the year before.
So no one will argue that we have not made substantial progress. But
I am not here to try to persuade my colleagues this morning that we
have dealt with this deficit and dispatched it with a single blow. The
deficit is very tenacious. I say to my colleagues that this deficit is
receding; it is retreating before the relentless assaults that we have
launched upon it over the past year and a half.
There is no doubt in my mind that the growth of this economy and the
vigor of this economy can be traced, at least in a significant part, to
the deficit reduction plan that we passed here last summer.
The financial markets which had long begged for a creditable deficit
reduction plan among the dross of gimmicks and contraptions offered to
them in prior years finally found a creditable deficit reduction plan--
the one we passed last year. And how did the financial markets respond?
They responded with lower interest rates, which helped push us into a
fully self-sustaining recovery.
This is how the American people have felt measurable results from our
efforts in deficit reduction last year. First, it came in jobs. Over
450,000 jobs were created in the month of March alone. We have now
created in this economy 2.5 million jobs in 14 months. That is more
jobs in 14 months than were produced during the previous entire 4
years--more jobs in 14 months than in the previous entire 4 years.
Well, the next measure is interest rates. Interest rates have
plummeted; they have come down; that is, before the Fed began to hear
inflation creeping in on little cats' feet which nobody else heard and
panicked.
For hundreds of thousands of our fellow Americans, low-interest rates
produced an unparalleled opportunity to purchase a new home. Housing
starts and permits in sales soared in the fourth quarter of 1993 at
more than a 50 percent annual rate.
Sales for domestically produced cars and light trucks jumped at more
than a 50 percent annual rate between September and February. And in
the year 1993, for the first time since 1980, more automobiles were
assembled here in the United States than were assembled in Japan. Let
me repeat that. In 1993, for the first time since 1980, more
automobiles were assembled here in the United States than in Japan. In
Japan, the cry is, ``The Americans are back''--and we are, in a big
way.
One of the strongest indicators of economic victory--real business
investment--advanced at a 22-percent rate in the fourth quarter of last
year and continued its upward climb in the first quarter to an all-time
high.
Well, how does that translate to living standards increases for the
average American? That is what we are concerned about, elevating the
quality of life of our citizens, elevating their living standards.
Well, Mr. President, living standards rose more during the first year,
in 1993, than during the previous 4 years put together.
So, taken as a whole, the economy has been performing so well that
during one of those rare days when we are all singing from the same
hymn book, Federal Reserve Chairman, Dr. Alan Greenspan, appeared
before the Joint Economic Committee of this Congress, and here is what
he had to say:
I don't recall as good an underlying base in the long-term
economic outlook any time in the last two or three decades.
Alan Greenspan, Chairman of the Federal Reserve Board, came before
the Congress and stated not too long ago that the underlying base and
the long-term economic outlook was better than it had been in the last
two or three decades--in the last 20 or 30 years.
Unhappily, the Federal Reserve Board seems to have changed its tune
somewhat since those salad days a little earlier in the spring, and
many of us, frankly, believe the Fed is singing way off key these days.
In fact, last quarter's 2.6 percent rate of real economic growth
confirms that the Fed's actions to tighten monetary policy have been,
in the judgment of this observer, misguided. In my view, the economy is
not carrying too much sail, as the Fed would seem to have us believe.
However, the Fed's actions go far beyond the headlines on the
business page. They bleed into all facets of our lives. These
preemptive strikes by the Fed against inflation threaten to choke off
the economic expansion before working men and women can begin to enjoy
the full benefits of it.
I add, too, that in spite of all our promises to the contrary, the
Fed, once again, is not supporting our efforts at fiscal contraction.
We are starting to see the positive results of our toil in deficit
reduction. Real Federal spending on goods and services declined at an
annual rate of 12 percent in the first quarter, the third consecutive
quarterly drop.
Mr. President, I want to repeat that statement. Real Federal spending
on goods and services declined at an annual rate of 12 percent in the
first quarter of this year, the third consecutive quarterly drop of
real Federal spending.
We are cutting spending, and how does the Fed respond? Do they
respond with a complimentary monetary policy? Well, we learned a very
hard and painful lesson from the 1990 budget agreement. We learned that
fiscal and monetary policy must be carefully balanced if we are to cut
the deficit and if we are to sustain economic growth. As a
counterweight to an austere fiscal policy, Congress needs the Fed to
offset that contraction by using its tools to keep the economy moving.
Mr. President, I sincerely hope that the Fed will reexamine its
actions. We in this body have made a courageous and earnest effort to
reduce the Federal deficit. We have fought hard to resuscitate this
mighty economy of ours. Our efforts are paying off. The 1995 budget
resolution will simply cement the structure in place that we brought
into being last summer.
Now, let me just spend a few minutes going over some of the
conference issues. Foremost is the Exon-Grassley amendment which made
further cuts below the preexisting caps on overall discretionary
spending.
Let me briefly review its history.
For the 5-year period between 1995 and 1999, the Senate budget
resolution as amended by Exon-Grassley reduced spending from the caps
by $63 billion in budget authority and $26 billion in outlays. Now,
that was what the Senate did. By adopting Exon-Grassley we reduced
spending below the caps by $63 billion in budget authority and $26
billion in outlays. Our colleagues on the House side passed a budget
resolution which contained no companion cut before the caps.
Now, following the passage of the Exon-Grassley amendment and its
adoption here, the Pentagon and the defense community and defense
experts began expressing serious reservations that a majority of the
cuts from Exon-Grassley would be lodged against the defense budget, and
I think their apprehensions are indeed and were indeed well founded.
These experts at the Pentagon and others were not alone in that view.
Many of my colleagues on both sides of the aisle voiced similar
concerns.
My friend, the distinguished ranking minority member of the Budget
Committee, Senator Domenici, who is known for his expertise and
sensitivity to national security issues, I think showed great courage
in attempting to restore the cuts once he fully analyzed the
possibility of the magnitude of the impact they might have on our
defense efforts.
Let me observe that my friend, the senior Senator from New Mexico, is
not given, Mr. President, to spending binges. He is one of the most
frugal and fiscally responsible Members of this body. I have frequently
given him credit for the pay-as-you-go system that has worked
effectively through the last 4 years. And he deserves credit for
vigilantly fighting deficits for more than a decade.
His willingness to look at restoring the $26 billion discretionary
cut I think simply reflects his abiding concern for this Nation's
national security.
Following the first meeting of the conferees, Senator Domenici joined
me to test the Senate waters on feasibility of such a plan of restoring
the cut.
But I think both of us quickly learned that the votes were simply not
there to do it. The will of the Senate was in favor of additional
discretionary cuts.
Now, that is where the Senate stood. But the House, on the other
hand, had made its position clear prior to conference when a motion to
instruct its conferees passed by a majority of the House to not accept
the Exon-Grassley language.
It became obvious that if the conferees were to agree on a budget
resolution at all, we would have to meet each other halfway and split
the difference.
So, Mr. President, that is exactly what we did with the Exon-Grassley
amendment. Rather than scrapping it altogether, as the House wanted to
do, and as a majority of the House of Representatives had voted to do
on the floor of the House, in open vote they voted to, in essence,
scrap Exon-Grassley, but rather than accepting that and scrapping it,
the Senate conferees ultimately were able to prevail on the House to
agree to $13 billion in cuts in outlays and $31 billion in budget
authority off the caps for 5 years. In other words, we were able to
prevail upon them to split the difference. That is almost exactly half
of the original cut off the caps over the next 5 years. In the first
year, the Exon-Grassley cut amounts to $500 million in outlays. It
accumulates in the later years.
I would also tell my colleagues that the conference report sustains
the language of both the Nunn-Domenici initiative and the Graham of
Florida initiative with respect to entitlements.
Both Houses are now on the record in favor of controlling growth in
entitlement spending. I might say to my colleagues that the resolution
is still agnostic when it comes to which health care plan or
combination of plans will be ultimately passed.
This budget resolution follows the outline of the President's budget
in that over 300 programs are either cut or terminated. In addition,
the resolution 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.
This budget resolution also makes the right investments. Investments
for education are in this budget resolution, I say to many of my
colleagues, including the distinguished Senator from Connecticut [Mr.
Dodd], who has expressed his continuing interest in continued
investments in education for many years. There are investments in
nutrition. There are investments for our infrastructure. There are
investments for fighting crime in this budget resolution. There are
investments to make life better and more secure for working men and
women and their families. As an example, we sustain the functional
totals that reflect the priorities of the amendment offered by the
distinguished Senator from California [Mrs. Boxer], which proposed more
funding for children's programs.
Mr. President, I really see no reason to drag on the debate on this
conference report. I will yield momentarily to my distinguished
colleague from New Mexico, Senator Domenici.
But before I do so, I urge my colleagues to vote for this budget
resolution for two specific reasons.
First, the conference report on the budget resolution that we bring
back to you clearly expresses the will of the majority of the Senate.
It is the will of the Senate to cut spending further. We have done that
in this resolution that comes before you. It is the will of the Senate
to provide for entitlement controls. That is included in this
resolution. It is the will of the Senate to keep us on the path of
deficit reduction. We bring it to the Senate in this resolution.
Second, let me warn my colleagues that the absence of a budget
resolution would make mischief for the entire appropriations process
and for the Senate as a whole, and the primary mischief would fall in
the area of national security and defense budget.
It is no secret that the Department of Defense appropriations bill is
the largest and usually the last appropriations bill to be brought to
the floor. If that bill is brought to the floor after other bills have
been brought to the floor without the protection of the 602(b)
allocation ceiling, then there is going to be overspending in the other
appropriations bills and when the defense bill hits the floor it is
going to have to pay the price for all of the other spending. I do not
think anyone will benefit from this chaos. The American people deserve
better. The institution deserves better, and indeed my colleagues
deserve better than chaos such as that.
So, Mr. President, I urge the adoption of this resolution. It is in
the best interests of our country. It is in the best interests of the
Senate, and we simply must adopt it.
Mr. President, I yield the floor to my distinguished friend from New
Mexico.
The PRESIDING OFFICER. The Chair recognizes the Senator from New
Mexico [Mr. Domenici].
Mr. DOMENICI. Thank you very much, Mr. President, and I thank the
chairman.
Before I give my remarks and respond, Mr. President, might I ask a
little bit about the process we want to follow?
I have about five Senators who want to speak. Maybe I should state
the names as we know them, so their offices know we are trying to
accommodate them but that we also want to get off the floor at the
earliest possible time.
I assume that is the chairman's wish.
Mr. SASSER. It is, indeed.
Mr. DOMENICI. Senators Gramm, Grassley, Lott, Gregg, and Nickles have
indicated they desire to speak. I assume that there may be others. But,
frankly, it is my intention, on our side, working with the chairman, to
yield back some of the time on this resolution. I assume we each have 5
hours. I do not think we need 5 hours.
Might the Senator give me his expression on that, whether he thinks
he is going to need the full 5 hours?
Mr. SASSER. Let me say to my able friend from New Mexico, we will not
need 5 hours. At the present time, we only have two or three Senators
on our side who have expressed any interest in speaking on the
resolution. So I would be positive that the time could be reduced very
considerably.
Mr. DOMENICI. Might I ask the Senator, has he conferred with his
leadership about when this vote might occur?
Mr. SASSER. I have not. I will do that in a timely fashion.
Mr. DOMENICI. I thank the Senator very much.
Mr. President, just to set some time parameters about what I say
here, I am going to yield myself a half hour at this point. Would the
Chair have the clerk notify me when I have used 30 minutes, please?
The PRESIDING OFFICER. We will.
Mr. DOMENICI. First, Mr. President, fellow Senators, I want to talk
just a bit about some of the remarks that the distinguished chairman
made with reference to the Federal Reserve Board and their policies.
I was not privileged to be in attendance at the Banking Committee
hearing. Perhaps the chairman was there. He and I are both members of
the Banking Committee.
But one of the President's designees, a rather eminent economist, Dr.
Alan Blinder, now serves on the economic adviser team in the White
House and I assume from economists around this land that he has a very
excellent reputation. It is my understanding that, as the President's
designee to the Federal Reserve, he was questioned about inflation
which ultimately causes interest rates to go up. It is my understanding
that he intends to fight inflation, concurring with the Federal Reserve
Board's goals.
I do not want to make a big point of it, because we are not going to
have a lot to do with that in this budget resolution anyway. There has
never been any successful effort on the part of Congress, since the
Federal Reserve Board was created as an independent entity, to take the
Federal Reserve and the banking system out of politics. There has never
been any real successful effort to tell them what to do. There may be
some political impacts on them, but I do not think we here on the floor
are going to be telling them what to do.
I just want to make the point that, in the long-term interest of
growth and jobs that everybody talks about in the American economy, if
they are thrilled about one thing that has happened in the past 10 to
12 years, it is that we have inflation under control. We have learned
in this great economy that it is inflation that ruins economic growth,
ruins the pocketbooks of American people, and lowers the receipts for
work by American workers. That essentially is the big culprit.
I am not suggesting that inflation is rampant again, but I am
suggesting that the Federal Reserve is doing the right thing. The right
thing is to prolong this economic recovery beyond what it might
accomplish if they did not adjust interest rates.
Clearly, I believe the political leadership of this country would
like very much to have this economy continue to grow. It appears my
friend from Tennessee has forgotten the business cycle and seems to
think that last year's budget resolution and tax bill caused all this
economic growth when it seems to me that the business cycle had gone
down about as far as it was going to go in America. It has started up
again and we are now reaping the benefits.
Having said that, it could very well be that Federal Reserve policies
are going to prolong this recovery and, thus, the positive side of the
business cycle for a longer period of time than it would have continued
if we kept the heat on this economy with the lowest possible interest
rates.
And I would remind everyone that the Federal funds rate, which is
what the Federal Reserve has been addressing, is not at an inordinately
high level. Compared to the past 20 years, it is at a pretty low rate
for the United States.
I will give my theory of what has gone wrong in the budget approach
that this resolution brings before us this year, but first let me take
a few moments to talk about the reality of what America is experiencing
today in terms of jobs, economic growth, and, even the specific,
positive fact that the chairman brought to our attention about American
automobile manufacturers producing more cars at more competitive costs.
No. 1, the Senator from New Mexico could not be more pleased about
anything than I am about the economy turning around and moving in a
positive direction. The American people have been very, very worried
about that, over the last few years, and the time has come when it has
fully turned around. I hope we do everything we can--I am not sure how
much we can do--to keep that growth going, to continue to improve our
competitiveness, and that the real wages of American workers increase.
So in that regard, if I were a Democrat, I would be laying claim to
all of these positive things that are happening in this economy, and I
would lay claim to them on the basis that they have all occurred
because of policies that the President and the Democratic majority have
adopted. But I think, as a Republican, while I am proud and pleased
that these things are happening, it is my responsibility to take a
couple of minutes to try to put this in perspective.
Second point: I do not know of a single American economist, including
the distinguished economist currently recommended for the Federal
Reserve Board, Alan Blinder, who has ever said that the Government can
change policies, whatever they are, and affect the economy in a
significant way in less than 1 year, and most say 1\1/2\ years at the
minimum. We are now in May of 1994, Mr. President--not May of 1995 or
1996--May of 1994.
I remind our fellow Senators--just a dose of reality--that the tax
package that was passed by the U.S. Congress in response to the
President's recommendations, but clearly not exactly what he asked for,
was adopted by the U.S. Congress in August of 1993.
Now, let us see--August, September, October, November, December,
January, February, March, April, May--we are now at 9 months since that
package was signed into law. And it is most interesting that the
largest surge in economic growth occurred in the last quarter of 1993.
I think it was a 7-percent gross domestic product surge.
To American business, American labor, American automobile
manufacturers, small business people, it is more realistic to assume
and fairer to say that a lot of things have been changing in this
American economy for the better for a long time. Clearly, I do not deny
that the chairman, in a sense the leader of the majority party, should
take the floor today and, in glowing terms, talk about all these good
things that have happened and say they happened because of the fiscal
policy plan adopted in August 1993. But I believe it is much closer to
the mark to assume that the business cycle carried us from lofty growth
in the Reagan days, to modest growth, then to a very quick recession,
and then more modest growth as the business cycle unfolded. I think it
is fairer to say that the time had come in the business cycle of the
United States when the private sector and the families of America had
taken debt out of their ledgers--the business ledgers and the private
ledgers. They bought down their debt tremendously and a number of other
things occurred where the American economy was ready to surge again,
and it has.
If the President's tax package had not passed and the caps had been
retained as they already were in the law on discretionary spending, I
am willing to speculate with a degree of certainty that this economy
would be very close to where it is right now. Perhaps it might have
even grown more.
The Congressional Budget Office, the independent arm set up by
Congress to tell us about these things, says in their analysis of
fiscal year 1994 that economic growth will be dampened because we have
a slightly more restrictive policy, including taxes and other things. I
believe this is true. Yet I want everybody to know if I were Chairman
Sasser, I would be down here saying what he said. If I were the
President of the United States, I would be running across this land,
and wherever I could I would say it is my policies that did all these
things.
Let us talk a little bit about what we have cut and what we have not
cut in 1993, 1994, and in this projected budget. It might shock people
to know that of the things we could have cut in the entire package of
appropriated accounts--everything from highways to education, revolving
funds for loans for water and sewer projects to the FBI--not one single
dime has been cut from anything other than defense.
Let me repeat. With all the discussion about strong fiscal policy, in
all of the array of American appropriated programs--not the
entitlements--we have only cut defense in 1993 versus 1992; 1994 versus
1993; and the proposed 1995 versus 1994. Shortly, I will talk
explicitly about the great risk to the American people and the free
world in this dangerous world, by the continuation of that downward
trend of cut, cut, cut defense.
Even without the allocation of the unspecified appropriations cuts,
the defense spending of the United States will be at the lowest percent
of gross domestic product that it has been since immediately preceding
the bombing of Pearl Harbor.
Think of that. We recall those days. We saw our men training in the
Philippine Islands with broomsticks while the Japanese were bombing. We
are going to be at the second lowest level in history--since the First
World War era. And that era is the only time in this modern time of
difficulty and American world leadership that we have been lower.
I want to have printed in the Record the numbers I have just
described about what has been cut and what has not been cut. I would
like very much to have printed this table which has the defense outlays
for 1992, 1993, 1994, 1995, and the domestic discretionary outlays for
the same period.
I might just indicate defense in 1992 was $302, it is now $270;
domestic was $233, it is now $273. I ask unanimous consent that little
summary be printed in the Record.
Mr. DOMENICI. Mr. President, the numbers will show that Defense's
cuts are going to get worse than that little chart shows as we follow
the President's policies and as we follow the policies of allocating
more of the discretionary cuts to defense in this appropriations
process called a 302(b) allocation process. Before I finish today I
will urge that the allocation process not take any of the new cuts out
of defense and we be given, as a people, as a Nation, the President's
requested Defense budget for 1995.
Having said that, I want to take a couple of more minutes, since I
talked about how, if I were Chairman Sasser and a Democrat, I would be
bragging about all these good things that have happened to the American
economy and trying to lay all that powerful change on an August 1993
budget resolution. But I think in the process the chairman also alluded
to what a great job we are doing in deficit reduction. Again, so
everybody will understand, if I were the Senator from Tennessee, and
the chairman, I would be saying exactly the same things. But I think a
dose of realism is required here, too. So let me try a little bit.
Obviously my friend from Tennessee will have plenty of time to rebut
this.
I would like to state for the Record and for fellow Senators what
makes up the reduction in the deficit that we are touting? Where does
that deficit reduction come from? So, my version says the only thing
that the August 1993 deficit reduction package did was raise taxes. Let
me take 1993 versus 1994 and let me go through just four or five
things.
The deficit for 1994, when it was first figured in 1993, was
projected to be $291 billion. These are all Congressional Budget Office
estimates, Mr. President. Now it is being said that in 1994 that
deficit went down, a $68 billion reduction in that deficit.
I believe it ought to be clearly understood that very little of that
deficit reduction came from the 1993 budget resolution, if we will just
go and look at where the deficit reduction items as shown by the
Congressional Budget Office.
First, the largest item is a $31 billion reduction; $31 billion of
the total $68 billion comes from what are called technical reestimates.
That means CBO has gone back and looked at how things like Medicare and
Medicaid spend out. It has nothing to do with policy changes.
They have found that technical adjustments are necessary to better
estimate the reality of the spending. Included in that are technical
reestimates of how much it is going to cost to complete the bailout by
the Resolution Trust Corporation.
I do not think we did anything in the budget resolution on that. I
think what happened is, we overestimated how much it would cost to do
that final cleanup, pay our bills, and begin the builddown and closing
up of the RTC shop. So that is $31 billion.
The new taxes and user fees amounted to $28 billion, according to the
Congressional Budget Office. Mandatory spending was reduced by $4
billion. So I assume one could say put credit where credit belongs and
show $4 billion in savings from policy changes on the mandatory side.
There are a couple more items, and one is called economic
assumptions. It amounts to a $13 billion reduction because the
economics are better than projected. If my arithmetic is right, if you
add those up, there is only one thing missing, and it is that we spent
$9 billion that we did not expect to spend on emergencies. So when you
add up the negatives and subtract that one, a $9 billion increase, you
end up with $68 billion.
Frankly, it seems the explanation of the Senator from New Mexico, of
how we got that deficit down is worthy of as much consideration, if not
more, since it based on the Congressional Budget Office's numbers. When
you look at CBO's assessment it is difficult to account for all of the
deficit reduction coming from an August 1993 tax bill, which included a
reaffirmation of caps on spending that were nothing more than carrying
forth the 1990 caps that were agreed upon at the summit at Andrews Air
Force Base.
The deficit is currently moving in the right direction, not for very
long, but it currently is moving in the right direction. I am not going
to go through the Congressional Budget Office's estimates of where the
deficit reduction will come in 1995, other than to say that between
taxes, which will be $46 billion of that reduction, and technical
reestimates, again, more Medicare/Medicaid spendout reestimates, more
RTC reestimates, which is $45 billion, what we have is over $90 billion
of the deficit reduction for 1995 coming from taxes and technical
reestimates.
I think that is a little different, Mr. President, than saying we
have really engaged in a major new round of cuts and restraint. Do not
forget that the discretionary caps are identical to those established
in 1990, for which I give the chairman a lot of credit. The President
wanted much higher caps. He wanted to spend a lot more, which would
have been very interesting in terms of how this would have come out.
Remember, the President also tried to gain enactment of a $17 billion
stimulus package.
In any event, the chairman of the Budget Committee insisted on
keeping the caps from the 1990 agreement, and that is why we got at
least that much. But even in using those, all of the savings, all of
the cuts came out of defense.
Mr. President, let me move along, and let me ask how much I have left
on the first half hour.
The PRESIDING OFFICER. The Senator has used 26 minutes.
Mr. DOMENICI. I want to yield myself the remainder of that, and 15
minutes more.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DOMENICI. Mr. President, my remarks to this point were in
response to assertions of the chairman, make Republican observations on
them, which I believe is very valid.
But now I want to talk about the budget resolution for 1995 and
analyze it. I say to Chairman Sasser, I regret that I cannot vote for
it. I did make a proposal. I felt so strongly about one basic
principle: That we cannot continue to cut defense. We cannot make any
more across-the-board discretionary cuts and take those funds from
defense with immunity. I said I would vote for the resolution if there
were no further cuts in defense.
Frankly, it turns out we cannot be assured of that, even if we took
out the Exon-Grassley discretionary cuts, because the Appropriations
Committee will make that decision. I urge that the Appropriations
Committee, in allocating the dollars under this budget resolution, give
the defense committees what the President asked for. The President made
a case to the American people in his State of the Union Address that we
have cut defense enough.
I believe if the whole Senate were to vote on that issue, I believe
we would give the President his full budget allocation for defense and
spread any across-the-board cuts across the other functions of the
Federal Government. I believe we would say that, if we were voting up
or down in the Senate.
I merely say that because we have never done that, but I sense enough
concern that maybe some effort will be made to get the Senate to speak
on how much defense is enough defense under this budget.
I say to my fellow Senators, if you look at the budget resolution,
the defense numbers are exactly the same as the President's. I am not
speaking about this budget resolution in that regard in a pejorative
sense. The truth of the matter is that all of the cuts are found in
another section called allowances. So the reductions from the budget
baseline are found in an allowance category. Those reductions are not
allocated between domestic and defense, so you could be a bit misled in
assuming this budget resolution provides for full funding of the
President's defense number.
While I compliment the chairman for producing a budget resolution--I
have been there, and it is hard to put this kind of thing together--I
believe it is sending the wrong signals and it is moving in the wrong
direction. I hope in a few moments I can express these views and
perhaps, to some extent, sound a warning.
First, I believe the chairman made the right decision in
compromising, as he indicated, because clearly the majority has a
responsibility of producing a budget resolution which adds a degree of
orderliness to the process.
But today I come down on the side that the risks of the failure to
complete a budget resolution are outweighed by the risk to our national
security and the potential impact of an unspecified $30 billion in
discretionary spending cuts in this resolution, and what effect that
might have on our security role in the future in a dangerous world.
And since some are asking why Senator Domenici did not favor further
discretionary cuts across the board, I remind the Senate that the
problem we are having with the budget of the United States is a problem
of the ever-increasing entitlement programs. And I did offer in this
Chamber an alternative to further cutting defense and domestic
discretionary programs and asked the Senate to take a small bite out of
the growing entitlements instead, kind of a tit for tat. I proposed the
same amount of deficit reduction but begin just a slight nicking of the
entitlement programs. It failed. But from the standpoint of reducing
the deficit, I am in sympathy with reducing it further. That was
encapsulated as an idea in the Exon-Grassley amendment.
(Mr. ROBB assumed the chair.)
Mr. DOMENICI. Now, also, I want to remind the Senators, with
reference to defense, Senator Nunn and I have been trying to restore
the firewalls between discretionary defense and nondefense, and had we
had those in place, I clearly might have been more willing to support
the Exon-Grassley type cut. But the amendment to put the walls back
under our processes takes 60 votes, and we have not been successful in
getting that done.
So I do not want to relive the last months of battle on that, but my
reason for not supporting the budget resolution is even more simple.
The conference report on the 1995 budget, once again, as I view it,
sends the wrong signal and moves in the wrong direction. It sends wrong
signals to the American public on how to really address the Federal
deficit.
Last year, the signal was taxes and defense cuts, and I believe I
have gone through that. My statement--that we have essentially cut
defense and raised taxes as a way to get the deficit under control thus
far--is supported by the Congressional Budget Office in its latest
evaluation. I do not think that sends the right signal to the American
people about how to get the deficit under control.
We can continue to reduce discretionary spending, implicitly defense
spending, and this resolution comes before us and says while we are
reducing discretionary spending, we increase entitlement spending over
and above the current policy.
Now, I believe, even if this budget resolution only allows a $5
billion increase of entitlements, it is sending the wrong signal. The
conference report reduces discretionary spending, and I think--and I
repeat--that in that process we are going to significantly reduce the
President's request for national security spending.
And then we turn around, as I indicated, according to the
Congressional Budget Office, and we increase entitlement spending
relative to what it would be absent this budget resolution.
Now, I have made this point enumerable times in this Chamber. In
fact, I have tried to focus the Exon-Grassley cuts away from
discretionary defense and back onto entitlements, and I have done that
in health care reform, when this resolution was before the Senate, and
unfortunately that failed.
I remind the Senate that we are going to adopt health care reform.
Almost everyone familiar with the budget has said health care reform is
our last opportunity to reduce the budget deficit on the entitlement
side. There are no plans except the bill I introduced yesterday that
say let us reform health care and apply savings to the deficit. This
resolution does not do that either.
So the culprit is really entitlement spending. Everybody knows it.
The deficit projections show it. Everyone in this Chamber knows it. And
interestingly enough, this budget resolution does nothing in that
regard other than, as I indicated, increasing entitlement spending. It
goes even further to ease our budget enforcement procedures for
consideration of future entitlement spending legislation. There are 12
reserve funds--12 reserve funds--in this budget resolution.
I know my very good friend from Tennessee will get up and say, well,
these reserve funds are burdened by your ``pay-as-you-go'' idea,
Senator Domenici. They require that spending be on a pay-as-you-go
basis so that it will end up deficit neutral. But, Mr. President, these
12 reserve funds are going to permit, on everything from welfare reform
to health care, Congress to increase the spending on the entitlement
side. It is spending that concerns this Senator, not necessarily that
we spend and tax to pay for it. That is not the solution to the
problem. The problem is ever-increasing entitlement expenditures.
When you look at the projections, clearly entitlements or mandatory
spending is beyond any doubt the culprit in the deficit of the United
States. The Congressional Budget Office in their baseline says, believe
it or not, from 1994 to 1999, entitlement and mandatory spending, Mr.
President, will go up 36.9 percent. Discretionary spending at the same
time, including everything that we spend on an annual basis, will go up
3.9 percent--36.9 percent versus 3.9 percent in terms of the growth
over the next 5 years. The Congressional Budget Office projects that
annual entitlement spending, which today is over $800 billion--making
up 55 percent of the Federal spending, excluding interest--will
increase to $1.1 trillion--a 37-percent increase, roughly, in just 5
years. Entitlement spending will then be 60 percent of the Federal
budget.
Now, this conference agreement will add $5 billion to that--not much
in the grand scheme of things, but nonetheless it will add to current
spending increases in that category of the budget.
More importantly, I want to talk about national security spending and
the trends. Today's spending on our national security represents 4.2
percent of our gross domestic product, but in just 5 years that figure
will decline to 3 percent. Only two times in recorded history, has
defense ever matched these two lows: once immediately before World War
II, the bombing of Pearl Harbor, when defense spending amounted to 1.7
percent of our gross domestic product; and, the second time was
immediately following World War II, when we had the precipitous
builddown which brought on the Korean war.
This resolution assumes $30 billion in discretionary spending cuts
over the next 5 years, and as I indicated, I hope we have an
opportunity to let the Senate speak on this issue because I am not
convinced that the Senate would want to cut defense beyond the
President's budget, even if it means taking some across-the-board
discretionary.
I believe that both will come out that way. If we do not do that,
maybe this year there will be a way for us to do that.
While clearly not the problem adding to the Federal deficit, current
enforcement mechanisms fall disproportionately on discretionary
spending relative to entitlement spending in this resolution and under
current law. Let me give you the reasoning as I see it.
We have found a way, with caps, to control discretionary spending.
First, if discretionary budget authority or outlay levels exceed
these caps, OMB makes across-the-board cuts. These caps are very strong
relative to entitlement spending enforcement mechanisms. As I
indicated, both budget authority and outlays on the caps are enforced
separately by OMB, and also by a 60-vote point of order in the U.S.
Senate.
Second, Congress must annually negotiate discretionary spending
appropriations bills to meet the Congressional Budget Office's scoring
to avoid this 60-vote point of order and OMB's scoring to avoid a
sequester. These are very strong enforcement measures. It has nothing
to do with whether the cuts come disproportionately out of defense or
not because it is the total that is being enforced. Unlike entitlement
programs, these discretionary caps are not automatically adjusted for
inflation and beneficiary growth.
However, on the entitlement side there is nowhere near the same level
of enforcement. Yes, we have pay-as-you-go for new, and I stress
``new,'' legislative proposals. Spending grows unabated and
automatically for inflation and beneficiary growth under current law
for entitlement programs.
So, what does this budget resolution do?
First, it adds a minimum of $4.5 billion to entitlement spending on
top of the huge increases that I have alluded to before that are built
into the law.
Second, it eases the enforcement procedures to allow expansion of
entitlement and mandatory spending even beyond these levels. For the
entitlement accounts of this Government, we add another $4.5 billion in
agriculture, for crop insurance, and we do not have any pay-as-you-go
requirement.
We need to reform the way the Government funds agricultural
disasters. I acknowledge that. We need to modify the Federal Crop
Insurance Program. And I acknowledge that. But I am merely suggesting
that the trends are in the wrong direction when we merely add $4.5 or
$5 billion and say we are doing that so we can get reform.
We have to admit up front that proposals that increase, even though
it is small, entitlement spending, even if it is by slight of hand,
will add to the Federal deficit. But the conference report does more
than that. While it ratchets down on enforcement of discretionary
spending to reflect the Exon-Grassley cuts as compromised, at the same
time it eases restrictions on entitlement spending.
Examples: There are several procedural changes made in this budget
resolution. Let me talk to them for a minute.
We add 12 broadly defined reserve funds. This is the new way to add
programs under the rubric of reform that cost money so long as under
budget calculations they are neutral in terms of their impact on the
deficit. But they are on the books as new and expanded programs. So
absent these reserve funds, we would have to get 60 votes to waive a
point of order under the Budget Act to increase them because of the
binding nature of the totals on the committees even on entitlements.
So the 60-vote point of order is waived under this approach of
reserve funds. Reserve fund legislation can provide unlimited increases
in entitlement spending as long as it does not lead to any estimated
increase in deficits. So, for example, the resolution provides an open-
ended spending increase for health care reform so long as it is deficit
neutral.
Mr. President, have I used my time?
The PRESIDING OFFICER. The Senator has used 13 minutes and 45
seconds.
Mr. DOMENICI. Could I add 2 minutes to that? That will permit me to
finish.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DOMENICI. Mr. President, so in health care reform everybody
should know that this budget resolution provides an open-ended
invitation in terms of how big and how expensive the health package can
be so long as we pay for it with new taxes and other savings.
I believe, even though by estimates it is deficit neutral, it is very
risky to do that not knowing exactly what the total is going to be.
While budget authority levels are binding on appropriations, one of
these funds effectively eliminates the enforcement of budget authority
levels for entitlement spending.
This budget resolution also weakens the pay-as-you-go point point of
order to make it even easier to expand mandatory spending by doing the
following:
First, it eases the discipline by only requiring legislation to be
deficit neutral for the first year, years 1 through 5, and years 6
through 10. Under current enforcement procedures, legislation must be
deficit neutral for each year through 2003. That is changed and made
more generous by this resolution. Maybe we should discuss easing the
application of this point of order. That time may be with us. But
clearly, there ought to be a major discussion about what it means.
Second, it exempts legislation from a requirement to pay for deficits
created by legislation enacted since the 1993 reconciliation bill.
Frankly, this catches me totally by surprise. I am sure it is going to
catch plenty of Senators by surprise. But what it really means is that
for legislation enacted since the 1993 reconciliation bill, if in fact
there are savings or tax increases that have not been used up in a pay-
go situation, they could be carried forward.
For 1994, it is a small amount--$17 million. But I submit it is
another trend and another dangerous precedent.
Third, it allows for the double counting of savings, by allowing
legislation to take credit for surpluses generated by legislation
enacted since the 1993 Reconciliation Act. This seems to me something
that should be thoroughly debated.
Fourth, it exempts the budget resolution from the pay-as-you-go
requirement so that mandatory spending can be increased by a simple
majority in a budget resolution. As I have just described, this seems
to be moving in the wrong direction.
Let me conclude for the record. The projected deficits in this
resolution increases from $175 billion next year to $200 billion in
1999.
Then, if you add the next 5 years to it, you will find that, under
almost anyone's evaluation, we are spiraling up again, such that in 5
to 6 years we will be back in excess of $300 billion in deficits.
Mr. President, I took this opportunity today to explain three or four
issues that I thought were important. I understand that the budget
resolution is a typical undertaking. What I have tried to do here is to
explain why I think it is moving, trend-wise, in the wrong direction
and why it is sending the wrong signal as to control the deficit.
I yield the floor.
The PRESIDING OFFICER. The Chair informs the Senator that he has used
18 minutes 15 seconds.
Who yields time?
Mr. SASSER addressed the Chair.
The PRESIDING OFFICER. The Senator from Tennessee [Mr. Sasser], is
recognized.
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